The “winds of change” blowing through the aviation-insurance industry when I wrote about insurance for Flying in the 2019 Buyers’ Guide have now reached gale-force speeds. I worked in general-property and casualty insurance long before becoming an aviation-insurance specialist, and I have never seen anything like the rate volatility today.
Aviation Insurance in Hard Times
Key Takeaways:
- Aviation insurance is currently experiencing a "hard market" with significant rate increases and high volatility across the board, a stark contrast to previous years of decreasing premiums.
- This volatility is primarily due to the unique nature of aviation, which lacks sufficient data for traditional actuarial science and has lightly regulated rates, making underwriting more subjective than scientific.
- Aircraft owners can improve their insurance outcomes by obtaining an instrument rating, completing regular training (especially simulator-based for turbine aircraft), maintaining high flying hours, and accurately valuing their hull.
- The COVID-19 pandemic is expected to prolong or exacerbate this hard market due to factors like reduced earned premiums, low interest rates, and potential increases in future claims.
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