After more than a decade of price reductions the market is reacting. Indeed, losses nowadays do not make it to the headlines as, thankfully, the airline industry has never been as safe as today. However, accidents still happen even though they are, so far, lower in magnitude with no or limited loss of life. New and sophisticated technologies are greatly contributing to it, as well as safety tools and initiatives such as SMS and IOSA. These innovations however have a cost attached and partial/major losses have increased very substantially. Today premiums charged do not cover these costs. The market is losing money and has been for a number of years, which is not sustainable.

We have to react but we have to do so in an orderly manner and with a pragmatic approach. All insureds have to contribute to the pot irrespective of their insurance results as they are part of a mutuality and as such each of them has to pay a minimum contribution. Our evaluation must be risk based and needs to consider complexity of flying (weather, altitude and environments), airlines safety philosophy and local legislation.

Another major factor concerns the assured’s losses. This is a further differentiation, where we have to analyse loss patterns both in terms of magnitude (or not) of losses and frequency at which they happen. The additional charge required needs to be commensurate to this analysis.

Altogether, this is a unique opportunity to come back to underwriting where risk pricing and differentiation have to be achieved. This is the only way in which we will continue to earn respect from the clients, their brokers and our principals.

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Chief Airlines Underwriter
& Sales Development



Following a relatively benign loss period 2018 saw some unusually high airport related as well as manufacturers claims as a consequence of some of the wider coverage granted in this soft market. Whilst some of this coverage was new, by definition there was no historic record to review or consider. Underwriters understood the coverage but in hindsight some of the limits granted may have been too high and the premium charged (if any) was inadequate.

The Aerospace market, including LRA in respect to large accounts in its portfolio, has reacted almost immediately with pragmatic and appropriate premiums being calculated. This has been at the same time as Lloyd’s has hardened its stance on business plans resulting in withdrawal of capacity as well as a strengthening in resolve with regard to rating. Long term policies are still available in the market but some Underwriters are “hedging” and not committing a full line to these. I would expect this situation to continue with likely further withdrawals and consolidation through mergers and acquisitions. In the event of continued challenges to profitability this may be accelerated. The result of this situation allows LRA to optimise its commitment and take opportunities where they arise. Our strength of security and significant capacity as well as our history and underwriting experience enables the differentiation that our clients and brokers demand. We have had excellent support from our brokers and clients and are now moving to contribute further as we gain and offer our influence to them whether in a supporting capacity or ultimately as a strong and empathetic leading underwriter.
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Graham Daldry
Chief Aerospace Underwriter

General Aviation

Make value out of know-how

With premiums decreasing for more than 15 years on the back of over-abundant capacity and the subsequent collapse of underwriting results, premium levels have been falling short of paying all the losses, which prove to be increasingly expensive because of new technologies (electronics, carbon) and rising litigation. Technical pricing increases are therefore no longer objectionable, especially as many market players stepped out of the line, because of its lack of profitability.

Security-wise 2018, which saw a doubling of the number of victims in France, has been a gloomy year for the light aviation industry. However, the sector continues its growth path with a total number of hours flown on the rise thanks to generally favourable meteorological conditions. The business jet market, with increasing unit sales, which started in 2018, is firming up globally as reflected in the machine upgrading and the corresponding increase of insured values, whereas in the helicopter market, premium level remains largely insufficient in respect to losses.

LRA, which has been a participant in the general aviation market for more than 65 years now, decided to stay in the market and adapt its underwriting policy on a case-by-case basis; our strategy consisting in proposing reasonable rate increases while valuing the continuity of our relations with our most loyal clients. The growing presence of LRA in the professional segment of drone users reflects our intention to support its impressive development through an increase of preferred partnerships with our specialised intermediaries. With its highly experienced team LRA deploys its know- how in Europe and beyond, while bringing to its clients and partners customised solutions and a tailored service, in particular when it comes to claims management.

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Christophe Kleider
Portfolio Manager General Aviation


Disruptive effects and opportunities

The space business ecosystem is currently going through a profound change due to competitive pressure of new and less expensive satellite-based (GEO HTS, LEO, MEO) and ground-based solutions. All participants, from operators to manufacturers, are impacted, including their insurers, and over-capacity is dominating the market. The very nature of the traditional business model is to be transformed radically. GEO risks, with their highly demanding levels of insurance capacity, are sharply decreasing in their contribution to the balance of the market portfolio. Meanwhile non-GEO risks whilst growing in numbers and relative contribution, are challenging and non-homogeneous due to their technical nature, risk features, actual insurance covers needs and lower insured values.

The typical risk portfolio profile to be addressed by the market is much different now than it was just 3 to 5 years ago. The evolution is expected to continue, with a high number of risks requiring a small capacity going forward, and fewer risks with over USD 100 M values. But the problem is that most of the individual players continue to operate as if nothing is changing: Inadequacy is all the more evident when considering current pricing levels, combined with growing portfolio exposure unbalances.

Committing a large capacity is hence, more than ever, a dangerous game that LRS has always elected to avoid, instead relying on a combination of risk selectivity and line-size consistency, with a favourable experience, as our long-term partners could observe. We are now focusing our attention on the identification of the challenges to be met in our ecosystem, and continue to provide to our clients, brokers and capital providers with the long-perspective continuation of our practice, as a clear-thinking specialist space market player.

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Michel Brafman
Chief Space Underwriter / R&D Technical Advisor