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Taiwanese airliners see limited impact from Ukraine air tragedy
Taiwan News, Staff Writer
2014-07-22 02:12 PM

Malaysia Airlines flight MH17 was shot down in east Ukraine last week and has triggered worries of a hike in war-risk insurance premium rates this year. Taiwanese airliners stated this week that the impact to their insurance rates might be limited.

Asked by media in a launch ceremony for new painted aircraft Monday regarding the impact of the air tragedy over Ukraine, Sun Hung-hsiang, chairman of China Airlines (2610), Taiwan’s largest carrier, said since the war-risk insurance rate accounts for approximately 9 percent of the company’s total insurance expense, which is not high compared to other types of insurance, the potential premium alteration might have a limited impact on company’s operation.

Sun emphasized that the aviation insurance rate is set based on its own airliners’ respective security records, and the rate for the company has been revised downward 10 to 15 percent every year thanks to its better flying record in recent years. But when asked whether a rate alteration would spur a hike in ticket prices, Sun said more observation is needed to make this decision.

Evergreen Airlines spoke in the same tone Monday, saying that the company hasn’t heard that the war-risk insurance rate would be revised upward due to one single incident, but if it does happen, the company might assess whether or not to transfer the price hike to air fares based on the percentage increase.

Media reported that a war-risk insurance rate increase imposed on airliners is a greater possibility as more wars are being waged around the world this year. Fare markup is expected to exceed 10 percent, even though related insurance claims have been rare in the past.

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