A leading underwriter has called on the insurance sector to stand with their aviation industry policyholders as the impact of Covid-19 continues to decimate the airline sector.
Writing in Broker Gallagher’s quarterly aviation update Plane Talking, Bruce Carman Chief Underwriting Officer at Hive Aero said airlines were in dire need of support amid thousands of plans now standing idle in airports across the globe.
Mr Carman said IATA currently estimates the financial impact of the virus on the air transport industry to be around $252 billion.
“The true impact however may well be as much cultural as financial, as the public’s appetite for travel will inevitably take time to recover,” he explained. “Clearly the financial element of this will take its toll and there will be airline failures, meaning unpaid premiums and bad debt, which will ultimately have to be managed by insurers and brokers.”
Airlines will seek return premiums from All Risks underwriters as aircraft are laid-up and passenger numbers significantly reduced, however, Mr carman said the timing couldn’t be worse, as the aviation market desperately tries to recoup some of its recent sizeable losses.
“For Hull War insurers, the growing number of grounded aircraft makes for eye-watering aggregate exposures. Keeping a tab on these numbers is challenging, especially at a time when airline schedules are effectively rendered obsolete,” he said.
Figures show that at present there are 205 grounded plains in Singapore, 178 in Hong Kong, 165 in Seoul, 159 in Beijing and 158 in Madrid.
Mr Carman added: “Society has acquired new phrases such as ‘social distancing’, ‘self-isolation’ and ‘R0’. Whilst we all wash our hands regularly and don’t greet others in the usual way, it is imperative that we as a market don’t wash our hands or distance ourselves from our collective responsibility to the airlines.
“The insurance market plays an essential role in the world of air travel and we must work collaboratively with other key players such as banks and lessors, to help the airlines as far as we reasonably can in their hour of need. We hope that underwriters and brokers will stand shoulder to shoulder with the aviation industry in order to combat the effects of this global contagion.”