A recent report by Allianz Commercial reveals that crashes and collisions account for a significant portion of aviation insurance claims over the past five years, totaling $15 billion. According to the analysis of 32,000 industry claims from 2019 to 2024, these incidents represent 63% of the total value of claims and a third by number. Faulty workmanship or defective products contribute to 22% of the claims, leaving other causes such as natural catastrophes, machinery breakdowns, and fires to account for the remaining 15%.
Tom Fadden, Global Head of Aviation at Allianz Commercial, highlights the unique challenges facing the aviation insurance market, which has seen disruptions due to the pandemic and ongoing geopolitical tensions. Despite these challenges, the aviation sector continues to grow, with gross written insurance premiums (GWP) expected to reach a 20-year high of over $8 billion in 2024.
Repair costs for aircraft have surged, driven by increased labor rates, rising costs of parts, and the shift towards next-generation aircraft. This trend, combined with a shortage of skilled mechanics, is expected to impact future claims. The shortage could lead to longer repair times and a reliance on less experienced mechanics, raising concerns about potential safety risks.
Runway excursions and ground handling incidents have also been on the rise in 2024, with weather issues and technical problems contributing to these events. On a positive note, “air rage” claims have significantly decreased since the pandemic, although there has been an uptick in damage claims related to the growing demand for helicopter travel.
The aviation industry continues its efforts towards sustainability, with initiatives like Sustainable Aviation Fuel (SAF) and the development of electric vertical takeoff and landing (eVTOL) aircraft gaining traction. However, Allianz experts believe that new regulations, such as the European Union’s Corporate Sustainability Reporting Directive (CSRD), could play a crucial role in advancing the industry’s green transformation by mandating comprehensive environmental, social, and governance (ESG) reporting.
Adam Tozzi, Head of Underwriting Global Tasks and Processes, Aviation, at Allianz Commercial, emphasized that standardized reporting could boost investor confidence and drive further improvements in sustainability practices across the sector.
As Allianz Commercial approaches the 110th anniversary of issuing its first aviation insurance policy, the company remains focused on managing volatility, risk selection, and maintaining long-term partnerships with its clients.
SOURCE: Allianz Commercial
