Aviation Market Hardens Amid Pandemic Turbulence

Placing You First Insurance Podcast by CRC Group

Featuring:

• Camille Knight is a Senior Broker with our CRC Indianapolis team, located in Kentucky. She has extensive experience and specializes in aviation relation risks.

As the aviation industry rebounds from a massive pandemic-induced downturn, aviation insurance rates are rising as insurers seek to address prior-year losses and the industry’s evolving risks. Interest in private jet purchases and rentals have surged as more business fliers and individuals avoid public carriers for health reasons. The pandemic has also provided an extra boost to the rapidly growing unmanned aerial vehicle industry since camera-equipped drones can perform many tasks at lower risk and without personal contact.
Rising insurance prices in the aviation industry come amid historic losses for commercial aviation. The COVID-19 pandemic made 2020 the worst year in history for air travel demand, according to the International Air Transport Association.1 The IATA expects net airline industry losses of $47.7 billion in 2021, which marks a massive improvement from estimated net losses of $126.4 billion in 2020.2

As the aviation industry recovers, it faces an insurance market that has been hardening for several years. The rise in rates for aviation coverage has followed big losses such as the disappearance of Malaysia Airlines Flight 370 with 239 people aboard in March 2014. Five years later, two crashes of Boeing’s recently introduced 737 Max within five months added impetus to the insurance market hardening: An Indonesia Lion Air Boeing 737 Max crashed in October 2018, killing 189 people, and in March 2019 an Ethiopian Airlines Boeing 737 Max crashed shortly after takeoff with 157 people aboard. The losses extended beyond the crashes as hundreds of Boeing 737 Max airliners were grounded around the world, resulting in significant grounding liability claims in addition to liability and hull loss claims.
Visit REDYIndex.com for critical pricing analysis and a snapshot of the marketplace.

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