Experts: Aviation Insurance Responsible for Sector’s Highest Claims, Premium Value
Ebere Nwoji
Aviation insurance experts have said that the sub-sector produced the highest value and high-profile claims across the global corporate insurance business line in the past five years, precisely between 2019 and 2024.
The aviation insurance experts’ analysis of more than 32,000 industry claims from 2019 – 2024 with a total value of $15billion (€14billion), showed that collision or crash incidents, which accounts for 63 per cent of the claims and faulty workmanship or defective products accounting for 22 per cent, are accountable for 85 per cent of the value. Other incidents like natural catastrophes (4 per cent) machinery breakdown (3 per cent) or fire (1 per cent) account for a much smaller proportion of claims by value.
In the latest edition of the Allianz Commercial’s Aviation Risk publication, claims and Insurance Outlook, the experts said growing aviation sector would see gross written insurance premiums (GWP) hit a 20-year high in 2024 of more than $8bn.
They however said significant increase in aircraft repair costs and growing shortage of mechanics would impact future claims activity.
According to them sustainability is still a major challenge for the industry, but new compliance might enhance the green transformation.
The experts in the publication noted that the energy crisis, Russia’s war would pose significant challenge to aviation industry and its insurers in recent years.
They however said aviation has rebounded well with several 2023 parameters showing “best ever” safety results.
“This year, the volume of global air passengers is expected to hit an all-time high (+10.4 per cent year-on-year), driven by Asia-Pacific and North America. While the general outlook for the industry is positive, there are still lots of challenges to tackle,” the publication stated.
It further stated, “the aviation market is in an interesting and possibly unprecedented place with the traditional market cycle having been interrupted by the impact of the pandemic and wars. The continual growth of the aviation sector will see premiums hit a 20-year high in 2024 of more than $8billion.
The Global Head of Aviation at Allianz Commercial, Tom Fadden in his observation of the aviation market performance stated, “We see a growing interest in multinational insurance, and more enquiries for international insurance placements for entire programs across lines of business, driven by increasing geopolitical and regulatory concerns and a desire from clients for a highly managed insurance structure. Yet dark clouds continue to hover for insurers with well-publicised losses and inflation pressurising bottom lines.”
In his submission, Global Head of Aviation Claims, Allianz Commercial, Cristina Schoen said that one also couldn’t ignore the fact that runway excursions were trending higher in 2024 than in 2023, with at least 23 reported globally through January to May 2024. Causes according to him include weather issues and technical problems.
