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US giant American International Group (AIG) leads the hull cover on the British Airways jet that crash-landed at London’s Heathrow Airport yesterday (17 January) while carrying more than 150 passengers.

The hull of the Boeing 777-200ER is valued at approximately $120mn and the AIG cover was brokered by Marsh, according to well-placed market sources.

Neither AIG nor Marsh was available for comment when contacted by The Insurance Insider.

Liability losses are thought to be negligible as all 136 passengers and 16 crew survived with only minor injuries. The liability could have been far worse as the plane landed near a busy road and a residential area.

The Air Accidents Investigation Branch will interview the pilot and crew and file an initial report in the next 48 hours.

Early reports have said that the jet lost all power after “all the electronics” failed while the plane came in to land.

The aircraft is generally thought by experts to be extremely reliable, with no serious accidents involving the 777 since the plane first went into production in 1996.

Heathrow has suffered major disruption due to the accident with the wreckage blocking one runway. It is unclear at this time the size of potential business interruption losses or whether they would fall with the airport, airline or manufacturer of the plane.

The loss adds to the bleak picture for airline insurers with reports saying it is “likely to have made a loss” last year with claims outweighing premiums.

Aon Aviation estimates the total amount of losses for 2007 to be around $1.70bn, including attritional claims, against hull and liability premiums of around $1.51bn.

Aon explained that rates could rise once capacity exits the market: “Organisations do not tend to remain committed to unprofitable markets for very long so if there is a reduction in capacity, the price of airline insurance may rise during 2008.”

The broker added: “Fundamentally, however, the airline industry and its insurance market is still sound, and the reasons that have attracted the high level of capacity over the last three years remain in place: technology, training and fleet improvements have all reduced the risk of an incident and minimised the effects of any incidents that do occur.”

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