The Paradox of Aviation Risk

The number of passengers transported on commercial planes between 1970 and 2015 has increased tenfold. During the same period, the number of deaths from aviation accidents was halved. This might lead us to conclude that aviation risk is decreasing; actually, it’s the opposite!

In fact, aviation risk does not decrease only with fewer crashes, whose financial consequences are very high. It also involves all market segments: design, production, infrastructure and operation. Each of these areas must comply with the same regulation, strength and traceability imperatives.

 

Direct Link between Operational Claims and Design Management

The numbers show that operational claims are relatively well-managed. These results are proof of the efforts companies and aircraft manufacturers have made to improve safety, as well as more drastic regulations. This especially translates into high-performing design that takes into account probability failure targets (rotating parts, motors, etc.).

 

Fewer Operating Risks, More Upstream Pressure…

Market growth (+ 65% in civil commercial planes delivered in 10 years) is accompanied, however, with enormous constraints on production and infrastructure.

Except for a few large players, this sector worldwide is made up of countless interdependent SME who all share the same end clients in aviation and defence. We must also add to this legislative and regulatory constraints that are sometimes very specific, all leading to pressure on the various players whose logistical structure is far less mature than the auto industry’s.

 

… and More Losses!

Proportionally, industrial and infrastructure losses are growing faster than changes to the aviation industry’s activity. This increase is tied to logistical requirements and to flows (manufacturing as well as people and merchandise transported), which become very tight. It’s also caused by operating losses in an industry where an aircraft’s operability rate is above 90%.

 

Company and Insurance Expert Development

The insurance market is adapting to these challenges by offering product ranges—depending on the position of their clients and their areas of activity—that can integrate risks traditionally tied to operating (especially the dreaded Aircraft On Ground).

Further upstream, regarding industrial aspects, we are also seeing certification elements taken into account when calculating premiums, which indicates insurers’ interest in manufacturing management and its immediate impact on aircraft reliability.

But the most anticipated development relates to treating claims: human and equipment contexts and financial interdependencies now cover issues such as operating in dedicated project mode and having responsive multidisciplinary teams—especially technical experts on the ground. These have become the profession’s essential elements.

Our emergency suitcase is always packed!

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Bernard PRIGENT
Aviation Loss Adjuster – GM Consultant