AVIATION INSURANCE RATES MUST RISE, GROUP SAYS

AVIATION INSURANCE RATES MUST RISE, GROUP SAYS

Aviation insurance rates must rise further if premiums are to reflect the risks insured, the chairman of the London-based Aviation Insurance Offices Association has claimed.

In his introduction to the association's 1991 annual report, published Tuesday, chairman Graham Nichols argued that although rates have risen sharply, further hikes are needed.The group represents the company aviation insurance market in London, outside Lloyd's. Its membership shrunk from 25 to 17 companies in 1991, but available capacity "if anything, expanded," the report noted.

Mr. Nichols argued that the most significant loss to underwriters so far this year was that of the Air Inter Airbus A-320 that crashed just outside Strasbourg in northeast France in January.

"This was an accident to a new technology airliner," Mr. Nichols said. ''The conclusions from the accident report are awaited with keen interest."

Combined hull and liability losses from Western-built jet airliners totaled $596 million last year, according to the association. Premiums accepted by the association's members during the course of the year were "not sufficient" to meet these claims, the report maintained.

Mr. Nichols said that aviation insurers' exposures to the major aircraft manufacturers are increasing and argued that rates should take account of this. Satellite insurance, which is a volatile class of business even by the standards of the aviation insurance market, remained "extremely unbalanced," the report noted.

Earlier this year, Munich Re, a leading underwriter of satellite insurance, hinted that it might withdraw from the market if rates do not pick up.