After the worldwide economic disaster of the last 18 months the aviation industry has had mixed fates.
Passenger airlines have been grounded or have operated minimal operations without profits, the majority having taken significant government loans. Coming out of government restrictions on flights, established airlines with legacy debt will have a battle to get back to profit-making, with competition from the financially secure low cost carriers and the dozens of start-up airlines without legacy debts.
Cargo airlines and Exec Jet operators adversely have not generally suffered during this period. In fact, they have seen increased demands to meet business and economic demands.
Now is a good opportunity to create a start-up airline, with a significant number of available aircraft with hugely reduced lease rates, freely available flight crews, and readily available finance, with investors looking at the potentials in this industry sector.
As regards the aviation insurance market, 2020 suffered relatively small levels of losses, as obviously the operations of commercial aircraft carriers were minimal. However, likewise underwriters experienced a significant level of operational fleet reductions and hence premium levels were reflective of this.
Aviation rate trends have been increasing dramatically for the last few years. With capacity reducing and underwriters seeking greater premium levels for smaller use of their capacities, the role of an insurance broker has its challenges.
However, it also presents great opportunities for brokers to demonstrate how imaginative and resourceful approaches to risk placement can make a difference.
I joined Consilium on 10th May 2021 tasked with driving forward Consilium’s niche specialisms and in particular their aviation capabilities, and have already been impressed by the team’s attitude and ability to satisfy client demands and create innovative solutions.
The culture of being an independent global (re)insurance broker means the team go to great lengths to understand client needs, and then have the flexibility to work with the client according to those needs.
One area of aviation so far unmentioned is General Aviation. The insurance market has reacted to the opinion that rates have been insufficient for the last decade by demanding catch up of premiums. Rates and premiums have jumped, with large increases not being uncommon, but also greater hikes effecting distressed risks. In fact, a fair number of aircraft owners have struggled to find insurance at any price. It was always said that every risk had a price, however with the smaller challenging risks, we have seen brokers unable to complete placements and working with us to utilise our capabilities and aide their client’s dilemmas.
With market knowledge and capability to think outside the box to provide insurance solutions, I look forward to working more with our Specialty team to strategise affinities, produce growth and devise new insurance products.
Consilium has a central hub for all Specialty lines and I believe we will be able to introduce greater collaborations between industry sectors, which has always been a failure within the large multi-national broking houses.
Cross-selling strategies within a group are often seen to be about increasing commissions to the Group. This is a blinkered approach, as it should be about satisfying a client’s actual needs, and creating a partnership with each client to set long term relationships and confidence.
Andrew Sommerville is Managing Director of Specialty at Consilium and is responsible for Consilium’s Aviation team. He has over 36 years’ experience working in the aviation sector, including 14 years at Aon, and 10 years at Marsh/Sedgwick. He was most recently Managing Director for Niche Aviation at Lloyd’s broker Grimme Butcher Jones.
Andrew has built up trusted relationships during his lengthy career, and has already put in place exclusive placing facilities at Consilium with leading aviation underwriters, and is inviting direct clients and brokers alike to get in touch about placing their aviation risks, from anywhere in the world, to take advantage of our specialist capabilities.