Air crash: Insurers take it on chin

THE American Airlines crash is expected to cost insurers several hundred million pounds, a fraction of the £50bn estimated losses from the World Trade Centre attack, industry sources predict.

'It is a tragic and substantial loss, but nowhere near in the same league as September 11,' said one. The Lockerbie bombing in 1988, which claimed 270 lives, cost PanAm's insurers more than £500m.

The battered Lloyd's of London market, which has a net exposure of £1.3bn to the WTC, confirmed it is involved in the insurance of American Airlines. US investigators arrived in London to probe Lloyd's ability to meet claims from 11 September.

Market sources say the lead underwriter on the aircraft is Global Aerospace Underwriting Managers, a London specialist aviation broker. GAUM is backed by several leading companies including Royal & SunAlliance, CGNU and Munich Re. Chief executive Tony Medniuk was unavailable for comment.

The plane was insured for £1bn, according to French company Axa, but experts say it is unlikely the costs will reach that level. One said: 'The aircraft itself will be insured for between $30m (£21m) and $50m. AA may also be liable for payments to relatives. Even if the airline is held entirely responsible, the bill will come to hundreds of millions.'

If the attack is found to have been caused by terrorists, most of the tab will be picked up by the US government. Following 11 September, international insurers have excluded coverage above $50m for terror attacks.

British insurers, including RSA, also face modest exposure to claims on property, motor and personal policies for victims on the ground in New York.

Mary Louise Rossi, of the International Underwriters Association, said: 'It is a tragedy, but it is the sort of event that the industry can cope with.'

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