Why Aviation Insurance Claims Are Skyrocketing Despite Safer Flights

Safety Comes at a Price

Flying has never been safer, yet aviation insurance claims continue to rise. According to the Allianz Global Corporate & Specialty (AGCS) report, 2017 marked the first year in at least 60 years of commercial aviation without any fatalities. Despite this, the number and size of insurance claims in the aviation sector are growing. One reason for this is that safer aircraft cost more to repair and replace when there are problems. The report analyzed 50,000 aviation claims from 2013 to 2018, worth $16.3 billion, and found that 'collision/crash incidents' accounted for 57 percent, or $9.3 billion.

The High Cost of Modern Technology

Today's aircraft contain far more sophisticated electronics and materials than those flying in the 1960s. When they bump into each other or come down too hard, they cost more to repair. For instance, a rental engine for an aircraft can sometimes cost more than the entire aircraft itself. Additionally, when entire fleets have to be grounded, such as the 2013 grounding of the Boeing Dreamliner for lithium-ion battery problems and the more recent fatal crashes involving the Boeing 737 Max, costs can really soar. Boeing reportedly has set aside about $5 billion to cover costs related to the global grounding of the 737 Max.

Rising Liability Awards

Compounding the claims associated with the costs of safer flight, liability awards have risen dramatically. With fewer major airline losses, attorneys are fighting over a much smaller pool and are putting more resources into fewer claims, pushing more aggressively for higher awards. Today's aircraft carry hundreds of passengers at a time. With liability awards per passenger in the millions, a major aviation loss could easily result in a liability loss of $1 billion or more.

In conclusion, while aviation safety has improved significantly, the cost of maintaining and repairing modern aircraft, combined with rising liability awards, has led to a surge in insurance claims. For readers, it's important to stay informed about the risks and costs associated with air travel, and consider purchasing comprehensive insurance policies that cover both personal injury and property damage.