• Sharebar
Aviation Insurance
Thursday, January 1, 2009
Black October

The recent spate of fatal aircraft accidents which shocked the country has caused the insurance sector to re-assess risk in the local aviation industry and rates have begun to harden report brokers Glenrand M.I.B.

South Africa has one of the continent’s largest light aircraft populations, numbering about 11 000 light commercial, sport and other types. Premiums generated amount to some R300m a year in relation to insured values across all types (excluding large commercial passenger aircraft).
In  October 2008 for example there had been 13 accidents in the country resulting in 27 deaths.  These statistics compare with eight accidents in October 2007 of which only one was fatal according to a Civil Aviation Authority’s (CAA) newsletter.
Captain Colin Jordaan, Commissioner for Civil Aviation says in the newsletter, “It should be noted there is no common thread that can be identified as being a specific cause in these recent accidents.”
A five year comparison of serious accidents and incidents compiled by the CAA shows that, notwithstanding the growth in numbers of aircraft registered in South from 8 403 to 10 189 last year, the percentage of accidents to registered aircraft has been steady year-on-year at around 1.6%. The number of fatalities actually dropped from 48 in 2003 to 38 last year. However “Black October” alone this year resulted in 27 deaths.
The effect on the insurance industry is that rates on renewals are currently being quoted at 10% to 15% higher than a year ago according to Molly Charles of Glenrand M.I.B.’s Aviation Division.
“Aviation risk is of course spread across world reinsurance markets but the reinsurers themselves are now clearly taking a view on the relative risk of the South African market specifically.
“Traditionally light commercial passenger aircraft have been better risks than, say, aerobatic aircraft and crop sprayers. However the recent incidents have forced a reappraisal in this and other respects and insurers are now looking at safety as a broad issue when assessing a risk, rather than merely increasing rates to allow for inflationary adjustments and for the softer Rand.”
That’s confirmed by Independent Aviation Underwriting Managers MD, Jamie Illing. “Factors such as pilot experience and quality of maintenance have always been taken into account, but even greater emphasis will now have to be placed on these and other aspects.” 
The CAA meanwhile says in its newsletter that a dedicated committee has been set up comprising members of the CAA and aviation specialists to come up with practical solutions to the findings raised during accident investigations.
These include the production of visual material which illustrates common mistakes committed by crew members that have resulted in accidents in the past and creating better access to information for pilots of light aircraft.
In addition the Commissioner of Civil Aviation plans to negotiate an agreement with the air traffic and navigation services organisation to provide selected additional services to general sector aviation services at an affordable cost.
“The immediate outlook however is that insurance of South African aviation hulls, passenger liabilities, etc. is faced with fairly aggressive increases notwithstanding tight competition in the market in general,” adds Glenrand M.I.B.’s Charles.
 

Copyright © Insurance Times and Investments® Vol:22.1 1st January, 2009
565 views, page last viewed on October 20, 2019