Returning to profitability is key concern for aviation insurers – Gallagher | News

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The aviation market was already hardening, and the pandemic has caused further complications

Returning to profitability post-pandemic for aviation insurers remains a key concern, with premiums taking the brunt of the hit.

However changing exposures, continued losses, reduced income, and ongoing economic factors have all played a part, this is according to Peter Elson, chief executive at Gallagher in its recent Q3 report – Plane Talking.

Elson said that these factors add “further impetus to rate increases in an already hardening market”.

He points out that although insurers have been taking differing approaches, they are all responding positively.

Therefore there is a growing expectation that the broader insurance industry will suffer significant losses in 2020 as the “aviation industry remains in a state of distress”.

Gallagher’s number one focus has been to help aviation clients manage their business through this unprecedented situation.

Looking ahead

Elson warned: “Looking ahead, with the pandemic continuing to impact clients, insurers and brokers alike, the aviation insurance sector looks set to remain a challenging trading environment.

“It is imperative that all parties continue to engage and work collaboratively to overcome the hurdles that arise so that we arrive together, post-pandemic in a healthy position.”

Gallagher states in the report with regards to aviation insurance pricing in Q3 that there has been “little change in market conditions with definitive upward rating movement across most business segments” and this is in line with what it has seen throughout the year.

The broker said that looking ahead Q4 will “undoubtedly [be] the most significant transactional period for the aviation insurance market”.

This is because it is a time when a substantial portion of the world’s airlines and aerospace accounts renew.

“With this in mind, all indications point to a continuation of the current market hardening,” the report stated.

Although Gallagher maintains that it will be some time before the “true impact “of the Covid-19 pandemic on the insurance market is understood. Claims have not been as high as initially feared, the report said industry opinion suggests that “Covid-19 will represent one of the worst ever years for the insurance market.”