Aviation insurance – Flying high after COVID

Jan Coetzee founder and CEO of Azriel Aviation, a Constantia UMA, has been in the Aviation business for more than 32 years, setting up Azriel in 2010. We spoke to him about his business, the aviation sector in general and the impact the last 18 months has had on it all.

COVER: What area of aviation is Azriel involved in?

Jan Coetzee: We can insure anything from hot air balloons to even smaller type Boeing 737’s and obviously some of the Jets and helicopters. We joined Constantia as we needed a new carrier and needed to have a proper reinsurance programme behind the scenes placed with well-known reinsurers like Swiss re, Munich re, Hannover, R+B. It is very important to us, to have solid backing to ensure claims are paid. We have built up very good relationships with various people at the insurers and the reinsurers.

We do have some restrictions or exclusions on what we write, like the fact that we cannot offer terms iro of Passenger Liability where the aircraft has more than 50 passenger seats. We have also insured a couple of operators out of OR Tambo in the past, but just on the aircraft Hull All Risks itself, we didn’t get involved in the liabilities. There are also certain types of cover and/or aircraft types that we prefer not to insure, due to past experience from claims.

In terms of reinsurance, we can write any risk if it is based or operating in Africa, and the outlying islands. We therefore do business in Seychelles, Zanzibar, Namibia, Botswana, Zimbabwe and East Africa, where we have a fair amount of business.

COVER: What impact did COVID have on the aviation market and what was your response?

Jan Coetzee: We evaluated clients who were licensed to perform certain air services, for instance  flight training & charter companies and then, where possible we offered a bit of a refund or credit.

East Africa was interesting for us because we saw they had a fleet of aircraft and they reduced the cover down to maybe 10 aircraft in the air, but they still insured the aircraft whilst it was sitting on the ground with incidental liabilities that might arise from that. So, COVID didn’t have such a major impact on our business, I think because we have a spread across Africa.

But, in the same breath, due to the lockdown, we had to pay quite a large claim last year. I believe the accident occurred purely due to two things: Firstly, the pilot was not that current on the aircraft and two, in order to stay within lockdown curfew times, he had to ensure he flew the aircraft to the maintenance organization and then return by vehicle to his residence. We believe the individual was rushed and the end result was a nasty accident that claimed the lives of the people.

Due to the challenges of Covid, we realized that pilots could not fly that often and therefore specifically request details re how many hours they have logged as Pilot-In-Command on the particular aircraft in the last 90 days. From that point of view, we would still insure them but we will ask them to do a dual check with a flight instructor, just to make ensure they are current.

COVER:  You do most of your business through brokers. Do you find that it is mostly specialist brokers, or can the average broker get involved?

Jan Coetzee:  Most non-aviation brokers have told me that due to aviation insurance being classified as a very niche area with huge exposure between the aircraft’s value and the liability limits,  they would rather just do it as a sub broker through one of the aviation specialists’ brokers. The majority of our business is therefore still generated by the specialist aviation insurance brokers. It is a very small market, but we have the odd broker who insures the client’s whole farm, all the equipment etc. and then being asked to place the client’s aviation insurance as well. We do assist these brokers by providing them with guidance re what information is required for us to provide a quotation and then what the policy will actually covered with ancillary clauses to extend the scope of cover.

We actually started offering skills training the year before last year, because there is such a gap in the market. We still need to get it registered with INSETA but we have a proper training course to take the guys through the basics. We look at the pitfalls and so on and obviously also assist person to person where we can.

COVER: What sort of challenges do you see in this industry after COVID, and going forward. Are there still opportunities for brokers and for yourself?

Jan Coetzee: South Africans, in general are very resilient. I think, if we just look at our book of business, where we have received a fair amount of the new inquiries, etc. It almost looks like, baring where you have got restrictions in countries, it is back to where it used to be. A friend of mine runs a flying school and he was saying to me that they are down to 40% on utilization in comparison where they used to be pre COVID. He said South Africa is a great country to come learn to fly, because you are not really bothered, like in the UK, with weather.

We are really blessed and have very nice routes, it’s really a nice place to learn to fly. Now, the problem is that, obviously, when COVID struck ,a lot of these students were sitting outside the county and were not allowed back in. He said approximately 10 or 11 out of 50 new students couldn’t come back due to a COVID restriction. Then, another fallout is that in South Africa, as across the globe, airlines were retrenching pilots. Many parents therefore started questioning whether they should pay for their child’s pilot training, because what they have read in the paper, is that qualified airline pilots, will be sitting without jobs. Hopefully that will change in the next six months, if we continue on the trajectory that we are on now.

COVER:  In terms of Azriel, as an aviation underwriter, what differentiates you from other aviation underwriters?

Jan Coetzee: We aim to be number one with our level of service in a very competitive market. Due to the very nature of the game, we must be accessible 24/7. It sounds so dramatic, but there are often losses over weekends when we immediately get contacted, sometimes we even before the broker knows that their client had a loss. We arrange for the aircraft to be secured and then to have it recovered by selected aircraft maintenance organizations to a secure location. Through our years in the industry, we know which people to contact and we try to go the extra mile when we can.

Then just jumping back to COVID, it is great to do these teams meetings, but there is still a lot of value in the in-person relationship. That is crucial and, obviously, where we can help clients, I am very pro the personal touch. If I get invited to go meet a client or look at their aircraft or look inside their hanger, that is what we do. It is so important, so that, when there is a bit of a tricky claim, you can sit down and have a proper discussion with somebody.

Therefore, a broker will often say, “don’t you want to come with?, can we pick your brain?, how do I do this calculation?” We always go the extra mile and try and come up with creative new innovative ideas.