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Aviation insurance traces its origins to the early 20th century, alongside the development of early air travel. The first aviation insurance policy was issued in 1911 by Lloyd's of London, marking the birth of this specialized line of business. It was Horatio Claude Barber (1), one of the British pioneers of aviation, who is said to have approached Lloyd's to obtain liability coverage for his passengers.
The sector’s early days were certainly difficult, and the initial underwriting results proved to be substandard. As early as 1912, following a series of accidents caused by adverse weather conditions, the underwriting of this type of policy was discontinued.
Since that initial experience, and over the decades, the aviation insurance market has evolved considerably into a highly specialized and mature industry. Today, it plays a vital role in aviation risks management, ensuring the smooth operation of international air transport.
(1) Horatio Claude Barber (1875–1964) was a British aviation pioneer and World War I flying instructor
Aviation insurance: key dates
1911
Lloyd's issued the first aviation insurance policy.
1912
Lloyd's temporarily suspended underwriting of aviation risks following a series of accidents attributed mainly to adverse weather conditions. The London market at the time deemed that the activity still posed too high a level of risk to be insured.
1919
Création de la «British Aviation Insurance Association» par Cuthbert Heath (2), étape fondatrice de l’assurance aviation. Bien que l'organisation ait suspendu ses activités entre 1921 et 1930 en raison d’une demande insuffisante et de perspectives limitées, cette initiative représente la première tentative de structuration du marché aviation autour d'une entité spécialisée.
L’association fut finalement relancée en 1930, marquant la reprise progressive de l’intérêt des assureurs pour ce segment d’affaires.
1924
The "British Aviation Insurance Group" (BAIG) was established in the United Kingdom in 1931, which became the "British Aviation Insurance Company Ltd" (BAIC). This entity was set up as an insurance pool bringing together several major British players, including Commercial Union and General Accident, to support the emerging aviation sector. The pool established itself as one of the first players specialized in aviation insurance, contributing to the development of the first methods for assessing and covering aviation risks.
1928
The "United States Aircraft Insurance Group", (USAIG) pool, was established by two former World War I aviators, Reed M. Chambers and David C. Beebe. Convinced that aircraft insurance should be managed by industry specialists, they also founded " US Aviation Underwriters Inc." to administer this pool.
1929
- Establishment in the United States of the "Associated Aviation Underwriters " (AAU), an aviation underwriting pool, by two major insurers, Chubb & Son and The Continental Corporation, to underwrite the first insurance policies designed for aircraft.
- The Warsaw Convention was signed, establishing the first international legal framework for air transport. This agreement established a uniform system of liability for air carriers in the event of damage to passengers, baggage, and cargo. It introduced compensation caps, limited the financial liability of airlines, and harmonized the rules applicable to international air transport among the signatory states. By reducing legal and financial uncertainty, this treaty played a key role in the development of commercial air transport and in the establishment of the first aviation insurance mechanisms.
1931
The "British Aviation Insurance Group” rebaptized the “British Aviation Insurance Company".
1934
The International Union of Aviation Insurers (IUAI) was set up in London by a group of insurers and reinsurers to represent and defend the interests of the global aviation and space insurance and reinsurance market. This organization was designed to promote coordination within the sector in response to the expansion of air transport, technological progress, and the increasing complexity of international legal frameworks.
1950-1960
Sharp increase in the industry’s insurance and reinsurance capacity thanks to the rise of commercial aviation.
1952
The British government established a legislative framework, the Marine and Aviation Insurance (War Risks) Act 1952, for the coverage of war risks.
1990-1991
Cancellation of “war risks” plan and a drastic increase in aviation insurance rates for flights to the Middle East during the Gulf War.
1999
Adoption of the Montreal Convention. In force as of 2003, the treaty modernizes and gradually replaces the system established by the Warsaw Convention. The new treaty was signed by 62 States. Under article 50, air carriers shall be required to underwrite adequate insurance to cover their liability. States may require proof of this coverage before authorizing the operation of their air services.
2001
- The 11 September attacks in the United States. This is one of the most significant claims in the history of aviation insurance, events resulting in a global overhaul of "war risks " coverage.
- Establishment of "Global Aerospace" following the merger of " Associated Aviation Underwriters " (AAU) and the "British Aviation Insurance Company" (BAIC); two long-standing players whose origins date back to the 1920s.
2018-2019
The Boeing 737 MAX Crisis. The Boeing scandal plunged the global civil aviation sector into a veritable industrial, financial, and safety earthquake. The crisis erupted after two major air disasters (the Lion Air and Ethiopian Airlines crashes), before being later exacerbated by the revelation of design and manufacturing flaws. Because of these events, the entire Boeing 737 MAX fleet was grounded worldwide, resulting in thousands of flight cancellations and stricter aircraft certification procedures.
The financial impact on Boeing is colossal. Direct costs (fines, compensation and legal fees) are estimated at over 20 billion USD, while indirect losses, linked in particular to the cancellation of more than 1 200 orders and the damage to the manufacturer's image, exceed 60 billion USD.
2020-2022
Drastic drop in air traffic and historic financial losses for global civil aviation business due to the COVID-19 pandemic. The overall financial cost of the crisis amounts to more than 200 billion USD (3) in net losses for airlines alone over the period 2020–2022. Future-lost-earnings, meanwhile, exceed 370 billion USD, according to the International Civil Aviation Organization (ICAO).
2022-2026
Disruption of global civil aviation since the outbreak of the war in Ukraine. Ukrainian airspace has been closed to civil aviation since February 2022, while European airlines still do not have access to Russian airspace, which continues to affect routes between Europe and Asia. Flight rerouting, therefore, led to longer routes and increased operational costs.
Alongside the disruptions to air traffic, more than 500 aircraft operated by Russian companies were confiscated, leading to significant disputes between leasing companies and insurers. These disputes resulted in major litigation before international courts.
2026
Regional air traffic comes to a standstill in the wake of the outbreak of war in the Middle East: more than one in two flights cancelled, closure of airspaces, historic surge in ticket prices (+24%) and jet fuel costs.
(2) Cuthbert Heath est un homme d'affaires britannique, actif dans les secteurs de l’assurance et du courtage. Il est souvent considéré comme le père de l’assurance non maritime au sein du Lloyd’s.
(3) Source : Association du transport aérien international (IATA)
