Boeing 737 Max Grounding Insurance Claim – 3 Months

It has now been more than 3 months since the 737 Max grounding by aeronautical authorities around the world. Here is a breakdown of our estimated insurance claim on Boeing’s Products Liability policy and its Grounding Liability Coverage:

Average flights per aircraft per day: 5

Average passenger seating: 150

Average revenue per passenger: $180

Total cost per day for 70 jets: $9,450,000 per day in the US alone.

If we counted all 350 worldwide deliveries then the claim would be approximately $47,000,000 per day. 

But the airlines fixed costs have to be deducted. Guessing the fixed costs are about 1/2 then we are down to $25,000,000 per day. Making the total claim for 3 months approximately $2.25B.

Variables such as Self Insured Retentions, operating costs in different countries, the ability of certain airlines to access replacement aircraft affordably can reduce this figure. At the same time our deliveries number is less than the 387 executed, our calculations for average revenue per passenger may be less than reality, and our average seating configuration also less than reality.

The impact on the aviation insurance marketplace could be very significant, particularly when we are in a hard market borne out of reinsurance pressures to begin with.