TMK launches Asian aviation consortium

Capacity will be provided by Lloyd’s Asia syndicates who will be able to write lines with combined limits up to $15m hull and $200m liability on any single risk. Supporting members of the consortium are Argo, Antares and Allied World. The consortium will be managed by Singapore-based TMK Aviation Underwriter, Graham Oddie.

Commenting on the launch, TMK’s head of aviation James Walker said: “As the aviation industry in Asia continues to grow, we have been keen to support this by offering the right insurance products. Clients and brokers can now get all their aviation insurance needs from Lloyd’s Asia with only a single point of entry to the market.”

The aviation market in Asia is certainly growing, as evidenced by the investor interest in the upcoming $1.1bn initial public offering from BOC Aviation, the aircraft leasing unit of Bank of China. According to plane manufacturers Airbus and Boeing, Asia is on track to overtake the US as the world’s biggest plane-leasing market.

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However, the aviation insurance market does face challenges based on the increasing capacity in the market. In July 2015 Allianz Global Corporate & Speciality (AGCS) warned that aviation insurers may be storing up problems for the future with falling premiums despite growing exposures.

Aviation insurers suffered another loss-making year in 2015 with aviation hull and liability insurance rates falling by 25% in the December 2015 renewals compared to the same period in 2014, according to figures from JLT Aerospace, a unit of the JLT Group.

“The rate reductions over the past two years are not driven by risk management improvements but by over-capacity in the market for aviation insurance,” said Josef Schweighart, head of aviation, Germany, AGCS. The total exposures faced by the aviation insurance market are forecast to exceed $1tn by 2020 according to AGCS.

Meanwhile Willis Tower Watson (WTW) has warned that an inability to keep up with technology change is the number one risk faced by airlines. A survey of almost 150 airline executives, conducted in March 2016, also revealed “startling differences” between how sub-sectors within the aviation industry viewed risk, said WTW.

“The aviation industry is at an inflection point,” said Mark Hue Williams, head of transportation for WTW. “Regulation and technological advancements are demanding new operating models whilst, simultaneously, the industry also faces the growing problem of both physical and digital attacks from hostile actors targeting the sector’s strategic position in the movement of people, products and ideas. This is all set against an unstable macro geopolitical and economic backdrop, and an ultra-competitive global labour market,” he added.