Swiss Re takes on the US business aviation market

Global reinsurer Swiss Re is keen to insure general aviation across the US and is hiring a team of specialists in New York to build a portfolio.

Swiss Re is one of the world’s largest reinsurance companies offering both underwriting, through its Corporate Solutions division, and re-insurance. The company will insure general aviation directly and will work with brokers to find clients. It will also partner with Seattle-based London Aviation Underwriters (LAU) to insure small general aviation risks.

“We have been looking at the US for a while now but it takes time. The US is not one country, it is 50 countries,” says Wayne Murphy, head of general aviation at Swiss Re Corporate Solutions.

Murphy says it has filed new product forms with each state allowing it to offer hull and liability cover and commercial general liability cover.

 “Anyone that is happy to put up capital and compete is welcome,” says Marion Hope, chairman of South Carolina based Hope Aviation, a leading US business aviation broker. “Swiss Re is more than 150 years old and is one of the world’s largest insurance groups so they have capital and a track record.”

Hope says that low investment returns mean that insurers are looking to use their capital to underwrite in a variety of industries including business aviation, making it a very competitive market. Australia’s QBE Insurance Group started a US general aviation underwriting unit in February 2011 and there have been other, smaller, start-ups.  Hope Aviation knew that Swiss Re had been planning to launch in the US for over a year.

In 2008 Swiss Re started offering general aviation underwriting in Canada and this year it acquired the right to renew the aviation portfolio of Canadian insurer GCAN (GCAN exited general aviation when it was acquired by a UK insurance company). Swiss Re started offering business aviation in Germany in 2008, in Australia in 2010 and in Singapore in 2011.  Murphy says they are looking to open in other countries.

Swiss Re already insures US airlines from an office in Munich, Germany. However, Murphy says that the size of the general aviation market is significantly larger than the airline market. They estimate that the US general aviation market is worth between $1.6 billion and $2 billion – which is more than the global airline insurance market.

The reinsurer defines general aviation as any aircraft with less than 60 seats. As well as aircraft and rotary owners and operators it is also looking to work with airports, manufacturers and FBOs. As well as damage to aircraft and liability insurance it will also offer business interruption, multi-year and long-term deals, self-insured retentions and extra expense protection policies.

Murphy stresses that they have invested significantly in the US and see it as a long-term business. Hope says this is good news.

“A lot will depend on the people they hire but if they take a long-term perspective they are very welcome,” says Hope. “We know they have the money and have had staying power in the past so this is good news.”