Jul 6, 2021

Allianz lists insurance challenges of post-COVID aviation

Allianz
Insurance
COVID19
aviation
3 min
International financial services expert Allianz has published a new report on the insurance challenges facing aviation as it recovers post-COVID

Titled ‘Aviation trends post-COVID‑19: Nine issues to watch as the industry prepares for takeoff’, Allianz’s report contextualises the devastating impact of the pandemic on the global sector.

For instance, in April 2020 (the height of the first major lockdown) approximately 66% of all commercial planes sat idle and there was a 90% year-on-year reduction in passenger traffic. 

Source: Allianz

Now, thanks to the success of international vaccination programmes, flights are beginning to recover some of their pre-pandemic momentum. However, Allianz urges carriers to exercise caution and careful consideration of the challenges that lie ahead:

“The grounding of worldwide fleets during the pandemic has represented an unprecedented event for the aviation industry,” said Dave Warfel, Regional Head of Aviation. 

“Challenges will no doubt emerge as the industry readies for takeoff again. Although it is hard to predict exactly what shape the aviation industry will return, one thing is for certain – it will have changed.”

Five insurance risks

Allianz’s report enumerates five factors that have the potential to cause insurance-related issues as flights begin operating again:

#1 Pilot “rustiness”: An understandable consequence of massively reduced flight requirements, many pilots may feel unpracticed (or “rusty”) at their job, particularly on smaller aircraft that are chartered to smaller or more obscure locations for sightseeing.

  • Solution: Airlines should invest in training programmes for pilots returning to service following an extended absence.

#2 Rising “air rage”: Research from the Federal Aviation Administration found that by June 2021 there had been 3,000 incidents of passenger disruption to a flight. In previous years, the industry would generally see around 150 such occurrences.

  • Solution: Allianz considers inflated passenger disruption as a consequence of COVID safety measures, i.e. wearing a mask. It’s possible that frequency will drop as restrictions change, but the insurer cautions airlines to avoid actions that could be interpreted as ‘discriminatory’. 

#3 Damaged fleets: Following a long period of inactivity, during which they have doubtlessly been exposed to various weather conditions, fleets of aircraft may not be service worthy.

  • Solution: Careful checking and maintenance of the craft are essential; the cost of a large insurance claim could dwarf the sum required for maintenance.

#4 Pilot shortage: Despite a year of reduced service the aviation industry is actually considerably understaffed, with an additional 250,000 needed over the next 10 years. Therefore, pilots being assigned to aircraft they’re not familiar with or simply overworked can cause significant insurance risk.

  • Solution: “[There] is a lot of industry expertise and resources available to assist airlines in building proper fatigue management systems,” said Warfel.

#5 Next-gen aircraft: The pandemic accelerated the decommissioning of older and larger aircraft as the industry shifts towards newer and smaller models. While these are safer and more efficient they are also more expensive to manufacture. 

  • Solution: Airlines must weigh the balance in order to prevent future claims costs being untenable. 

COVID-19 fails to inflame insurance risk

Notably, Allianz states that COVID-19 itself has actually caused very few insurance claims within aviation directly. Almost invariably it has been global socio-economic conditions in reaction to the pandemic that have damaged the industry’s profitability.

“As a result of the significant reduction in commercial airline travel during the pandemic we saw fewer attritional claims than we would during a typical year,” states Cristina Schoen, Global Head of Aviation Claims. 

“However, the insurance sector was not immune to larger losses during the course of the pandemic, with different regions seeing tragic accidents, emergency landings, and hull losses to name a few. As air travel begins to return to pre-pandemic levels we expect claims volume to rise accordingly.

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Jul 23, 2021

The Ultimate FinTech & InsurTech LIVE Event

Fintech
Insurtech
live
event
3 min
Where innovation meets implementation, coming to you live from London

Whether you attend virtually or in person, it will give you the chance to network with C-Level executives, share ideas with industry pioneers, and walk away with actionable, unique insights to bolster your business and career. 

By the end of the three-day event, you will have seen the latest innovations in both FinTech and InsurTech. You will be able to see how companies like yours are tackling the problems that keep you up at night, engage in a community that many struggle to access, and share your ideas with people who care as much as you do. 

Order your tickets now to take advantage of our limited-time Early Bird offer. 

 

How can you attend?

 

In the post-Covid era, not everybody wants to travel for events. So FinTech and InsurTech Live will be completely hybrid. That means you can attend the event in person or virtually - with no disadvantages to people who don’t make the trip to the Tobacco Dock. 

 

In-person

 

FinTech and InsurTech Live is happening in the Tobacco Dock in London, a ten-minute walk from Tower Bridge. For more information on the location, click here

 

Virtually

There’s no need to worry about missing out if you choose not to attend in person. You can still absorb all the information, interact with other attendees and enjoy the conference experience on our virtual platform. 

There will be live feeds from all of the stages (also available on-demand after the event) as well as virtual networking areas. So not being able to travel is no reason to miss your chance to gather with the industry.

 

What’s on the agenda? 

 

With keynote addresses from global leaders, dynamic roundtable discussions, and extensive networking opportunities, FinTech & InsurTech 2021 will expand your network, deliver insight, and enhance your organisation’s reach. 

Across the three-day event, a number of relevant topics and trends surrounding fintech and insurtech will be discussed. 

 

  • Tuesday 14 October - Diversity and Inclusion
  • Racial equality (11:30 am)
  • Supplier diversity (12:00 pm)
  • Sustainability (12:30 pm)
  • Women in fintech (14:30 pm) 
  • Wednesday 15 October - Challenger and neobanks 
  • Cashless society (14:00 pm) 
  • SMEs (14:30 pm) 
  • Thursday 16 October - Adopting new-age digital solutions in the insurance industry (06:00 am)


Influential executives from around the world will give their insights and professional experiences surrounding these topics, allowing you and your company to leave with valuable information. 

The topics surrounding digital transformation should certainly be on the mind of every executive after the events of 2020 and how we all had to adapt to meet customer’s needs. Creating a digital roadmap is key, and making changes to the traditional ways of working. Customers now have new needs, and keeping up to speed with the digital changes, whilst also doing so safely, are important. 

If you want to get leading perspectives on the future of fintech and insurtech, you can purchase your tickets here.

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