The ACI-NA Insurance and Risk Management Committee kicked off the New Year with its 11th annual Insurance and Risk Management held in the warm and sunny San Diego with close to 95 attendees, up almost 20% over last year’s attendance.
The first session on Thursday highlights the current airport insurance market including aviation and non-aviation entities, domestic liability and property, the London market and its emerging trends.
Patrick Brafford, managing director of Marsh USA, provided a review of the 10 viable airport liability coverage providers. The competition last year was very healthy, driving the rates down across airports of all sizes. However, things may start to change this year. The top three providers – ACE, CHARTIS and Phoenix Aviation Managers captured 74% of the top 250 US commercial airports. The recent Christmas terrorism incident serves as a great reminder for airports to look into their war risk coverage. Marsh’s recent survey shows coverage at only 26 of the top 85 airports.
Gary Moore, partner of JIL Aerospace, covered global airport marketplace. The total airport net premium has dropped in the recent three years from the peak in 2005 and 2006. Total claims dropped even more, making the current loss ratio at less than 50%. This is due to a lack of major catastrophe in the recent few years, which is very good news for the industry.
Richard Terlecki, area senior vice president of Arthur J. Gallagher Risk Management Services, addressed the U.S. property market. The current market has been very soft with competition willing to drop price by 10-20%. The best practice for soft market strategy as suggested by Terlecki is to get increased coverage and better terms and conditions, and most importantly to lower retentions. This strategy would help when market conditions change significantly. Richard also suggested that airports should look into the necessity for having large limits and determine if it is worth to purchase the coverage that may never be used.
By Liying Gu, Senior Director, Economic Affairs and Research