The Boeing 737 MAX crisis [4] will have a direct impact on aviation insurance premiums. On the eve of the renewal, the latter will witness a double-digit increase for the first time in 15 years. In fact, it is since 2017 that market professionals have noticed a rise in aviation losses. The grounding of the 737 MAX would put additional pressure on rates.
This hardening is predictable after the exceptional losses caused by Boeing and its 737 MAX. In addition to the aircraft hull and the bodily injuries policies following the crashes of Ethiopian Airlines and Lion Air aircrafts , the policies pertaining to the aircraft manufacturer's third party liability will also weigh on the bill.
Boeing had to ground several hundred aircrafts for several months and delay the delivery of thousands more. The total compensation bill for Boeing customers (including both crashes) could reach 10 billion USD, which Boeing would inevitably pass on to the price of its aircrafts. Airlines will, in turn, increase airfares, and in the end, it is the traveler who will pay for the entire loss.
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