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Insurance Worries: U.S. General Aviation Underwriters Suffer Big Losses

Despite huge increases in premiums, insurers saw substantial losses in 2020.

John C. Tune Airport in Nashville after a tornado. Courtesy of Metro Nashville Police Department
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According to a report obtained by Plane & Pilot from insurance industry analysts from Milliman, the general aviation insurance picture is growing increasingly dire for insurers, which means, naturally and almost surely, coming increases in rates for aircraft owners and operators. The analysis, written by Carl X. Ashenbrenner and Andy Kline, reported a loss of approximately $50 million in 2020, this following a record nearly-$300 million loss in 2019. The improvement was mostly likely a result, the authors said, of reduced aircraft usage during the pandemic.

“The loss,” they wrote, was not “attributable to any one single large event, as over the half the USGA [United States General Aviation] market …reported losing money.” The expectation had been that 2020 might be  a rebound year for insurers, because of the decreased flying time by insured aircraft, but that turned out not to be the case as, the authors noted, “general aviation recovered more quickly than airline traffic,” total accidents and fatal accidents declined only slightly over the year before, and severe weather events, such as tornados, wind storms and floods, resulted in a large number of claims. The tornados that swept through Nashville, Tennessee, in early March of 2020, “…cost the market $100,” the analysis found. Other factors leading to the losses included big judgments, the average of which have increased for fatalities from an average of $2 million to $5 million “over the last few years.”

And these losses were despite a big increase in premiums, 33%, in fact, according to the report, with premiums of more than $200 billion for the year. It’s important to bear in mind that the definition of General Aviation is broad, and while the USGA insurers cover both small planes and large non-airline commercial aircraft, the numbers here are not a perfect reflection of the state of the light GA insurance market, though anecdotal evidence of substantial premium inflation in recent years strongly suggests that our segment of this larger marketplace could be looking at big hikes in premiums, especially if the increase in the number of severe weather events persist.

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