Lloyd's on board as Chinese economy takes off

While the Lloyd's market does not (yet) provide cover to ensure the evil spirits take flight, the historic insurance market reinsures every single airline flight for Chinese owned planes through the General Administration of Civil Aviation of China. It's the largest single placement of airlines in the world with an insurance value of $74 billion across 31 different airlines. 

Bruce Carman, War Underwriter at Atrium, is the lead Hull War underwriter for the policy at Lloyd's. He told lloyds.com: "In short, it is a very exciting placement and an extremely interesting country to do business in. Over the past six years I have travelled throughout China, and the diversity of culture that I have witnessed is immense.

“What surprises me most, however, is the appetite of the Chinese to learn – especially the English language. I have met so many young Chinese professionals who are fluent in English and yet most have never been out of China."

He added that part of the reason Atrium set up an office in Singapore was because of the wealth of new opportunities for Lloyd's in the rapidly expanding Asian market. 

"China is without a shadow of a doubt the powerhouse of the world economy today,” Carman continues. “The Chinese airlines are growing at a pace and they are not stopping. They are going for gold."

China has placed large block orders for planes through major Western manufacturers. In addition, there are also 55 locally built Commercial Aircraft Corporation of China (COMAC) C919’s on order. The C919 is expected to challenge Airbus and Boeing. A locally manufactured ARJ21 variant aircraft (regional jet) has also received some 250 orders for both domestic and international operators.
 
The Hull War policy lead by Atrium protects against malicious damage and war risks, including civil war, strike, riot, acts of sabotage, seizure, and hi-jacking, while Amlin leads the cover for All Risks. 

Carman says: "One of the challenges the domestic operators in China are facing is the expansion of the high speed rail network. The airlines have to maintain the advantages of safety, comfort and low cost in order to compete."

Nonetheless, he said the safety standards and safety culture being adopted by all of the airlines in China are first class and are now major contributors to international safety forums.  And the Chinese fleet stands out for being very young, with an average aircraft age of only 6.5 years, and around 50% of the planes are less than 5 years old.   
 
"There is also investment on a massive scale in airports and infrastructure, demonstrating the Government’s commitment to the sector and recognising the important role that it plays in economic growth," he said.  "It's excellent for Lloyd's to be part of this investment in China."

Lloyd's China was established in 2007 with an office in Beijing.

Lloyd’s Chairman John Nelson was recently in China to discuss Lloyd’s long term commitment to the Chinese market and the partnership with China Re.