What do a Midwestern machine shop, a Spanish engine manufacturer, and a transportation company have in common? They all supply parts or services for the manufacture and maintenance of aircraft.
Today’s aviation insurance market covers far more than hull and passenger liability insurance.
From the machine shop making cotter pins for landing gear to the shipper transporting engine parts, aviation relies on a complex, interconnected supply chain. A single aircraft involves a network of raw material suppliers, parts distributors, assemblers, and the airlines that use the finished product.
Across the US and around the globe, small and mid-sized businesses supply products and services supporting aircraft manufacture and maintenance. No matter what product or service these businesses provide, each is required by aircraft manufacturers to carry adequate insurance to protect against loss and liability. In aviation, every component, whether critical or noncritical, is or should be insured.
It is mind-boggling to imagine how many parts and components aviation insurance needs to cover. While nearly every part of an aircraft is crucial to safety, products that do not directly impact the aircraft’s viability or safety are considered noncritical. These include cabin interiors, carpets, access panels, intercom systems, and tray tables. Although defects in these products could cause damage, the damage rarely, if ever, reaches a catastrophic level.
Engines, however, are a different matter. Engines, brake pads, wing assemblies, or any component necessary to keep the aircraft airborne and enable safe landing are considered critical. A failure in one of these products could result in a crash or loss of life.
It's not just the parts that are covered—property, shipping, distribution, liability, and even workers' compensation policies protect the livelihood of businesses supporting aviation. Given the complexity of each business contributing to the aviation supply chain, it's vital for insurers to possess a deep understanding of the industry.
Covering the Gamut
That understanding must extend to the insurance products themselves and how to apply coverage for the most comprehensive protection. For example, when our aviation team assesses a client’s business, we look at their operations as well as those of their suppliers and customers. We ask questions such as:
- How high do limits need to be?
- Are there add-on coverage options that can augment policies to better protect the business?
- Is the business susceptible to product recall issues?
- Do they need non-occurrence grounding coverage?
- Where are the client’s biggest vulnerabilities?
- What are their contractual obligations to their vendors?
We also explore other forms of insurance to find the best protection available. Perhaps a client is seeking a product liability policy but would benefit more from a CGL policy. Our team examines all the risks and builds a comprehensive package that reduces loss exposure and meets the requirements of the client’s customers.
In an ever-changing, dynamic marketplace, attention to detail makes a difference. Today’s aviation insurance market is buyer-friendly: limits and premiums are low, and coverage is ample. No matter the size of the risks your organization faces, having a comprehensive insurance package is essential. Your insurer should use a solutions-based approach to ensure your business is protected.
That is the approach AXA XL’s aviation team uses for each client. We are aviation industry experts who bring our expertise to the insurance world. We offer decades of experience as pilots, airport workers, aviation professionals, and insurance underwriters. We communicate with both manufacturers and suppliers from a position of knowledge and understanding.
This expertise extends to claims handling. Our claims team has decades of experience with claims management, contractual language, and litigation. As global insurers in the aerospace industry, we bring the latest products, innovations, and insights to mitigate your loss exposures.
Supporting the aviation industry means supporting every aspect of its supply chain. Every supplier, manufacturer, transporter, distributor, and facility operator plays an important role in keeping the aviation industry running smoothly. Ensuring the health of the aviation lifecycle requires in-depth knowledge of every facet of the industry, from collaborating with aircraft manufacturers to understanding the needs of a small-town machine shop making one part for the aircraft—and knowing how to protect each of them.
From critical to noncritical products, the aviation industry is a vast network of suppliers, each working in their specialized role to support the safety and viability of aircraft, passengers, and crew. The need for expertise in helping each entity protect against loss and operate efficiently is critical. An insurer with specialized knowledge can help your organization address its most pressing risks and build a proactive approach to loss control.
About the author
Rob Knizner is a Senior Underwriter, General Aviation. He is based in Chicago and can be reached at rob.knizner@axaxl.com
