Warning: Illegal string offset 'active_actions' in /home1/pimweb/public_html/wp-content/plugins/thesis-openhook-new/functions-options.php on line 21

Warning: Cannot modify header information - headers already sent by (output started at /home1/pimweb/public_html/wp-content/plugins/thesis-openhook-new/functions-options.php:21) in /home1/pimweb/public_html/wp-includes/pluggable.php on line 1174
New Markets Should Provide Relief to Consumers

October 2, 2011

New Markets Should Provide Relief to Consumers

September 2006

There are constant and unpredictable cycles in the aviation insurance marketplace. Over the past 24 months, rates and terms have leveled off and many consumers can now look for rates to begin to drop.

Once rates stabilize and investment income is a firm realization, more markets look to gain market share. This will increase capacity in the aviation insurance market. In order to put business on the books, new insurance companies will lower rates, creating competition. The rest of the marketplace will have to follow. The onslaught of these rate decreases has become a reality over the past several months. We have seen the emergence of several companies new to the U.S. general aviation market.

The first company of major impact new to the market is Starr Aviation, a C.V. Starr company. C.V. Starr is owned partly by Maurice Greenberg, former chairman of AIG. Its subsidiary, American International Insurance Agency, handled the bulk of AIG Aviation’s airline business until a separation in early 2006. In the separation, AIG Aviation’s CEO departed with a number of other executives and underwriters to transition C.V. Starr into a new company in the world-wide aviation insurance marketplace.

Starr Aviation is already busy writing policies for existing clients, but they have begun underwriting general aviation risks and should be in full force by the new year. They will likely look to initially write turbine aircraft (particularly with professional piloted crews) and products/manufacturer risks as well as other various commercial operations. You can probably expect this company to enter the light aircraft and agricultural markets in the next six-24 months.

The other major player to emerge in the U.S. general aviation market is Allianz. As with C.V. Starr, Allianz has already been a player in the global airline and products sectors of aviation insurance, but this major global insurance company has elected to become a player in the U.S. general aviation market.

In late April 2006, the CEO and a senior vice president of USAIG left (retired) to begin constructing this effort. They have since been joined by a number of underwriters from USAIG and other aviation insurance companies. Like Starr, indications are that they will look to begin operations writing turbine aircraft, the products/manufacturer lines and larger commercial operations. This should be followed by the light aircraft sector and other aviation lines. Allianz is currently putting general aviation business on the books and is already making an impact on the market.

Other new companies to the U.S. aerospace market include Berkley Aviation, LLC (a W.R. Berkley Company), which consists of many former XL Specialty executives, and Inter-Aero (International Aerospace Insurance Services, Inc.), a managing general agent for Arch Insurance Company. These companies will have an impact in airline, products, rotor-wing operations and corporate non-owned sectors of the market. They will not likely venture into the light aircraft sector of the market.

So as you can see, there has been a great many changes and shake-ups in the aviation insurance industry during the past six months.
With more capacity and competition, rates tend to decrease. This usually results in premium savings for many consumers. So barring any major disasters, rates in many sectors of the marketplace should decrease over the next couple of years.

Previous post:

Next post: