AVIATION INSURANCE IN RUSSIA 20 YEARS AGO AND TODAY. February 25 th 2016

Transcription

1 AVIATION INSURANCE IN RUSSIA 20 YEARS AGO AND TODAY February 25 th

2 AVIATION LANDSCAPE IN RUSSIA EARLY 1990 s Each Independent Country from USSR suddenly had its own National Airline 1993 Scores of separate Airlines within Russia itself being established Explosion of Insurance enquiries, the majority Via Willis,Moscow first established overseas Aviation Broker in Russia Intl Reinsurance Market very cautious about the new Risks being presented Main 2 Underwriters writing the Risk were Albert Hope and Geoff Weston unfortunately both worked for the same Company IE Zurich Insurance! 2

3 AVIATION LANDSCAPE IN RUSSIA EARLY 1990 s Ariel leading Russian built Aircraft Policy for Aeroflot Liabilities only Volga Dnepr placing Hull All Risks for its A124 Aircraft 100% with AIG for Value of USD5M as this was extent of available Capacity! 1992 Transaero single IL86 placed in the Intl Market Liabs only Russian Intl Airlines initiated as a Daughter company of AFL taking 5 x A310 Acft. Placed via Lex Garant/Willis Led by Mr.David Peachey at Jansen Green. Flight 593 Moscow to HK crash in March 1994 provided the first real experience for the International Market to service and support a major claim with a Western Built/Leased Acft for a Russian operator. 3

4 RUSSIA 1990 s 4

5 RUSSIA 1990 s 5

6 RUSSIAN ASSOCIATION OF AVIATION AND SPACE INSURERS (RAAKS) Founded in 1996 Objectives :- Consolidation of Aviation Insurers in Russia and FSU Protecting Members interests Development of Common Rules of Insurance Communication and Presentation of Russian Aviation Insurers to the International market 6

7 RAAKS When first established consisted of 28 Members Out of these 28 members only 3 are participants today Additionally ALFASTRAKHOVANIE who have absorbed original members : Moscow Insurance Co and VESTA First President Mr.Nikolay Pavlovich Ustimenko then President of Avicos. Today involves 21 Insurance Organisations. 7

8 RAAKS MEMBERS Number of Insurance Members 8

9 Rubles Billions Premium Claims Average Loss Ratio over the 19 years % Worse 2 Years are the last 2 with 41% and 43% Loss Ratios respectively Note : Figures show Claims paid and Premiums written in the annual period 9

10 RAAKS Original Meetings ad hoc First Seminars were domestic only First International Conference took place in 2009 Today for the Seventh International Conference we have over 250 delegates registered 10

11 RUSSIAN RISKS IN THE INTERNATIONAL MARKET How has the perception of Russian Operators within the International Insurance community changed over the past 20 years? As recently as December 2011 in a Wall Street Journal report it was stated that Russia Once a Global Aviation power has become the most dangerous country in which to board an Airliner Insurers had held sceptical views since the early 90s regards : - Pilot training and conversion to Western Acft - Infrastructure Issues Outdated equipment at Airports etc - Severe weather conditions - General bad press regards Drunken pilots, lack of Compliance to Air Safety Regulations, Concerns as to black market Spares etc ALL TRANSLATED TO A PREMIUM LOADING ON RUSSIAN AIRLINE RISKS 11

12 RUSSIAN RISKS IN THE INTERNATIONAL MARKET TODAY?! Majority of outdated Eastern built Acft withdrawn Top Russian Airlines operating some of the youngest and modern fleets in the World Investment in Airports and ATC resulting in superior operating climate High Level and regular communications between Airlines, Insurers and International Markets to address any points of concern Head on. First hand Experience of Knowledgeable and efficient Risk Management and Claims Handling providing increased confidence to all Markets PERCEPTION ISSUES OVERCOME! Largely! 12

13 RUSSIAN INNOVATION DURING SEVERE WEATHER CONDITIONS 13

14 RUSSIAN RISKS IN THE INTERNATIONAL MARKET Further Proof!? What has Insurers/Reinsurers experience been in participating in Russian risks over a long term period? Russian Premium Income and Russian Claims as compared to the market averages 14

15 RUSSIAN AIRLINE PREMIUM V CLAIMS Premium Claims S7 Airlines Aeroflot-Nord Tartastan/ AirBridgeCargo [15]

16 RUSSIAN RISKS IN THE INTERNATIONAL MARKET USD Billions Income Market Loss Ratio 77.84% Market Loss Ratio 101.7% Market Loss Ratio 92% Russian Loss Ratio 48.84% Russian Loss Ratio 56.89% Russian Loss Ratio 34% Premium Claims 0 16

17 RUSSIAN RISKS IN THE INTERNATIONAL MARKET since 2006 Worldwide Figures (Including Russia) Premium USD B Claims USD B Loss Ratio % Russian Figures Premium USD 463,812,382 Claims USD 263,888,541 Loss Ratio 56.89% Insurer writing a 10% share participating on all risks would have lost USD28,000,000 over 10 years Insurer writing a 10% share participating on exclusively Russian Risks would have made a USD19,900,000 profit over the 10 year period. 17

18 SIGNIFICANCE OF RUSSIAN RISKS IN THE MARKET Average Fleet Value 2% Russian Airlines Hull and Liability Premium Russian 3% Airlines [18]

19 SIGNIFICANCE OF RUSSIAN RISKS IN THE MARKET 2000 Russian Risks responsible for 0.82% of Market Income No Claims 2006 Russian Risks responsible for 1.40% of Market income and 1.46% of the Claims 2014 Russian Risks responsible for 3.79% of Market Income and 0.46% of the Claims Evidence of growth in overall share towards the Aviation Market Income overall albeit modest compared to the overall statistics. Claims figures average out over 15 years to 1.1% of overall Market Claims 19

20 HAVE THE IMPROVEMENTS TRANSLATED TO A BETTER DEAL FOR RUSSIAN RISKS? Difficult to prove in terms of Rates/Premiums but generally it is considered that Russian Risks no longer carry a loading due to negative perception issues. Top Russian Carriers rated in line with their EU counterparts Other Territories under the microscope and attracting penalty premiums India, Iran, Indonesia Reasons Safety, Sanctions, Political Climate, etc. Over capacity is still a major factor to any way an Airline is treated by the Market and has a large influence on Underwriting decisions when assessing Risks in such a competitive Market environment. 20

21 RUSSIAN AIRLINES Vs MARKET PREMIUM PER PASSENGER CARRIED $1,60 $1,40 $1,20 Russia Cost per Pax Market Cost per Pax $1,00 $0,80 $0,60 $0,40 $0,20 $0, [21]

22 WARNING! Please do not get complacent! Rates currently enjoyed could change dramatically if Claims statistics significantly deteriorate Sanctions against Russia are already influencing some Insurers to stay away from Russian Risks. Further more concrete or stringent Sanctions could change the available Capacity overnight Result : Higher rates for all notwithstanding quality of operation. Recommendation Please ensure dialogue, communication, and openness with your Insurers are maintained to a maximum to pre-empt any future change in Market conditions. 22

23 MOST IMPORTANTLY KEEP YOUR AIRCRAFT CLEAN!!! 23

24 Memories of First Russian Visits! Recalling one of my first Visits to Moscow with Zurich Insurance company. 24

25 Memories of First Russian Visits! Then : 25

26 IN CONCLUSION 20 years of RAAKS has been good to the Russian Insurance, Aviation and Space Communities. Long may it blossom over the next 20 years! And in 2036 : I WILL BE LONG RETIRED! 26

27 THIS GUY WILL STILL PROBABLY BE PRESIDENT! 27

28 AND WHO KNOWS ABOUT THIS GUY.. 28