The predictive genre has made The Role of Insurance in Aviation Business better appreciated as it has been able to provide actual risk profiles other than on general standards. This has taken into account time driven customers behaviours change due to changes in many controllable and uncontrollable factors.
The Commissioner for Insurance, National Insurance Association NAICOM, Olusegun Ayo Omosehin, who presented the above as theme at the Lagos CHINET Aviation and Cargo Conference 2024, noted that advancements such as the rise of electric and hybrid aircrafts is creating a new era in aviation industry and aviation insurance is going head-to-head with the advancements that are expected to reduce carbon footprint and enhance energy efficiency; creating faster, cleaner and quieter aircrafts.
These advancements Omosehin noted, create aviation industry that would be characterised by predictive maintenance for aircrafts, automation of air traffic control system for optimisation of routes. These advancements he inferred, are midwifed by insurance, and it is inconceivable that it could be ventured into without considering the complementary inherent risks and role of insurance in mitigating those risks.
Advancements on all fronts of human endeavours he said, was captured in the book, Technology and the Insurance Industry where Antonella Cappiello stated that smart analysis techniques, predictive modelling and connected telematics devices allow insurers to create products and set premiums based on actual risk profiles other than on general standards.
Insurance industry Omosehin noted, has become an active traveller in the disruptive advances and it is not insulated from the pressure of disruptive environmental patterns, especially the external environment, thereby affecting how businesses are conducted by underwriters.
In his words, “We can almost ascertain that insurance sector is facing significant waves of disruption, spanning new innovations to changes in market positioning, dilution of the aviation insurance ecosystem, technology, changing nature of aviation risks and skills in underwriting aviation businesses.”
To mirror real exposure, he said underwriters use a combination of forecasted worst worst case scenarios of exposures and historical experience. “It is not possible for multiple hulls to be lost and loss of several lives in the event of a disaster. however, likelihood is more of a risk estimation concerns rather than exposure measurement.”
The role of insurance therefore, he cleared is to help and allow airlines, manufacturers, operators to transfer the financial burden of potential losses to insurance companies.
Insurance he mentioned play a key role in facilitating investment and financing. This he noted play out in the capital-intensive aviation industry that requires huge funds and investors more likely to fund venture in aviation when there is adequate insurance coverage in place.
