The past year has been an extremely difficult time for the aviation sector and the insurance market. After more than a decade of soft market conditions, a number of insurers have withdrawn from the sector or reduced their appetite for certain risks. However, at a time of unprecedented uncertainty, our commitment to the aviation insurance market remains steadfast.

“Despite the devastating impact of the pandemic, HDI Global Specialty views the aviation sector with optimism. We continue to invest in the aviation insurance market in the belief that better times are ahead. In the past two years, we have made considerable investments in data and analytics and in automated quote and bind systems, as well as growing both geographically and in terms of product offerings and expertise,” says Mats Westerborn, General Manager of Aviation in Scandinavia.

“We have remained true to the aviation market and continue to expand our offering at a time when many other insurers have not. We have kept to our strategy and held our course, providing a consistent service to aviation brokers and clients,” he says.

Brighter skies ahead

The aviation industry has had one of its toughest years ever with global airline passenger demand down a record 66% last year, according to the International Air Transport Association (IATA). However, despite the impact of the coronavirus pandemic, there are areas of growth and stability in the aviation sector.

The general aviation sector has seen strong demand for private jet use, while regional airlines and commercial light aircraft have continued to provide an essential service. Even in the airline sector, there is an expectation that vaccination programmes will fuel rising demand for air travel later this year. In a sign of confidence, a number of airlines are placing orders for new fuel-efficient aircraft. Rebounding air cargo volumes are another bright spot, as airlines increased dedicated freighter capacity (20% increase in 2020) to compensate for reduced passenger schedules.

“Despite the ongoing challenges of the pandemic, it is not all grey skies for aviation. We have a strong belief that demand for air travel will rebound, and that we will continue to grow our business along with our clients. General aviation has also held up well. Regional airlines are the lifeblood of remote areas in countries like Canada and Australia, while demand from commercial light aircraft has been strong,” says Westerborn.

Investing for the future

Despite the pandemic, we have continued to invest in our aviation offering, expanding both in terms of product and geographical footprint. In addition to the established business in Sweden and Germany, we have almost tripled the size of the aviation team in London and continue to build out our local presence in Canada and Australia.

“The aviation team in Australia has grown from just one to five people in a little over two years. We now have full-service capabilities in both underwriting and claims as we look to firmly establish ourselves as a market leader within the region. We differentiate ourselves by being a global market but with a local empowered approach,”

says Jamie Bowes, Head of Aviation in Australia.

Stepping up to support clients

We continue to invest in our aviation offering as we look for ways to further support brokers and clients. For example, we continue to offer ‘loss of licence’ insurance in Europe, where a number of insurers have withdrawn capacity. We have also expanded into aviation deductible insurance, which protects clients’ balance sheets against the costs of damage and repair that would otherwise fall within the insured’s retention layer.

“Aviation deductible insurance is a new line of business for HDI Global Specialty. It is just one example of where we have stepped into areas where capacity in the market has shrunk in order to support clients and brokers,”

says Martin Jackson, Head of Aviation & Space in London.

A number of insurers in the London market have also pulled back from general aviation – such as the market for light aircraft - due to the higher costs of distribution relative to the premium, explains Jackson.

“We have chosen not to walk away from clients but instead to invest in systems and technology to help reduce the costs and ensure the product remains viable,”

 he says.

Consistent and committed

For over 50 years we have been providing insurance to the aviation industry, with some client relationships spanning over three decades. Over this time, we have become an established player in the aviation market, with a reputation based on reliability and flexibility.

“No insurer can compare to us in the past two years in terms of investment in aviation. We have seen good growth in our aviation business, which now accounts for around 10% of HDI Global Specialty SE’s total annual specialty premiums, This demonstrates our investment and belief in the aviation sector,”

 says Jackson.

HDI Global Specialty’s long-term approach to the aviation market has insulated the group from volatility affecting other parts of the insurance sector, explains Jackson. “Our consistent performance ensures the support of senior management and means that local underwriters are not under the same short-term pressures and constraints as some other large insurers. In addition, we are not beholden to Lloyd’s supervision, and are therefore not restricted as many currently are within the Lloyd’s franchise. We hold the key to our destiny,” says Jackson. 

HDI Global Specialty also believes strongly in empowering its underwriters in their local markets, explains Jackson. “HDI’s decentralised structure provides for flexible and agile underwriting. Underwriters are able to draw on the resources and expertise of a global insurance group, yet are empowered to respond to the needs and opportunities of regional markets. The autonomy of our underwriters, who can adapt quickly to changes in the market, is one of our key strengths,” he says.

Underwriters in local markets are able to tap into the group and address cross-border insurance needs, according to Michael McEwen, Head of Aviation in Canada. “Our local aviation offices co-operate to write cross-border accounts. We are able to write matching lines in different geographies and offer clients global support, which is one of the unique features of our aviation offering,” says McEwen.

Dynamic agile partner

Our long-term commitment to the aviation sector is also evident in our investment in supporting innovation. The aviation sector is embarking on a major period of innovation and transformation, with a new generation of fuel-efficient planes, drones, and electric air taxis, as well as growing automation in airports, including virtual air traffic control system.

“We have been working closely with clients as they innovate, facilitating the testing and implementation of new technologies, such as electric passenger drones and rescue drones,” says Alexander Malik, Managing Director of Aviation in Germany. We have actively worked together with clients on electric aircrafts and remote towers for air traffic control.

As a leading specialty insurer, HDI Global Specialty has also been investing in technology solutions to enhance service and product delivery to brokers and aviation customers. In an industry that often lacks innovation, our Aviation IQ platform uses intuitive algorithms to speed up and simplify the quotation and binding of general aviation insurance for brokers. Following a successful launch in Australia, Aviation IQ is due to be rolled out across our aviation teams, marking the future path for our commitment to the aviation sector.

Visit our Aviation & Space page for more information.