Aviation has a long-held reputation for providing the statistically safest form of transport, which it has earned through a steady reduction in fatalities associated with air accidents. The increasing value of fleets as inbuilt technology becomes ever more sophisticated, more frequent flying and newer risks such as drone collision and cyber threat, means claims costs have crept up in recent years requiring insurers to have a deep understanding of risks associated with this dynamic industry. Space is becoming more crowded and competitive in recent decades as private investment has flown in to back smaller and opportunistic ventures, with very different risk management approaches and exposure than the established giants of the industry and the state agencies.
The global pandemic has created unprecedented challenges for the airline industry as it manages reduced demand, grounded flights, renewed health & safety requirements and supply chain issues. Against a backdrop of growing environmental awareness and an expectation of more fuel efficient travel, the aviation sector will continue to evolve to meet its corporate responsibilities, to drive safety standards, and meet the changing needs and expectations of passengers and clients.
And as more start-ups enter the sector and increased competition in the areas such as Earth observation, human spaceflight and planets exploration, this dynamic yet robust sector presents many new opportunities for the insurance industry to promote and enable real innovation.
During times of geopolitical tension and a focus on national security defence, aerospace has so far not been as adversely affected by the pandemic. The US continues to augment its industrial base for defence and has given priority to the sector during the pandemic. However, the consequences of the pandemic may move focus away from areas such as defence, as recently seen in South Korea. 2020 has been marked by the successful splashdown of the Space X Crew Dragon marking a US return to manned spaceflight. Commercial space has largely focussed on manufacturing and delivering into orbit satellites for communications and earth observation and this is unlikely to change markedly. Defence space activity will continue to be a priority, and recent concerns about possible anti satellite activity might place greater emphasis on defensive measures, if government budgets allow.