For over 50 years, HDI Global Specialty has been a trusted partner to the aviation industry, working with customers to support innovation and overcome significant challenges. During this time, increased levels of automation and an exponential rise in air passenger traffic have fundamentally changed risk and challenged the insurance industry.

Looking ahead, the next 50 years are likely to be just as challenging, if not more so. Climate change and technology will drive big changes in consumer behaviour, regulation and innovation, such as the development of electric powered flight and urban air mobility. Advances in technology will also have important implications for safety and liability, as well as business continuity with a growing reliance on data and IT systems and infrastructure.


General aviation

Technical innovations will be most felt in General Aviation, where the development of drones and electric powered flight are already well underway. Commercial drones are beginning to perform tasks traditionally fulfilled by light aircraft and helicopters, such as surveying pipelines and powerlines, search and rescue and crop spraying. Innovation is also changing the passenger and light aircraft market, with the emergence of small autonomous passenger vehicles and electric aircraft.
However, experience shows that innovation can have unexpected consequences. Repairs to composite materials and modern jet engines, for example, are more complicated and expensive to carry out. Innovation can also result in large product liability and business interruption – as the two fatal crashes and subsequent grounding of the world fleet of Boeing’s 737 Max shows.

 

“As innovation in the aviation sector increases – as we now see with drones and urban air mobility – the challenge will be to maintain the industry’s record of safety and reliability. Our skies and airports are growing more crowded with every year, while the complexity and sophistication of technology is increasing at a fast pace,” says Dr Alexander Malik, Managing Director – Germany.

Innovative solutions

Conscious of the fast-paced change in the aviation sector, insurers are constantly looking to develop innovative insurance products. For example, we have developed specialist insurance to meet growing demand from the rapidly expanding market for commercial unmanned aerial vehicles (UAVs), as well as powered gliders and ultralights.

Another area ripe for innovation is the shared economy. Aircraft ownership in the General Aviation space has declined in markets like Germany with a trend towards shared ownership, private chartering and hire. This trend is likely to continue with changing consumer behaviour, and will require new types of insurance. We have already been developing pay-as-you-go insurance and invested in our online distribution capabilities and pricing models, which can deliver insurance for drones and General Aviation risks within minutes, with improved service and at an affordable price.


Consistent partner

Following almost two decades of falling prices, last year saw a correction in aviation insurance rates, including for General Aviation risks. At a time when other insurers are retrenching, we are investing in developing our offering with new teams in Canada and Australia, as well as strengthening existing expertise in Germany, Sweden, and the United Kingdom.

“We are always there for our aviation customers. The insurance market is in an upwards cycle and many of our competitors have withdrawn from the market. But we do not step out of the market when the going gets tough. For 50 years we have been a constant and reliable partner for the aviation industry,” says Malik.


Dynamic, empowered and committed

In periods of change, a dependable insurance partner is essential. At HDI Global Specialty SE, we value long-term partnerships and, over the decades, we have built many long-standing client relationships – with national organisations such as Swedish Royal Piston Association and all Nordic Glider Associations, for example, and German hang-gliding and paragliding association DHV has been a client since it was founded in 1979. We also seek to actively engage with customers, insuring some of the world’s biggest airlines, airports and manufacturers, as well as private operators, drone operators and flying clubs.

HDI Global Specialty SE is a global insurer with a local presence. As a leading industrial insurer, we have the knowledge and capabilities to take on the big challenges and come up with innovative solutions. However, local expertise and flexibility are equally important, which is why we empower local teams to meet the needs of regional markets and make swift decisions. We also value industry and technical expertise, and many of our teams include pilots and engineers.

“As a global specialty insurer, we combine broad technical experience with industry specific and local knowledge and expertise, delivering risk management advice and innovative solutions to our clients. Our key values have made us a reliable partner to the aviation industry for over 50 years and will serve us well as we continue to support clients through what is likely to be a period of change and innovation ahead,” says Malik.


Global insurer, local expertise

Our Aviation specialists around the globe shared their views on innovations within the industry.

Jamie Bowes, Head of Aviation – Australia looks forward to our online platform enabling portfolio expansion and focus on complex risks:

“Here at HDI Global Specialty – Australia, the dynamics regarding the placement of insurance are changing. Utilising a bespoke General Aviation Platform, we will be able to expand our existing portfolio into areas of the General Aviation market previously deemed uneconomical to serve based on volume versus generated premium. By combining risk intelligence with process automation, the online platform will simplify the underwriting of these smaller risks, which in turn enables our underwriting team in Australia to focus on larger complex risks that require full attention to detail.“

Niklas Egeltun, Head of General Aviation – Sweden - Proactive relationships, national associations: Reinvesting premium and time into safety

“General Aviation consists of many small communities; it could be Norwegian gliders, Finnish pistons, or Swedish balloon operators. With the number of both private pilots and smaller aircrafts decreasing, it is as important as ever to be listening to each insured, and create solutions to our common benefit.

‘Safety first’ – an expression used by many these days, but always equally important to pilots. Anything that gets up in the air, eventually has to come down. In the wake of Safety Management Systems (SMS) being used in commercial operations, we are also actively supporting national associations to implement similar safety systems on flight clubs and private individuals. This is done by giving safety presentations whenever possible, sponsoring our own Swedish glider competition (“HDI Safe Skies”), and by giving a discount to those persons or clubs that have implemented the safety systems into their organisations.

This has been a very successful way to strengthen our own position as an insurer in each segment. Furthermore, members of the associations benefit both in safety and monetarily from their memberships, and each association will have a better safety track record and, in turn, gain more positive members. It is a win-win concept where we as the insurer have a constant feed of information on where the industry is going.”

Stephen Madden, Aviation and Space Underwriter – UK looks forward to benefits arising from increased adoption of Safety Management Systems:

“Safety Management Systems (SMS) are already implemented by many commercial operators worldwide, however, General Aviation operators have up until now been slow to implement a fully integrated SMS due to a number of factors including cost and lack of knowledge and resources.

I expect to see an increase in the adoption of well-structured and implemented SMS for General Aviation operators, which will bring a myriad of related benefits:

1. Improved safety culture, which should reduce the number of accidents which will improve the company’s overall safety record.
2. Positive impact on the company’s reputation helping to build trust with customers and employees.
3. Lower insurance premiums due to embedded safety culture and improved loss record.

Safety management systems are evolving all the time with new technological advancements in this field. It will be exciting to see how the industry will utilise and take advantage of SMS in the future.”

*This blog was written prior to the COVID-19 pandemic. The virus has and will continue to impact the aviation industry in the foreseeable future. We are preparing a follow-up blog to update our readers with our predictions and views in light of this unprecedented situation.