FLEETS
GROUNDED Insurers face uncertainty over exposures caused by airplanes and marine vessels laying idle, writes Tim Evershed
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he Covid-19 pandemic will wipe trillions from the value of global trade this year as economic uncertainty continues, demand stalls and supply chains are disrupted. This disruption has included the grounding of a vast number of aircraft fleets and marine vessels. These idle fleets are creating new risks for their owners, operators and (re)insurers, including accumulations of risk at ports and airports, maintenance challenges and crew issues. According to estimates from researchers Russell Group, global trade will fall by $3trn (£2.38trn) in 2020, compared with last year, while airline passenger numbers dropped by more than 90% in May 2020 compared with May 2019, according to the International Air Transport Association.
Consequently, there is a significant drop in shipping and aircraft movements and even the unlocking of some of the world’s economies will only provide limited relief.
CHANGING RISK Alex Stovold, head of aviation at law firm DAC Beachcroft, says: “The risks here are clear – the aggregation of valuable aircraft assets in storage, often in locations that would not ordinarily have such a risk profile, requires careful review of various issues. These include any change to ‘ground risks only’ insurance from the usual ‘flight risks’, the oversight of appropriate physical security provision, the impact on maintenance schedules of the unexpected change of aircraft and fleet use and fundamentally the contractual protection that sits behind all of these factors.
thejournal.cii.co.uk / The Journal / August - September 2020
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17/08/2020 08:29