American Airlines Crash Another Blow to Insurers

November 14, 2001

Insurance companies reportedly face $200 million in claims from the New York City plane crash on Nov. 12, an unwelcome blow for insurers still struggling with major losses from the Sept. 11 attacks.

According to Reuters news service, the overall insurance bill from the latest crash was estimated by one analyst at around $1 billion. While insurers would directly cover $200 million in liabilities, the remainder is likely to be offset with policies taken out with reinsurers.

The loss of the plane itself, an American Airlines Airbus A-30–would cost insurers about $60 million, industry sources said, with liability claims possibly throwing in another $100 million.

The American Airlines jet, bound for the Dominican Republic, hit the Rockaway section of Queens, N.Y., near John F. Kennedy Airport, minutes after take-off on Monday morning. All 260 on board are feared dead.

The expected insurance loss is seen as less than some recent U.S. commercial air crashes because the passengers, mostly Dominican citizens, may not achieve high compensation awards relative to citizens from some other countries, industry sources commented.

The crash, which investigators say was likely an accident, comes two months after hijacked jetliners slammed into the World Trade Center in New York, causing about $70 billion in insured damage. It is not yet known how much of that will fall on insurers covering airlines’ liability.

Shares of many insurers in the U.S and Europe dipped shortly after the crash, as investors feared another terror attack, but most recovered in later trading.

Insurers of American Airlines also are looking at some third-party liability claims for the damage caused on the ground in New York when the plane crashed.

Six people were reported missing in Rockaway, and several houses were destroyed.

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