Charles Alcock is managing editor of the AIN Media Group, having rejoined the company in 2019. He has been an aviation journalist since 1986, and previously worked for AIN from 1990 to 2017, most recently as editor-in-chief. His main focus is on covering new aviation technology and business models, as well as international news.
Having been raised in the London area, Alcock studied at the University of Manchester in the UK and earned an honors degree in Politics and Modern History. He speaks English and French, and some German.

Managing Editor

Charles Alcock

The worsening military conflict in Sudan could push aircraft insurance premiums higher, adding to already significant cost pressure on airlines resulting from Russia’s invasion of Ukraine. What’s more, the insurance sector and its customers could take another financial hit when the fate of hundreds of Western-made aircraft trapped in Russia eventually gets resolved, according to Nigel Weyman, aerospace global executive with insurance and risk management group&nbsp;Gallagher.
The war-related risks, against a backdrop of other global tensions such as China’s increasingly aggressive stance over Taiwan, have raised&nbsp;concern despite an otherwise-improving situation for airlines, Weyman told AIN. “Since 2019, the industry has had a pretty good run with [relatively few] accidents,” he commented. “Partly this is due to the lack of flying during Covid, but since the restart [of operations] airlines have been very well-organized and safe.”
According to London-based Gallagher, up to about 500 aircraft leased to Russian operators remain trapped in the ostracized country. “The Russian government is refusing to give the aircraft back, and they are all subject to potential claims depending on how the [insurance] cover falls," Weyman said.&nbsp;"They could be assessed [by insurers] as all-risk, war-risk, or not at all. “So the losses could be anywhere between $10 billion and $30 billion, which is up the level of the World Trade Center loss [in 2001].”
The insurance implications of the Russia-Ukraine war might not yet be fully understood, but premiums already have risen due to other factors, such as fall-out from problems with Boeing’s 737 Max 8 airliner. Weyman said that, for now, insurers have not yet increased premiums associated with assets at risk in Russia, because “they can’t charge increases on losses they are [currently] denying.”
For now, insurance remains another cost pressure on airlines, already dealing with high expenses in other areas, including fuel and labor. One constructive response, Weyman explained, could center on&nbsp;reducing&nbsp;the “attritional losses” resulting from incidents such as damage to aircraft in ground incidents.
The relative cost of repairing seemingly minor damage, such as a dent in a fuselage from a baggage truck on the apron, has risen significantly.&nbsp;“Carbon fiber repairs are more complex to fix and so airlines need to reduce the frequency of these losses by trying to raise [operational safety] standards,” said Weyman.
Another trend that the Gallagher team has seen involves increasing deductibles in a trade-off to keep premium rates down. “It can be cheaper for airlines to deal with repairs themselves than to go through the insurance market,” Weyman said. “The overheads of insurers, such as loss adjusters and other specialists, add a lot to the cost of a claim so that, roughly speaking, for every dollar you pay an underwriter only 75 to 80 cents arrives to pay the claim, so airlines have been offering to take on $5 million deductibles.”
During Covid, some brokers worked with insurers to grant some premium rebates in recognition of the extreme hardship airlines faced, with the cover being retained for aircraft parked on the ground. Nonetheless, Weyman said the last three years have proved profitable for underwriters. “This has attracted newcomers into the market and so there is now more supply than we satisfy so good brokers can exploit that to create competitive tensions,” he commented. “Well, at least on the all-risk side of the business; the war-risk side is a different picture.”

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Worsening War Risks Could Push Insurance Premiums Higher

The conflict in Sudan is adding to the pressure and uncertainty for airlines and their insurers resulting from Russia's invasion of Ukraine.

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