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Aircraft insurance rates may go up
The unprecedented terrorist attacks that have ripped through
the heart of America bringing down the military headquarters and
the World Trade Centre will have a disastrous effect on the world
economy including financial markets worldwide. While the losses
incurred in terms of life and property is yet to be quantified
a minimum of 10000 people according to reports are feared killed
so far excluding those passengers who died in the airplanes that
were hijacked for the operation.
Insurance claims to go up:
The damage caused by such a disaster is unimaginable and the
amount of insurance claims that will soon pour in will go down
in history. Four aircrafts are said to have been involved in the
tragedy and according to analysts, the rates in the international
aviation reinsurance market will go through the roof. Reinsurance
means underwriting the risks of the insurance company. This is
done in order that the insurance company spreads its risks by
transferring all or part of its risks to one or more reinsurance
companies which helps insurance companies write more larger risks.
Reinsurance rates to spiral:
Reinsurance also helps insurers with more cash whenever required
particularly in case of huge losses. Very recently the reinsurance
market had seen a revision in rates and now the rates will further
shoot up.
Indian Airlines and Sahara Airlines will soon need to renew their
insurance policies in October and may have to shell out higher
premia now with the reinsurance market witnessing turmoil.
Aviation insurance rates to be hiked:
The aviation insurance market is influenced by the international
reinsurance market. The Indian Airlines fleet of 52 aircraft has
been insured for $1.6 billion while Sahara India has insured its
aircraft for about $200 million according to reports.
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