Aviation premiums to hit 20-year high in 2024: Allianz

As the aviation industry recovers in 2023 after a challenging period, analysis from Allianz Commercial’s Aviation Risk, Claims and Insurance Outlook suggests that nearly 63% of claims were due to collision or crash incidents.

Of the 32,000 industry claims from 2019 to 2024, totalling around $15 billion, Allianz found that approximately 22% were due to faulty workmanship or defective products, which accounted for 85% of the value.

Natural catastrophes, machinery breakdowns and fires account for a much smaller proportion of claims by value.

In 2024, the volume of global air passengers is expected to reach an all-time high, increasing by 10.4% year-on-year. This growth, driven by Asia-Pacific and North America, creates a positive outlook for the industry.

The report notes that aviation produces some of the highest value and high-profile claims across the corporate insurance sector.

Tom Fadden, Global Head of Aviation at Allianz Commercial, commented: “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.

“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.”

Soaring repair costs, a shortage of mechanics and incidents involving runways and ground incidents are increasing issues for the industry currently as inflation rises, notes Allianz. The shift to next-generation aircraft continues to impact claims, especially concerning engine disassembly and repair costs.

Cristina Schoen, Global Head of Aviation Claims of Allianz Commercial, added: “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.

“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.”

Adam Tozzi, Head of Underwriting Global Tasks and Processes, Aviation, Allianz Commercial, said: “Standardised reporting may foster investor and stakeholder confidence in the industry and the best-performing companies, demonstrating industry leadership in decarbonisation. 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.”

Fadden concluded: “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.

“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.”

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.