Insurance Program Results

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Aviation: Pricing Low Despite Rising Claims Severity

The abundance of capital in insurance markets is penetrating the aviation segment, previously marked by ups and downs over the years but now seeming to sustain low prices. Carriers are expanding coverages, taking up more aircraft business and keeping rates low this year despite a flurry of catastrophic losses experienced early this and last year. HCC Specialty, Munich Re, State National and American Financial Group all launched new programs earlier this year. With the growing number of product offerings and widespread use of reinsurance, a large catastrophic event – not necessarily aviation related – will need to occur before aviation insurers can expect any large rate increases to stick. 

Lloyd’s of London syndicate Atrium, AIG, Allianz, Catlin, AXIS, Validus Re, Swiss Re and Validus Re’s Lloyd’s syndicate Talbot likely garnered modest increases on renewal rates since they were the markets most exposed to losses from recent plane crashes. The remaining carriers in the general aviation segment – XL, Hallmark, W.R. Berkley, Arch, Partner Re, Old Republic, Starr and QBE – remain largely unaffected by such losses. While Ironshore hasn’t been a main insurer of any of the airlines experiencing losses, it is taking precautionary measures and slightly reducing its book of aviation business.

Adding to the rivalry for aviation business is XL and Catlin’s merger to form XL Catlin, which will create the second largest aviation insurer. Catlin added a follow-form excess policy to complement its aviation program earlier this year. Expect the newly combined carrier to take on more business and roll out new products in the coming year.

The softening aviation market can be attributed in part to safety improvements that have reduced the frequency of claims over the past few years as well as additional improvements made after the recent bout of airplane crashes – Malaysia Airline’s MH370 and MH17 and German Wings’ 4U9525 – during the past year, although the top claim during the past six years, in terms of both frequency and severity, remains plane crashes. This year’s safety initiatives include a global push to improve airline tracking methods with many more airlines adopting real-time tracking technology. Airlines are also growing their passenger counts, freight and flight schedules, all of which is generating organic growth on aviation insurers’ books. Passenger numbers are predicted to increase by 384 percent by 2050, reaching 16 billion, and freight is expected to increase from 50 million tons to 400 million tons by 2050. The consolidation of U.S. airlines will also create larger accounts.

Copyright © Crittenden Research Inc., November 2, 2015

Drone Coverages

Administered By: ProSight Specialty Insurance

Distribution: Carrier Direct

Industries:

Aviation, Aviation Risks & Airports

Carriers: ProSight Specialty Insurance Group

Coverage: Contractual Liability, Products & Complete Operations Liability, Property, Special Event Accident Coverage , Special Events, Third-Party Liability

Limits: Call - for Limits

Space Insurance (SpaceCo)

Administered By: Allianz Global Corp. & Specialty

Distribution: Direct/Broker

Industries:

Aviation, Space/Satellite

Carriers: Allianz Global Corp. & Specialty

Coverage: All Lines Aviation , Launch Insurance

Limits: Call For - Limits

 

Aviation

Administered By: AmWINS Group, Inc.(Casualty)

Distribution: MGA

Industries:

Aviation

Carriers: Lloyd's of London

Coverage: Agricultural Aircraft Liability , Aircraft Liability , All Lines Aviation , Aviation, General Liability

Limits: up to - $300 million (Hull Limits), up to - $1 billion (Liability Limits *higher limits available if needed for Hull and Liability)