Plane crash bill estimates cut

INSURANCE shares rallied as the embattled industry damped down fears of catastrophic losses from the New York plane crash. Initial estimates of up to $1bn (£670m) have now been scaled back dramatically. Experts believe claims relating to the aircraft and its passengers will be around $400m.

An insurance market source said: 'A 13-year-old Airbus would be covered for up to $100m. Liabilities relating to passengers could amount to a further $200m to $300m. The industry can absorb it.'

But premiums, already spiralling upwards by up to 40%, are likely to increase further. Insurers, who claim rates were at rock bottom levels last year, already face a $70bn bill from the World Trade Centre and need to replenish their coffers. High-risk lines such as aviation and city-centre skyscrapers could soar by hundreds or even thousands of%, insiders say.

Royal & SunAlliance and CGNU are indirectly exposed to the crash through their joint ownership of agency Global Aerospace. The two companies share the risks with a number of agency members, including Munich Re, Zurich and Chubb, so losses suffered by RSA and CGNU are unlikely to be significant.

The battered Lloyd's of London market, which is picking up an estimated £1.3bn terrorism bill, could see further losses of up to $50m, excluding reinsurance, analysts said.