In the Plane Talking Q4 2023 report authored by Philip Stafford, Senior Partner, Aerospace at Gallagher Specialty, insights into the General Aviation (GA) sector’s performance during the fourth quarter of 2023 were explored, shedding light on key trends that may influence the industry in 2024.
As the year concludes, indications suggest a shift in the resolve of General Aviation underwriters to maintain existing rating levels. The sector, perceived as more benign post-‘Black Swan’ events in other aviation segments, witnesses a surge in capacity.
Existing insurers are increasingly deploying larger participations to secure renewals amidst lower hull values and required liability limits, allowing buyers to stress-test pricing and explore market coverage.
Contrary to the Airline Insurance market, no single or spate of incidents predominantly drives market ratings. Despite ongoing losses consistent with post-pandemic aircraft industry recovery, significant claims result from ‘non-operational’ events like extreme weather (earthquakes, hail, snowfall). Older aircraft’s sustained high value and repair cost inflation contribute to the challenges.
Recent global events, including the Russian invasion of Ukraine and civil unrest in Africa and the Middle East, intensify the impact on General Aviation Hull War coverage. Rates surge across the board, with high-risk regions experiencing substantial increases in insurance spend. Reduced market capacity and risk aversion further complicate the situation, prompting buyers to seek cost-effective solutions.
As climate change takes center stage at COP28, the General Aviation industry remains relevant, particularly in responding to natural disasters like wildfires and floods. With increasing frequency and severity, these events affect regions not historically prone to such disasters. The sector, often at the forefront of defense and aid provision, sees a growing focus on using UAVs alongside traditional piloted aircraft to mitigate risks and drive cost efficiencies.
The diverse nature of General Aviation makes it challenging to predict outcomes for individual buyers. Factors such as loss experience, aircraft utilisation, mission profile, and geopolitical issues contribute to varying outcomes. Nevertheless, there is a discernible increase in insurers’ appetite to participate in this evolving sector, providing optimism for buyers in 2024.
