04 July 2024
General Aviation Insurance
Market Update Q2 2024
As Q2 comes to a close, rates continue to soften due to ample available capacity, despite considerable loss activity in the General Aviation sector in 2024.
In this article, we explore some of the factors currently affecting the rating trends across the General Aviation sector and highlight some of the more significant losses and their impact to the insurance market.
Hull & Liability rates continue on a downward trend
As was previously predicted in this publication, General Aviation Hull and Liability rates have continued to soften through Q2 of 2024. This trend has been driven by increased capacity from new entrants and an increased appetite for the class, from those who, historically, focussed their expertise and capacity in the Airline and Aerospace Infrastructure space.
The reduction in available premium income is forcing Insurers to either revise their estimates for the year or to offer larger percentage shares of any given risk, to minimise the impact of premium reductions.
This is certainly good news for general aviation insurance buyers, at least in the short term, but it remains to be seen if this is a sustainable situation, in the medium and long term. Much will depend upon the frequency and severity of losses in the sector, which we will touch upon, later in this article.
Managing General Agents (MGAs) have also played a significant role in the increase of available capacity in the General Aviation sector. For example, in May, Agile Underwriting Services, an Australian-based MGA, announced that it had received permission to underwrite at Lloyd’s, through Syndicate AUS 2427. In June, another Australian-based MGA, Catalyst, announced that subject to regulatory approval, it was being acquired by Chubb, who will provide 100% of the capacity behind the MGA. These developments will inevitably increase available capacity in the region, putting further pressure on the General Aviation Hull and Liability rating.
General Aviation claims and aviation safety
The General Aviation market continues to record a steady flow of daily incidents. General aviation is one of the most dynamic and diverse sectors of the aviation market covering a broad range of aircraft, operations and missions around the world. General Aviation losses and claims are therefore extremely varied. Below we highlight just a small selection of recent losses recorded in 2024:
Skyline Helicopters – Terrace, British Columbia, Canada – 22nd January 2024 - Whilst performing Heli-Ski operations, an Agusta A119 Koala was involved in a crash into terrain. Tragically, there were 4 fatalities, including 2 Italian heli-ski tourists. It is widely understood in the industry that all heli-ski customers sign a waiver, prior to arriving at their ski lodge. That said, it has been several years since such a waiver has been tested in a court of law and all interested parties in the industry will be watching this case, to see how it concludes.
Northwestern Air - Nr Fort Smith NWT, Canada - 23rd January 2024 – A Jetstream aircraft carrying 5 passengers to a Rio Tinto-owned mine, crashed into terrain, soon after take-off. Six of the seven on board, died, with one passenger suffering significant injuries. The Canadian Transport Safety Board is yet to publish its report.
Bristow Group - Norway - 29 February 2024 - A search and rescue (SAR) S-92 helicopter crashed off the coast of Norway, which resulted in one fatality and five crew injuries. The cause of the accident is not yet known.
SkyJet Elite - Ingalls Field Airport, Virginia - 10 March 2024 - A twin-engine IAI Astra 1125 crashed when it came down short of the runway as it was attempting to make an emergency landing. Five people died in total, including the CEO of a private jet company and pilot training school. Virginia State Police are investigating the crash alongside the Federal Aviation Administration and National Highway Traffic Safety Administration.
Eppley Airfield, Omaha, Nebraska – 26th April 2024 - Four Hangars and some 32 General Aviation aircraft were damaged or destroyed by a tornado. Although the quantum of the loss is yet to be determined, a number of high-valued Cessna Citation jets and other aircraft sustained significant damage. The largest GA operator on the airfield, Jet Linx, saw its 30,000 square-foot hangar ripped open, causing extensive damage to the building and the aircraft stored therein.
National Police Colombia – Colombia - 29 April 2024 - An MI-17 army helicopter carrying supplies to troops crashed in a rural area in northern Colombia, killing nine soldiers on board.
Iran – 19th May 2024 - A Bell 212, carrying the Iranian President and several high-ranking Iranian government officials, crashed, killing all of those on board. It was reported that bad weather could have been the decisive factor as foggy conditions hampered the search and rescue attempt.
Malawi - 10 June 2024 - A Dornier 228-202K, carrying the Vice President of Malawi and nine other government officials, crashed in Chikangawa Forest Reserve, killing all of those on board. The President of Malawi has called for an independent investigation into the crash.
The incidents just mentioned are just a small snapshot of the varied losses the General Aviation sector experiences on a day-to-day basis. Overall, losses are widely recognised to have increased following the industry’s recovery, post-pandemic and General Aviation insurance claims are also increasing in severity, driven by higher values of aircraft, increased repair costs and rising liability awards.
In such a dynamic and diverse sector, insurers are continually assessing their portfolios and exposures. Certain operational sub-sets such as rotor-wing operations and corporate jets are under particular scrutiny due to the typically larger aircraft values and higher liability limits. The growth of emerging technologies like Advanced Air Mobility (AAM) and electric vertical takeoff and landing (eVTOL) aircraft, also represents a host of new exposures for General Aviation insurers to navigate. An increasingly volatile geo-political landscape and climate change-related extreme weather events have also led to an increased focus on ground accumulation exposure modelling.
The value of strong claims advocacy has always been important, but more so, during a time of significant market softening. Broker and market selection in a period of over-capacity is a key consideration for the sophisticated insurance/reinsurance buyer.
General Aviation outlook
As we enter the backstraight of 2024, it is hard to predict anything other than the trend of softening rates until the end of the year.
In 2024 we have seen several buyers taking advantage of multi-year policy periods offered by insurers who are looking to partner on a long-term basis, and we also believe that this is a trend that will continue.
Let's talk
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.