The European Commission (EC) is undertaking preliminary investigations into the practices of aviation insurance providers following simultaneous cancellation of war risk cover last week. The competition directorate general says that it has asked several of Europe's largest carriers to provide details of recent changes to insurance cover to ascertain whether insurance brokers colluded to fix prices.
European governments had to step in last week and guarantee minimum third-party war risk cover after insurance companies simultaneously revoked AV52c aviation insurance, leaving airlines with insufficient cover to operate out of most airports. The UK Government drew up plans to keep airlines flying that were mirrored by other EU countries. These cost-free guarantees are set to expire in 30 days from 25 September, after which time governments in the three largest insurance brokerage countries - France, Germany and the UK - will offer the cover at "commercially viable rates", if the insurers fail to come up with new plans.
The EC says that it is looking at the aviation insurance market and that if individual insurers, re-insurers or "pools" of companies are found to have acted in breach of EU anti-competition policy, it could lead to censure, including the lifting of anti-trust exemption for "pools" of EU aviation insurers.
Lloyd's of London says the few large reinsurers set conditions on aviation insurers who pass on these to the airlines. Retro insurers all "reach the same market conclusions".
Insurers are currently reformulating policies to include geographical exclusions or minimum security standards to counter unacceptable risk to carriers.
Source: Flight International
