Geopolitical instability tops aviation insurers’ concerns: IUAI

Geopolitical instability has been identified as the biggest threat to the aviation sector by insurers, a new industry survey has revealed, with war and international conflicts as the top concern for two-thirds of respondents working for international aviation insurers and reinsurers.

The findings come from research conducted by the International Union of Aerospace Insurers’ (IUAI) Cyber and Emerging Risks Study Group.

The Group was originally formed in 2018 to examine the potential impact of emerging risks on the aerospace sector. Whilst the initial focus was on cyber threats, its remit has gradually expanded to look at other emerging risks, particularly those associated with the industry’s increased attention on sustainability and environmental impacts.

The group, co-chaired by Tom Hughes of the International Underwriting Association (IUA) and Florian Zierer of Swiss Re, polled 84 senior professionals in the aviation re/insurance sector for this survey, which also identified increase in natural catastrophes, supply chain problems, a lack of skilled personnel and malicious cyber attacks, as other popular risks.

Tom Hughes, Director of Underwriting at the IUA, said: “Aviation insurers are monitoring closely the development of many new technologies and emerging threats. The use of artificial intelligence, new aircraft types and the transition away from fossil fuels all have the potential to transform risk profiles in what is a fast-changing industry.

“But when asked to pin down the single most important threat over the next five years, there was a very clear winner. The number of experts identifying geopolitical instability was almost seven times higher than that for the next most significant risk.”

The survey also revealed the emergence of claims inflation as the most important challenge facing aviation re/insurers, followed closely by overall market conditions and rate adequacy.

For airports and aviation operators, the highest priorities were identified as attritional ground incidents, air traffic control issues and runway incursions.

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