3 July 2025
Lead Lines: Turbulence Ahead Redefining Insurance Risk Management Strategies
The modern aviation industry is in the midst of a sweeping transformation. While the post-pandemic recovery is fuelling travel demand and reshaping fleet strategies, airline risk managers, underwriters and brokers find themselves challenged with a new set of emerging threats, but also operational inefficiencies.
On top of an airline's risk map, there are various risks that are not insurable or that are technically insurable, but market capacity is insufficient to provide a meaningful level of insurance cover. For example, these are: regulatory risks, reputational risks or simply financial risks such as fluctuations in fuel prices, currency exchange rates or economic downturns - the typical protection gaps.
In certain areas, however, insurance is one of the most reliable instruments to mitigate the financial impact of a risk that materialises.
Insurance was often seen as a necessary evil - a cost centre to meet regulatory and contractual requirements rather than a strategic asset. However, this mindset is changing as the broader value of well-structured insurance programmes as a business enabler becomes clearer.
Comprehensive cover ensures solid financial protection in case of major events such as accidents or liability lawsuits. This continuity is vital for airlines, not just for business survival but also to satisfy investor requirements and ensure public trust – it provides all stakeholders with confidence in the airline’s resilience.
Traditionally, aviation insurers and brokers have focused on physical losses and liability exposures. However, today’s risk universe has expanded, and risk managers account for new systemic exposures, which often transcend conventional aviation insurance lines.
From global health crises to supply chain vulnerability, and from cyberattacks to geopolitical tensions, the nature of threats faced by airlines is changing - and becoming more interconnected.
To remain relevant for the aviation industry, crucially, the commercial insurance market must respond to this rapidly evolving risk landscape to avoid the protection gap widening.
Risk managers cannot wait for the insurance industry to create solutions; they must develop more dynamic strategies, such as increasing self-insured retentions, using parametric structures and exploring other capital sources such as captives, alternative risk transfer (ART) models, insurance-linked securities (ILS) or structured reinsurance.
Captive insurance companies have already become a key strategic risk transformation tool for some players in the aviation industry. Captives allow for the retention of predictable layers of risk, manage volatility in hard markets and design bespoke, customised coverage for unique exposure or to cover non-traditional risks that the commercial market may exclude or price unfavourably.
Captives can reinforce resilience, reduce dependency on external insurers and align insurance with the business objectives of an airline. Well-managed captives also act as profit centres, earning underwriting income and investment returns, effectively converting insurance expense into airline profit.
Besides, as airlines look to integrate multi-line insurance strategies (discussed in the following), captives provide a flexible base structure to aggregate risks across various lines of insurance.
A Changing Landscape
A few examples of airline risks that have evolved over time and are now listed as top risks on most airlines’ risk maps:
Cyber
Today’s airline operations are deeply reliant on digital infrastructure. With digitisation embedded in nearly every operational layer - from avionics to booking systems - vulnerabilities abound.
Modern technologies, such as artificial intelligence (AI), are game changers; however, they also elevate the severity level of cyber threats. Thus, ransomware attacks, data breaches, and IT outages are now top concerns.
Yet cyber insurance remains underdeveloped in the aviation sector. Policies are fragmented, lack tailored language or adequate limits.
Insurers struggle to model cyber exposures for aviation, especially for system outages that could cause both financial loss and flight disruptions or that involve other IT suppliers.
Airlines and brokers should further collaborate closely with underwriters to eliminate these grey zones. Insurers need to intensify their efforts to work with the aviation industry on proper cyber risk quantification.
Supply Chain and Geopolitical Risk
These risks have already been monitored by airlines in the past; however, the dynamics have increased tremendously over the last decade and so these risks jumped up the list.
Disruptions and aftereffects of the global pandemic still have significant impacts on supply chains - limited availability of aircraft, spare parts and maintenance, repair and overhaul resources included.
The Russia-Ukraine war and the renewed instability and recent escalations in the Middle East region have spotlighted the risks of operating in politically unstable regions.
Besides, the implications of political decisions may have on global economies and financial markets are substantial and provide uncertainty for both the aviation and the insurance industries.
The chaos around tariffs is only one example. De-globalisation, as a consequence of increasing protectionism and nationalism, is another example that may have ripple effects on demand for air travel in the future.
It is probably not all doom and gloom, but for risk managers, it is extremely important to remain connected and to gather information on geopolitical risk from various sources to maintain anticipatory views that allow them to react before situations escalate.
To provide adequate coverage to the aviation sector, we feel that insurance needs to evolve to address, e.g. contingent business interruption, non-damage business interruption and political risk in a more nuanced way.
Looking ahead, what can we expect in the future?
Multi-Line
One of the topics we, at Albatros, have on top of our wish list is a growing market support of multi-line insurance programmes.
The fragmented approach to managing coverage via separate policies (e.g. hull & liability, war risk, cyber, directors & officers or business interruption) causes coverage gaps, redundancies and overlapping limits. This eventually leads to inefficient premium spending.
Rather than managing risks in silos (or lines of business) the integration of several policies under one multi-line insurance programme encourages a more holistic understanding of how risks interact.
For example, a ransomware attack that leads to flight cancellations has both cyber and operational liability implications - best addressed through a unified policy framework.
These structures avoid duplication and gaps, streamline renewals and may facilitate dynamic reinsurance structures. Multi-line bundling also improves operational efficiency as the consolidation of placements reduces administrative friction (as an insured, you may think of providing renewal information, exposures and values only once, for all lines of insurance coverage).
As this structure would also allow crossline risk sharing, insurers can offset underwriting exposure across various business lines, offering more competitive pricing or more capacity in volatile risk sectors.
Another benefit for both insureds and insurers is simplified claims management as multi-line programmes streamline loss adjustment and avoid inter-policy disputes.
A single point of coordination allows faster and cleaner settlements. This seamless experience is especially valuable in major loss and crisis scenarios when rapid indemnification and insurance support are critical.
Finally, multi-line structures create scale that could reduce premium spend for insureds and, on the other hand, provide a higher portfolio stability and clearer risk transparency to the benefit of global insurers and reinsurers.
Multi-line is certainly no one-size-fits-all model, and in reality, it does not work for every line of business. Brokers will have to play a vital role in designing bespoke programmes - ensuring alignment between the insured's risk appetite, operational footprint and strategic goals and on the other hand, insurer’s requirements, capacities and regulatory environments.
It requires disruptive change in the insurance and reinsurance market and a transformation from the traditional line-of-business view to a more holistic approach: the starting line should be the insured‘s risk profile, not the insurance product.
This is ambitious and not necessarily for everyone, as the level of customisation is particularly valuable for large or multinational corporations with complex risk profiles, but smaller companies will also benefit.
Digitisation
Another hot topic ranking quite high on our wish list is processes and technology. Most aviation insurance renewals are still burdened by manual spreadsheets, static risk presentations and various broker-insurer feedback loops. Also, premium calculations, policy wordings, claims notifications and surveyor reports suffer from a lack of standardisation and automation.
This leads to delays, increased operational costs and avoidable disputes.
Technological innovations, such as web-portals, digital submission platforms and modern API interfaces, offer ways to improve accuracy, reduce turnaround time and free up resources.
Efforts to digitise aviation insurance processes are underway but remain slow and fragmented due to legacy IT systems and inconsistent adoption of standards across lines of business and regions, among other things.
Risk Modelling Limitations
These days, airlines collect vast quantities of data, from flight telemetry to maintenance records. However, much of this data remains underutilised in underwriting and pricing decisions. Insurers often rely on industry averages rather than real-time, airline-specific risk profiles.
A cultural shift toward improved data integration could allow for dynamic pricing and more accurate risk assessments.
Claims and Dispute Resolution
The claims process is one of the most important insurance functions, but at the same time, one of the most frustrating pain points: complex liability chains, varying jurisdictional laws and misaligned expectations often result in protracted claim settlements and double reserving.
Emerging technologies like AI-assisted damage assessment, predictive tools for early claim reserving and digital claims prioritisation and tracking tools are beginning to address these issues, but are slowly taking data quality issues and regulatory compliance concerns into consideration.
It seems obvious that the level of automation for straightforward claims will be higher than for complex claims, which need more specific technological support. It is likely that the human element remains paramount in such complex cases, to ensure that they will be handled appropriately and in line with a customer-centric approach.
Another area of inefficiency is the claims collection process on co-/reinsurance programmes if claims payments have to be collected individually from various parties or several parties have to agree to a claim payment that has already been approved by the leading insurer, finally leading to delayed payments to insureds or loss payees.
In today’s interconnected world, where financial markets trade millions of dollars within fractions of a second, such insurance processes are outdated and need to be optimised sooner rather than later.
Clearly, the implementation of technology is a time-consuming, sophisticated and ongoing process - but without broader systemic changes, the digitisation progress in the insurance world will remain incremental, and there is a risk that the market may not take full advantage of such innovative technologies.
Let’s make sure that this does not happen.
All of this requires a lot of change, and for sure, it is easier said than done.
The ongoing discussions we have witnessed over the last two years regarding the automatic termination of war insurance cover following a detonation of a nuclear weapon have painfully demonstrated the challenges for the market to change.
Bearing in mind that war liability cover is essential for an airline to operate, this topic has made its way up to the attention of the board of directors of many airlines, as those automatic termination wordings put airlines’ business continuity at risk.
Although underwriters and brokers have invested a lot of energy and resources, it is hard to understand that the market has not been able to agree on a new wording standard so far.
A wording that allows airlines to continue to operate after a nuclear detonation – if, where and when it is safe to fly… (credit to those underwriters that have been instrumental and supportive in developing alternative solutions).
In short
Whether we are risk managers, underwriters or brokers, we are all in the same boat and need to work together as partners to ensure that the fundamentally positive image of insurance as a business enabler does not turn into the opposite.
The mission is clear: evolve or be left behind.
This requires more than a market shift. It’s a critical transformation - one that demands vision, willingness to experiment, collaboration, and the courage to chart a new course.
Being open-minded and listening to the ideas of the next generation of talent will be key to ensure that the aviation insurance market will still be an inspiring, fascinating and thought-provoking environment in the future.
One that remains to be part of the solution, not of the problem.
The mission is clear: evolve or be left behind.

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Author
Florian Pawelzick
Senior Director, Senior Director Aviation Insurance
Albatros/Lufthansa Group
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.