Despite the pandemic, the general aviation market is thriving. International flights may have been grounded, yet small regional airlines and commercial fleets have continued to serve remote communities and provide essential services, from rescue services to vaccine delivery.

While ‘business as usual’ has returned to the general aviation sector, the insurance market continues to undergo change. The past two years has seen a progressive hardening of the general aviation insurance market, with price increases and coverage restrictions. A number of insurers have withdrawn from the market completely, while others have reduced their risk appetite and cut back on capacity/lines of business.

According to Marsh, general aviation rates increased by 20% to 50% in the fourth quarter of 2020, and prices are expected to rise further in 2021, albeit at a slightly slower pace than 2020. Price increases, while not welcome, have been necessary. Aviation safety has improved markedly in recent decades, but claim severity has increased markedly due to higher repair costs and rising liability, while competition has driven premiums to unsustainable levels.

A beacon of stability

While other insurers have retreated, HDI Global Specialty (HGS)’s commitment to general aviation has been steadfast. HDI Global Specialty continues to grow its general aviation business, insuring anything from drones and micro-lights through to the largest airliners and manufacturers. We are the insurance partners to four of the largest aerosport associations in Germany and are a leading insurer of corporate and commercial fleets, with customer relationships spanning more than 50 years.

HGS has maintained consistent levels of capacity and coverage for general aviation, seeking to moderate price increases and maintain coverage levels. We have been able to provide stability and consistency of cover for customers at a time of volatility in the insurance market, and despite Covid-19. This is reflective of our long-term approach to the general aviation market. By managing our costs and offering a quality product and sustainable prices, we are able to shield our customers from the volatility of the current insurance market.

In fact, we have continued to invest and expand our general aviation insurance offering, adding to teams in Canada, Australia, and Europe. We have continued to streamline our operations, investing in more efficient technology. For example, we are working to roll-out our Aviation IQ general aviation quote and bind platform for brokers in Europe, having successfully launched in Australia.

Supporting e-flight

Our commitment to the general aviation sector also extends to supporting innovation. Perhaps the most exciting development in general aviation is the emergence of electric and autonomous flight. Over the next 20 years, electric flight is likely to become mainstream, with potential applications in air mobility, commercial and private general aviation.

Drones are already entering commercial fleets, in some cases replacing the work of light aircraft and helicopters used by emergency services, agriculture, and energy and engineering sectors. Commercially viable electric light-aircraft are also taking off, such as the two-seat all-electric trainer Pipistrel Alpha Electro, which became the first electric aircraft certified as airworthy by the Federal Aviation Administration (FAA) in 2018. A host of start-ups and traditional aerospace companies are developing and testing electric planes of varying designs and sizes.

Perhaps the most tangible area of development is with small urban electric air taxis, or Electric Vertical Take-Off and Landing (eVTOL) aircraft. German air mobility manufacturer Volocopter, for example, recently launched the VoloConnect, a four-seater electric flying taxi capable of inter-city flights. The company already produces the two-passenger VoloCity, which is currently in the certification process with European Aviation Safety Agency (EASA) and the Federal Aviation Administration (FAA). The VoloCity has been trialled in Dubai and Singapore, and the company hopes to run air taxi services in US and Asian cities in coming years.

Electric powered flight is also making headway in aerosports. The planned launch of Air Race E in 2022 will see the first ever all-electric airplanes compete around an oval circuit, reaching speeds of 400 km/h. Electric microlight and ultralight prototypes have also been developed, and are likely to become more relevant to the aerosports space in the future as fossil fuels are eventually phased out.

De-risking innovation

The transition to electric power is not without challenges. Regulation and liability regimes typically lag behind technical developments, although recently implemented EU ‘risk-based’ drone regulation could pave the way for electric and automated flight into European airspace. Under the new rules, drone delivery operator, Manna Aero was recently issued the first ever ‘light UAS operator certificate’ by the Irish Aviation Authority (IAA) and EASA.

In addition to regulatory developments, electric powered flight involves prototype risks. Lithium-ion batteries, for example, are known to combust or explode when damaged or exposed to high temperatures. In January 2020, an all-electric prototype from Eviation caught fire during ground testing at an Arizona airport. The fire was reportedly linked to overheating lithium-ion batteries.

Insurance is an important facilitator of innovation. Electric and autonomous flight are challenging new areas of risk for insurers, lacking in the historical data typically relied upon to assess and price risk. By working closely with clients, HGS is able to compensate for the lack of data with experience and expertise, helping empower innovation in the general aviation sector.

Committed partner

Whether it’s supporting innovation or insuring everyday risks, the general aviation market deserves reliable and committed insurance partners. We have supported the general aviation market for over 50 years, and by managing our costs and pricing risks sustainably, we intend to remain a trusted partner for many years to come.