How data visualisation can help you understand your real-time aviation exposure

The conflict between Russia and Ukraine has had devastating repercussions not only for the people and businesses that lie within its borders but also for those beyond. For the aviation industry, shifting war zones pose significant obstacles to aircraft routes, while grounded aviation hardware also faces a significant risk of damage or confiscation. 

This is exactly what happened for certain civilian aircraft, with the Russian government seizing control of approximately 400 leased aircraft from the country’s carriers. According to a report by Insurwave client Willis Towers Watson, this has the potential to result in one of the largest aviation and aviation war claims in history, estimated to cost Insurers a staggering $12bn or more.

This figure dwarfs the amount set aside to cover claims in Ukraine for Lloyd’s, currently set at £1.4bn for aircraft stranded in Russia, as well as ships trapped in the Black Sea since the advent of the sanctions imposed on the country following the invasion in February 2022. The amount reflects nervousness on insurers' behalf to officially reserve the total quantity of claims, relying instead on coverage opinion to determine its size. Now set to face what is referred to as a mega trial in London by many claimants, Lloyd’s is looking to its syndicates to ensure they have full visibility of their exposure amid increased volatility.

In early March, ahead of its 2022 financial results announcement, Lloyd’s portfolio risk management director Kirsten Mitchell-Wallace called for gross underwriting management to be a priority across all classes for its syndicates.

“External conditions are not an excuse to not understand and manage your exposures or have a well-considered strategy,” she told the market. “To be clear, it is unacceptable to not know the location of your exposures. Gross underwriting management must be your priority across all classes.”

While it was also stated that Lloyd’s will be scrutinising 1-in-10 modelled [natural catastrophe] losses from syndicates, it was stressed that ‘equal focus’ should be placed on exposure management across all classes of business. For many insurers, that is a tall order. 

This is because the current way of doing business involves a lot of data being placed and sourced across a wide variety of teams and locations, with many insurers having to rely on manual updates via email and spreadsheets to even attempt to understand or visualise where their exposures are and their relation to what’s currently happening geopolitically. 

To get a solid grasp of your exposure, access to good quality data and an effective form of visualisation for that data is key to both understanding and making better-informed decisions about contracts, premiums and claims.

With more options to visualise your data becoming available every day, there has never been a better time for insurers, insurance buyers and brokers to make better use of data visualisation to optimise their business operations. For the best results, larger data sets are key. “The more data you capture, the more effective any position you’re going to take will become, explained Mark Costin, Commercial Director at Insurwave. 

“Understanding where losses have occurred in the past, what the loss development is, what the typical passenger awards are in different jurisdictions. This is just some of the information needed for all parties to take a strategic view when a loss event happens.”

While diving into large volumes of data can seem daunting, there are many analytics tools that insurance teams can take advantage of, from real-time dashboards to interactive maps to improve your insights and make better-informed risk transfer decisions using data visualisation as a starting point.

Through risk visualisation, you can process and interpret critical data more efficiently and naturally by using tools that enable graphical representations. Your organisation’s risk profile can be easily understood this way, as can suggestions for improving it. When it comes to claims in the aviation space – an increasingly challenging area, especially in times of conflict –  understanding the data is key.

“Claims data is difficult. No one has thus far created a claims database that is comprehensive enough to be what people perceive to be the holy grail of claims information. But that is the challenge,” Mark added.

As the demand for data transparency grows, the aviation industry is well-placed to take full advantage of the data visualisation technology on offer to improve their understanding of their exposures at any given time. 

By taking advantage of tools such as Insurwave’s interactive risk map, aviation insurance providers now have the opportunity to meet the new standards required by groups such as Lloyds by improving their ability to assess risk accurately. 

With improved data literacy, risk professionals can access detailed information about future geopolitical events, and other factors affecting policy rates, allowing them to better understand their exposures, pick up on patterns and, most importantly, focus on the details that matter most.