The Global Aviation Insurance market was valued at USD xx and is expected to reach USD xx by 2027, growing at a CAGR of 7% during the forecast period, 2021-2027.
Aviation insurance covers losses that result from risks such as damage to property, loss of cargo, or injury to people. Aviation insurance protects from losses resulting from aviation risks that arise from the conservation and usage of the aircraft, property destruction, forfeiture of cargo, or injury to an individual. It protects both the owners and aircraft operators from unexpected losses. According to the standard laws, in many countries, aircraft owners and operators require to purchase insurance for third-party liability.
There has been a steady and significant rise in passenger traffic since the covid-19 impact. There has also been an increase in government rules & regulations for passenger safety. In addition, globalization has led to an increasing demand for airline services as emerging nations are aiming to expand their existing airport terminals. For instance, the 3rd runway at Heathrow Airport, London, Beijing Capital International Airport is expected to get started by 2025, Two new international complexes at the John F Kennedy airport by 2023, USA, and many more amongst others. These expanding terminals and increasing airports worldwide are proof that there is a soar in the aviation industry in the near future. However, this could be a significant factor to witness lucrative growth in the global aviation insurance market.
Rising expenditure on international airlines has increased the need for travel insurance and is expected to fuel the growth of the aviation insurance market. The rise in spending on international travel and vacation further attracts customers of the airlines business. Requirement of travel insurance has also been listed as a factor to propel the growth of the aviation insurance market. For instance, travel insurance companies such as AXA and MondialCare provide a mandatory certificate of insurance as a requirement to apply for a Schengen visa.
However, Covid-19 has paralyzed the travel industry. For instance, the arrival of tourists in Spain dropped by 78% in 2020, with approximately 19.2 million visitors. In recent times, there have been a series of air crashes around the world such as the 2018 Ethiopian Airlines crash, the A320 airbus crash in Karachi, the recent crash which killed Kobe Bryant and many more. Due to a crash, an insurance company would have to pay out a higher amount to get a risk cover against huge losses. This creates a hindrance to the growth of the aviation insurance market. However, in such conditions, insurance companies could develop new tailor-made offers for consumers. However, costly aviation insurance premium hampers the growth of the market.
The Global Aviation Insurance Market Segmentation:
By Insurance Type
By End User Industry
Based on insurance type, the passenger liability segment is likely to grow the fastest during the forecast period.
Passenger Liability Insurance protects the passengers injured, in any accidents, occurring during their travel in the aircraft. This is mandatory insurance in many countries of the world. It is generally sold on a ‘per seat’ basis and comes along with the ticket itself. Passengers on a plane aren’t covered by public liability insurance, passenger liability insurance protects the people onboard. As only passenger planes are commercial, not every airplane company requires to provide this insurance. According to the Civil Aviation Authority of the EU Aircraft operators’ insurance must protect passengers, baggage, third party cover, cargo, risks of war and terrorism. On travel portals like MakeMyTrip, Cleartrip and Ixigo, there are number people booking tickets in advance as compared to last minute emergency travels. Thus, with supporting laws and mandatory travel insurance requirements the passenger liability by insurance type is expected to be the largest segment in the aviation insurance market during the forecast period.
Based on regions, Asia Pacific is expected to hold the largest share in the aviation insurance market during the forecast period.
Based on geography, Asia Pacific is expected to witness lucrative growth over the forecast period. Economically emergent countries like China and India are anticipated to lead the aviation insurance market. There are major manufacturing plants of several industries situated in developing countries such as India and China and thus there is a major working population who are constantly traveling to these nations. Thus, there is a rise in investment from the government in this region towards development of airports and runways. In 2020, a report by scmp.com stated that by 2035, China Aviation Administration of China plans to reach a milestone of 450 airports by constructing almost 200 new airports across China. Opening of new airspace between countries is one of a major driving factor to hold the largest share.
In a 2019 report published by Hindustan Times, Air India launched frequent flights to the US and Australia and direct flights to Bali, Toronto and Nairobi and is expected to generate an operational profit of over Rs 1,000 crore per year. Due to globalization, there is an increase in passenger traffic. This has led to construction of more airports and additional runways at airports. With a rise in construction of airports, higher number of passengers travelling and more aircrafts, there will be a rise in the number of insurance policies being taken. This will boost the Asia Pacific aviation insurance market.
Company Profiles and Competitive Intelligence
The key players operating in the Global Aviation Insurance Market are:
Covid 19 Impact on the Aviation Insurance Market
Covid 19 had a very severe impact on the aviation insurance market. There was a direct effect as many countries announced the closure of airports and airspaces. All scheduled flights stood cancelled and all this led to the decline in the aviation insurance market. Due to the pandemic, there has been a shortfall of airline flights and is expected to remain the same in over the near future. Owing to the pandemic, not all aviation insurers are willing to offer insurance policies. Gallagher reported that insurers are seeking rate increases as much as 30 percent where they are offering a cover due to new challenges being faced and losses incurred after Covid-19. Aviation insurance companies will now have to consider that the airlines insured could be responsible for the spreading virus if appropriate measures weren’t taken. This would result in claiming of more insurance and thus a decline in the aviation insurance market. Thus, covid 19 has had a negative impact on the aviation insurance industry.
The report also provides in-depth analysis of key market trends
|1||Reduction in flights due to Covid 19 led to degradation of aircraft which means claiming of more insurance||Negative|
|2||Expenditure on Airlines||Positive|
|3||Rising air crashes||Negative|
The report also provides an in-depth analysis of recent News Developments and Investments
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