Aviation insurance in turmoil
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The rising premiums reported following the 9/11 trauma had not lasted too long. With 3.6 billion USD of premiums reported in 2003, the market concluded 2018 with 1.3 billion USD in contributions despite the increase of global fleet, number and value wise. Current premiums are not consistent enough to cover frequent claims, excluding the total loss of aircraft hull.
Weakened and more and more overlooked by insurers, the loss-making market since 2013 is now undergoing a second test.
The 737 MAX has compounded the market misery with an outstanding bill worth 20 billion USD and an aircraft manufacturer, namely Boeing, in turmoil.
Strained by a 20 year-long crisis, the aviation sector is agonizingly facing an event with exceptional magnitude, a virus that has grounded all global fleet, setting airline companies between 238 and 418 billion USD in future-lost earnings.
In order to recover, the market is required to highly increase its premiums, quite a daunting challenge in view of the current situation whereby insurers have to put up with scrambling customers at the edge of bankruptcy. The disappearance of airline companies, budget restrictions and shrinking fleets are certainly not going to help increase premiums considerably, either. The only way out is now to consider more stringent renewal terms with a decrease in risk exposure but finding insurers and reinsurers willing to embark on this adventure is never easy.