Crashes and collisions dominate $15bn of aviation insurance claims: Allianz
31 Julio 2024 - 6:54AM
Business Wire
- Analysis of 32,000 industry claims over five years shows
such incidents account for over half the value of all claims (63%)
and a third by number
- Growing aviation sector will see gross written insurance
premiums (GWP) hit a 20-year high in 2024 of more than
US$8bn
- Significant increase in aircraft repair costs and growing
shortage of mechanics impact future claims activity. ‘Air rage’
claims plummet
- Sustainability still a major challenge for the industry, but
new compliance may enhance the green transformation
Covid-19, the energy crisis, Russia’s war - to say that the
aviation industry, and its insurers, have had to face significant
challenges in recent years is an understatement. However, 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% 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,
according to Allianz Commercial’s Aviation Risk, Claims and
Insurance Outlook.
The aviation sector produces some of the highest value and
high-profile claims across the corporate insurance sector around
the world, the report notes. Analysis of more than 32,000 industry
claims from 2019 - 2024 with a total value of US$15bn (€14bn) shows
that collision or crash incidents (63%) and faulty workmanship or
defective products (22%) are accountable for 85% of the value.
Other incidents like natural catastrophes (4%), machinery breakdown
(3%) or fire (1%) account for a much smaller proportion of claims
by value.
“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 US$8bn,” says Tom Fadden, Global Head of
Aviation at Allianz Commercial. “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-publicized
losses and inflation pressurizing bottom lines.”
Soaring repair costs, lack of mechanics, runway, and ground
incidents an increasing issue
There has been a significant increase in aircraft repair costs
in recent years, driven by higher labor rates and the cost of
aircraft parts, among other factors, such as inflation. The shift
to next generation aircraft continues to impact claims, especially
when it comes to engine disassembly and repair costs. Furthermore,
a growing shortage of aircraft mechanics may impact future claims
activity. It may take longer to complete repairs if vendors lack
manpower, or efficiency. More less-experienced mechanics on the
line could mean they do not have the ability to repair a part,
meaning it will need to be replaced with a new one, which typically
is more costly. An obvious concern is the shortfall ultimately
leads to an accident, despite the systems of checks and balances in
place in the industry.
“One also cannot ignore the fact that runway excursions are
trending higher in 2024 than in 2023, with at least 23 reported
globally through January to May 2024. Causes include weather issues
and technical problems,” says Cristina Schoen, Global Head of
Aviation Claims, Allianz Commercial. “There has also been a
noticeable rise in ground handling claims at large airports
worldwide. Elsewhere, while ‘air rage’ claims have plummeted since
the pandemic, we see an increase in damage claims resulting from
the growing demand for helicopter trips and getaways.”
SAF and eVTOL aircraft takeoff but compliance is the main
lever to reach Net Zero targets
Aviation contributes around 2% of global emissions and is
focused on its sustainability efforts, pledging to reach Net Zero
by 2050. The lack of a silver bullet solution for decarbonization
should not take away from the exciting developments underway.
Sustainable Aviation Fuel (SAF) continues to attract a lot of
attention with mandatory targets starting to be implemented.
Improvements on existing technology continue to advance apace, as
do innovations. The market for eco-friendly electric vertical
takeoff and landing (eVTOL) aircraft, which can transport
passengers or cargo, is set to grow significantly in the future –
the first insurance coverages for operational uses are likely to be
placed this year. Yet one unheralded development that could force
as greater accountability as any technological advancement is the
development and subsequent implications of the European Union’s
Corporate Sustainability Reporting Directive (CSRD) and similar
regulations worldwide. They require companies to disclose
comprehensive information on their environmental, social, and
governance (ESG) performance and impact.
“Standardized reporting may foster investor and stakeholder
confidence in the industry and the best performing companies,
demonstrating industry leadership in decarbonization. Most
importantly, it should improve sustainability practices across the
sector. Companies will be forced into engaging with the topic by
such accountability. Investment will surely follow engagement,”
says Adam Tozzi, Head of Underwriting Global Tasks and
Processes, Aviation, at Allianz Commercial.
“Allianz has all the fiscal sophistication and disciplined
balance sheet protection that you would expect of a global insurer
that has been offering financial strength and support to our
aviation customers for over a century,” concludes Fadden.
“As the 110th anniversary of the issuance of our first ever
aviation insurance policy approaches, we continue to be laser
focused on volatility management, risk selection, detailed
sub-segment steering and being a stable and long-term partner to
our clients.”
About Allianz Commercial
Allianz Commercial is the center of expertise and global line of
Allianz Group for insuring mid-sized businesses, large enterprises
and specialist risks. Among our customers are the world’s largest
consumer brands, financial institutions and industry players, the
global aviation and shipping industry as well as family-owned and
medium enterprises which are the backbone of the economy. We also
cover unique risks such as offshore wind parks, infrastructure
projects or film productions. Powered by the employees, financial
strength, and network of the world’s #1 insurance brand, as ranked
by Interbrand, we work together to help our customers prepare for
what’s ahead: They trust us to provide a wide range of traditional
and alternative risk transfer solutions, outstanding risk
consulting and Multinational services, as well as seamless claims
handling. The trade name Allianz Commercial brings together the
large corporate insurance business of Allianz Global Corporate
& Specialty (AGCS) and the commercial insurance business of
national Allianz Property & Casualty entities serving mid-sized
companies. We are present in over 200 countries and territories
either through our own teams or the Allianz Group network and
partners. In 2023, the integrated business of Allianz Commercial
generated more than €18 billion gross premium globally.
Cautionary Note Regarding Forward-Looking Statements
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For further information please contact: Jo-Anne
Chasen Tel. 917 826 2183
jo-anne.chasen@agcs.allianz.com Erin Burke Tel. 631 681
8770 eburke@stantonprm.com