Turbulence Ahead: Insights and Predictions for the Aviation Insurance Market
In this discussion between Philippine Dumoulin of Robert Wray PLLC and Glenn Brighton, the executive director of aviation advisory services at Willis Towers Watson, the focus is on insights and predictions for the aviation insurance market.
Brighton begins by addressing the current state of the aviation insurance market, highlighting the distress caused by global events such as conflicts in Ukraine and Russia, as well as recent events in Israel and Palestine. Following the uncertainties brought about by the COVID-19 pandemic, the market is now grappling with increased premiums across various sectors, including airlines, general aviation and airports. Notably, there is a simultaneous reduction in coverage levels, creating challenges for insurance buyers.
The conversation then delves into the impact of the Russia-Ukraine conflict on the leasing market, where many aircraft stuck in Russia face uncertainty, potentially leading to substantial losses. A legal claim is anticipated, but the outcome remains uncertain, affecting leasing companies that continue to buy policies from the same market.
Regarding the broader aviation insurance landscape, Brighton anticipates fundamental changes in whole war policies, emphasising a shift in insurers’ approach due to the unforeseen geopolitical risks. The discussion touches on potential permanent increases in premiums, changes in coverage, and the industry's focus on ensuring such significant losses do not recur.
“Most of the aircraft that were stuck in Russia after the invasion of Ukraine are still there.”
Looking beyond geopolitical events, Brighton highlights a positive trend in aviation safety, noting a significant reduction in major losses compared to earlier decades. However, he points out that the cost of repairing aircraft has substantially increased, affecting insurance considerations. The discussion ends with a prediction for 2024, where Brighton expresses a desire for the aviation insurance market and its clients to rebuild trust and strengthen long-term relationships. He emphasises the importance of returning to a collaborative environment, where insurers, brokers, and clients work together to create the right insurance packages. Ultimately, the goal is to restore trust and bring back the positive relationships that define the aviation insurance market.