Page 12 - May 2022

INSURANCE
Global Events
and Local Effect:
“War Hull”
by Kyle White
Lately, it seems there is always “something” happening in the world that derails the stability of the aviation ecosystem. In 2020, it was COVID. The pandemic brought the aviation industry to a screeching halt, causing all of us to look at each other asking questions that nobody knew the answers to. COVID sparked serious concerns within the aviation insurance community (see “Aircraft Insurance and Pandemics,” King Air magazine, May 2020). The disruption gave grounded aircraft owners time to comb through their operating budgets to find potential savings. Many looked to their insurance policy for premium credits while their aircraft were hangared. It wasn’t just the general aviation market looking for refunds; the airline industry received major premium credits as well because their premiums are based on passenger miles flown.
Now the pendulum has rapidly swung the other way and we are back to aircraft shortages and high demand across the board. From pi- lots and aircraft to hangars and jet fuel, everything is in short supply and resulting in higher costs. During the fourth quarter of 2021 and the beginning of 2022, the King Air own- er had cautious optimism that this year could potentially bring a more stable insurance renewal experience. However, aviation insurance may get
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added to the list of higher prices, once again. Signs are now pointing to a potential inflationary hard market, combined with re-insurance price hikes on the horizon.
As we are finally moving past COVID, the newest “something” that is likely to affect aviation is the outbreak of war and sanctions in Eastern Europe. This was not on the radar screen as 2021 came to an end. The ramifications of the ongoing war
has caused inflationary values to fuel, as jet and 100LL prices have jumped considerably. During the Aircraft Electronics Association convention in New Orleans in late March, an FBO owner was standing next to me when he received a message from his general manager notifying him that the fresh delivery of jet fuel was $1.00 per gallon higher than their last load. This, of course, is an immediate hit to the King Air owner’s operating budget. The $1.00/gallon increase
MAY 2022