Willis - aviationnews-online.com · Willis Towers Watson * Source: Willis Towers Watson Data...

Airline Treasury &

Risk Management Forum

Aviation Insurance in Africa & Middle East

Willis

Responding to the changing shape

of riskAirline Treasury & Risk Management Forum

© 2016 Willis Towers Watson. All rights reserved.

Dubai, October 4th 2016

Willis Towers Watson

* Source: Willis Towers Watson Data

Airlines with AFV >US$100m

Current safety trends


Number of Fatalities and Fatal Accidents*

5© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

0

100

200

300

400

500

600

700

800

0

5

10

15

20

25

30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

of

Fa

tali

tie

s

Nu

mb

er

of

Fa

tal A

cc

ide

nts

Jet Fatal Accidents Turboprop Fatal Accidents

Turboprop Fatalities Jet Fatalities

*figures courtesy of IATA

Number of Passengers carried and Fatalities per Passenger carried*


-

50

100

150

200

250

300

350

400

450

0

0.5

1

1.5

2

2.5

3

3.5

4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fa

tali

tie

s p

er

Billi

on

Pa

ss

en

ge

rs C

arr

ied

Nu

mb

er

of

Pa

ss

en

ge

rs C

arr

ied

(B

illi

on

)

Passengers Carried Fatalities/ Billion Passengers Carried.


Middle East & North Africa*


0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ac

cid

en

ts p

er

Mil

lio

n S

ec

tors

All Accident Rate Hull Loss Rate Fatal Accident Rate

Middle East & North Africa (MENA)

MENA saw no hull losses or fatal accidents in

2015 and had an overall accident rate of 1.67

accidents per million sectors.

All three rates have shown significant &

consistent improvement since 2009.



“The most powerful engine of progress is

to be found deep within the culture of the

(aviation) industry: instead of denying

failure, or spinning it, aviation learns

from failure” Matthew Syed: ‘Black Box Thinking – The

Surprising Truth About Success’

State of the Aviation Insurance Market


Insurance Industry Dynamics

10

Soft Market Conditions

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

2016 Cumulative Monthly Claims

11

Hull & Liability


0

250

500

750

1,000

1,250

1,500

US

$ (

Millio

ns)

Jan – Sep Jan – Sep Jan – Sep Jan – Sep

2012 2013 2014 2015

US$426m

HULL RESERVE

US$124m

LIAB RESERVE

US$349m

ATTRITION

US$899m

TOTAL CLAIMS

US$ 1,129m

4 YEAR AVERAGE

SEPT

SOURCE: WILLIS TOWERS WATSON DATA:

LOSS DATA SHOWN IS TO THE BEST OF OUR KNOWLEDGE AT THE TIME OF PUBLICATION.

Jan – Sep

2016

Market Premium & Claims

12

Hull & Liability


25%

50%

75%

100%

125%

150%

175%

200%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

CALENDAR YEAR

Premium Claims Loss Ratio

Focus on Risk Management : ‘Attrition Claims’

13

At Today’s Level of Premium, it is the Challenge

2010 2011 2012 2013 2014 2015


Attrition Losses

Premium

Reducing volume of premium to pay

for major losses

Attrition losses eroding catastrophe

related premium

Many airlines are paying premiums far lower than the value of one engine

Responding to the changing shape of risk


Where to next…?

Where to next….?


“How can we think of risk transfer

solutions before we understand the

risk itself?”

“Ten to 15 years ago, three of the

top 10 risks would have been

covered by insurance. Now it may

be just one,” John Hurrell, AIRMIC CEO

The world is changing…


Willis Towers Watson Transportation Risk Index


The Risk Index: who participated?


350companies

110

CEOs

80 CFOs

80 CHROs

80 CROs

Global coverage

Assessed

50 risks over

5 megatrends

117land companies

63sea companies

170air companies

60% of respondents have

revenues over $5 billion

90% have revenues over

$1.5 billion

Additional

qualitative

interviews

Megatrends


“Some of the riskier environments are disproportionately complicated

for us as a business. We believe complexity is the enemy of cost; so

keep it simple”Peter Duffy, Group Commercial Director: Customer, Product &

Marketing, easyJet

“One of my first questions when I’m meeting an airline CEO is: “how’s

business?” Invariably, they quickly talk about the competitive

environment and how it’s constantly getting tougher with new carriers

coming in”Tony Tyler, outgoing Director General and CEO, IATA

“Talent management is the biggest opportunity because business is

done by people. Technology is not a replacement for people; it is a

complement for people”COO, Leading container operator

“There has been such a large amount of regulatory change in such a

short period of time… It has added very significantly to costs and

complexity and those two things together are always bad for business,

and for the consumer in the end”Peter Norris, Chairman, Virgin Group

“It’s not so much one problem, it’s a whole bunch of people who want to

do bad things to your organisation who are taking advantage of the

changing dynamics of global technology to be able to do those things

more easily” James Hatch, Director of Cyber Services, BAE Systems

Applied Intelligence

2

1

Geopolitical instability and

regulatory uncertainty

Digital vulnerability and

rapid technological

advancement

3

4

5

Changing market dynamics

and business model

insecurity

Complex operating models

in an interconnected world

Talent management and the

complexities of a global

workforce

Megatrends in practice


“We want to double our service but

regulations aren’t allowing: Scoot’s

India head”

Business Standard 20 August 2016

“Cyberattack claims multiple airports

in Vietnam”

Washington Times 29 July 2016

“$54m cyber fraud hits

aircraft supplier share

price”Computer Weekly 22

January 2016

“Airline stocks lose

altitude after terror

attacks”

The Times 20 September

2016

“India poised to become one

of world’s largest aviation

markets”

Business Today 25 August

2016

“Airlines knocked due to fare

pressure fears”

Financial Times 21 July 2016

“U.S intelligence to help

companies avert supply-chain

hacking”

Bloomberg 10 August 2016

“Robots may solve the global

air traffic controller shortage”

Skift 15 August 2016

“Hundreds of flights cancelled

as typhoon hits Tokyo”

BBC News 22 August 2016

“Shrinking pool of future pilots

keeps major airlines on edge”

Bloomberg 29 June 2016

2

1

Geopolitical instability and

regulatory uncertainty

Digital vulnerability and

rapid technological

advancement

3

4

5

Changing market dynamics

and business model

insecurity

Complex operating models

in an interconnected world

Talent management and the

complexities of a global

workforce

Top 10 air sector risks


1

3

5

7

9

2

4

6

1

0

8

Failure of critical IT systems

Dependence on 3rd party suppliers

Extreme weather events/ natural

disasters, epidemics and armed

conflicts

Competition/anti-trust law scrutiny

associated with M&A activity

Change in seasonal demand

leading to shortfall or oversupply

Inability to keep up with pace of

change and technological

advancement

Threat from new and emerging

competitors

Over-dependence on national

infrastructure

Increased security threat from cyber

and data privacy breachesSocial unrest, involuntary migration

and terrorist threats

Top 10 Risks to Middle East & African Air-related companies


• Over-reliance on tech.,

increasing risk of

human error

• Failure of critical IT

systems

• Increased security

threat from cyber & data

privacy breaches

• Staff retention

• Inflexible asset

agreements in a rapidly

changing economic

environment

• Threat from new &

emerging competitors

• Volatility of interest

rates, currencies, fuel &

commodities impacting

cost model

• Social unrest; involuntary

migration & terrorism threats

• Competition law scrutiny

associated with M&A activity

• Protectionist policies and

regulation restricting open

competition

23

Our Transportation Risk Index gives you

perspectives from your industry which allow you

to…

Understand how your approach to risk

compares to that of your peers…

…identify future challenges

and unlock opportunities to gain a

competitive advantage© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Any questions?



Focus Offerings

Core Products

People protection

Political violence/

risk/ terrorism/ war

on land

Kidnap & ransom

Insurance

Duty of care

Location/ site

protection

VAPOR

Corporate all risks

evacuation

Impairment of

access cover

Alert 24

Intelligence systems

& generation

consultancy

Country conflict

threat baseline

surveys

Excess AV52E (Third Party

War Liability)

Personal Accident, Loss of

Licence

Hull, Liability and Spares

Hull War

Hull Deductible

Airport Owners / Operators

Liability including Air Traffic

Control

Refueling liability

Premises, Products and

Hangar keepers Liability

Manufacturers products liability

DIGITAL VULNERABILITY

Cyber risk

analysis and

protection

CrimeStar

Darktrace

Affinity

Solutions

Loyalty

Adviser

Business

continuity

planning

Credit & mortgage

default protection

Trade credit

TCR reduction

Operational risk

optimisation

Risk finance

planning

Captive advice,

management &

optimisation

Global peril

diagnostic

Environmental

liability protection

Global programme

analysis

Business continuity

planning

24/7 intelligence

alerts

COMPLEX OPERATING

MODELS

M&A (people

and assets)

Due

Diligence

Warranties

&

Indemnities

Reputational

Risk

Protection

Nat Cat

Review

Weather

Index

Solutions

Impairment of

access cover

Enterprise

risk

management

TALENT MANAGEMENT

Benefits marketplace/

global access

Talent risk consulting

Change enabled

programme

management

Career and capabilities

framework

Employee

assessments and

insights

Compensation

software

Pension change

communications

Executive risk

insurance

Falck and Alert 24

Alternative

risk transfer

(ART)

Dual-trigger

solutions

Business

continuity

planning

Captive

advice,

manageme

nt and

optimisatio

n

CHANGING MARKET

DYNAMICS

GEPOLITICAL INSTABILITY & REGULATORY UNCERTAINTY

Security staff intelligence analysis training

APPENDIX


Top 10 Risks to Middle East & African Airlines


• Inability to keep pace of

change in technological

advancement

• Increased security

threat from cyber & data

privacy breaches

• Staff retention

• Change in demand due to

macroeconomic conditions

• Extreme weather events,

epidemics & conflicts

• Disruption to operations

due to security issues

• Volatility of interest

rates, currencies, fuel &

commodities impacting

cost model

• Threat from new &

emerging competitors

• Social unrest;

involuntary migration &

terrorism threats

• Competition law

scrutiny associated with

M&A activity

Impressing the Insurance Community

Promoting your Advanced Practices in Safety & Security

Safety Culture

- Continuous improvement of safety

culture

Flight Deck Automation

- Crew readiness to intervene/override

systems to mitigate flight path related

risks

- Training enhancement via evidence

base training (EBT).

Flight Path Monitoring & Control

- Effective monitoring

- Stabilised Approach especially for

regional operators (FDM)

Pilot Psychology & Awareness


Runway Safety

- Bird strike, ground collision, ground

handling and runway incursion

- Operations in newly develop air fields

and with construction work

Aviation Security

- Enhancement of intelligence activity

- Security information sharing with other

carriers

- Developed, strong safety & security

culture

Fatigue Risk Management

Lithium Battery Carriage

Insurers offer Risk Management Bursaries that fund safety improvements

Date post:	09-Jun-2020
Category:	Documents
Upload:	others
View:	18 times
Download:	0 times

Willis - aviationnews-online.com · Willis Towers Watson * Source: Willis Towers Watson Data...

Documents