High volume and growing magnitude of aviation claims
Source: Middle East Insurance Review | Apr 2020
Analysis of more than 50,000 aviation insurance claims worth EUR14.8bn ($16.3bn) over the past five years shows collision/crash incidents account for over half of the value of all claims (57%) – equivalent to EUR8.4bn – and over a quarter by number (27%), according to research from AGCS and Embry-Riddle Aeronautical University. Loss of control in flight is the most frequent cause of fatal accidents.
Collision/crash claims include incidents such as hard landings, bird strikes and runway incidents such as incursions and excursions. The research shows there have been 470 runway incidents resulting in claims over five years totalling more than EUR800m of insured damages. The average runway claims totals around EUR1.7m, said the report.
Increasingly sophisticated aircraft are also contributing to more expensive claims. More complex engines and, in some cases, composite materials can be costly and more time-consuming to repair.
The growing complexity of aircraft design, technology and manufacturing is also leading to more costly grounding incidents, involving entire fleets, as in the case of the aftermath of the two fatal crashes involving the redesigned Boeing 737 Max within five months in 2018 and 2019. Such incidents highlight the challenge in finding technical solutions to complex problems, which increases the time it takes to get grounded aircraft back into operation. Even if a fix is found, the task of retrofitting a fleet takes considerable time.
Insurers are also seeing a higher level of foreign object damage claims. Bird strikes are a notable contributor, resulting in excess of EUR330m of damages over five years. M