Turbulence ahead: how geopolitics is impacting aviation insurance

As airlines suspend flights to areas of concern and strategise alternative routes to avoid conflict zones, the operational complexities are often subtle from an operational perspective yet can be far-reaching. 

For example, GPS, short for Global Positioning System, is one of the four global satellite positioning systems that fall under the banner of the Global Navigation Satellite System (GNSS) and is a vital navigation tool for aviators, replacing the expensive ground devices that transmit radio beams to guide planes towards landing.

The system has experienced a rise in interference around the world following the increasing number of conflicts, raising fears due to an increased number of risks that could arise from planes losing or altering their planned navigation paths. Instead of the satellite signal abruptly disappearing, as with jamming, this new interference, also known as signal ‘spoofing’ subjects aircraft to counterfeit signals delivered in place of the original signal. This is usually known as signal spoofing. It tends to impact areas close to war zones as the technology is used to send military drones off-track. For commercial flights, the wrong signal might give a receiver unit a false position indication while providing pilots with indicators that their GNSS equipment is functioning normally. In extreme cases, this confusion has led to ground proximity warnings systems giving false commands to pilots and with the navigation equipment rendered effectively useless, Air Traffic Controllers must work overtime to provide additional navigation assistance to pilots by radio using their ground-based radar.

Aircraft flying over Iraq have been more vulnerable to this situation in recent months. Similarly, Estonia recently accused its neighbour Russia of jamming GPS navigation devices in airspace above the Baltic states, echoing concerns from airlines that say they have been contending with such interference for months.

As these geopolitical tensions are most likely to continue, this has potential to become a more commonplace concern for aviation insurers. In these circumstances, having the ability to view your exposures on a real-time basis provides the ability to spot these irregularities and respond to them more effectively. Insurers are also now taking advantage of third-party data sources to incorporate into their own data feeds to provide more accurate detailed pictures of their risk landscapes.

In this era of rapid escalation, one singular view of your exposure is often inadequate to allow for the best decision to be made. With 2024 elections still taking place creating internal security environments, third-party data can significantly strengthen risk management practices by providing organisations with a more accurate and comprehensive view of their exposure to risk.

When considering enhanced threat intelligence, should insurers have the ability to simultaneously overlay third-party data sources onto their existing view of risk, this can not only save time and effort avoiding the manual process of seeking out multiple individual sources of data, but also provide insurers with the agency to make proactive decisions around their risk appetite and take steps to advise their clients when they wish to make changes to existing cover.

Insurwave is one such data platform that offers smarter aggregated exposure monitoring based on declared values, contracted terms and live tracking for dynamic risks for a full picture of your risk as opposed to a limited snapshot in time. Ultimately, the more data you can collect in one place, the more accurate and detailed the pictures of your risk landscape will be.

However, no matter how complete a view you have, the insights gained will be limited by how current and up-to-date they are. Taking into account the prevailing geopolitical instability, coupled with political and economic actions, these conditions invariably lead to uncertainty and will require the industry to act quickly to modify processes, operations, and business strategy.  

Having the ability to view your exposures on a real-time basis provides the ability to spot these irregularities and respond to them more effectively. There are many events that will impact your exposures, from climate change to conflict and most relevant to this article, local elections. One thing these occurrences have in common is their ability to change the risk landscape overnight. 

For example, one geographic area you may have written off as benign in December could by May of the following year be anything but. So how do you proactively manage incidents like that if and when they should occur? 

Technology platforms like Insurwave offer advanced exposure monitoring tools such as our real-time Risk Map that enables insurers to proactively monitor areas of interest and take an instant read of the situation to monitor for such eventualities and take appropriate action when necessary.

Insurance marketplaces like Lloyd’s are continuing to raise expectations for insurers to understand how the multitude of geopolitical conflicts are impacting their portfolios. With many of these events slowly transforming into perennial conflicts that do not go away or resolve themselves quickly, it is imperative for insurers to deploy some form of real-time monitoring to ensure their threat intelligence is up-to-date. Enterprises that do not get out ahead of the new threat landscape will inevitably find themselves falling behind it.

Regular monitoring of geopolitical flashpoints can help organisations assess and respond to threats as and where they arise. Similarly, by having a comprehensive view of your exposures overlaid with third-party data sources, insurers can begin to spot trends and patterns that can help offer some warning that tensions may be bubbling up, allowing them to plan accordingly, forewarn staff, improve security, and put contingencies in place.

With more and more insurers turning to tech to help them transform their exposure monitoring capabilities, those who are slow to catch on may find themselves struggling to be as proactive in their risk selection as those who have a real-time read on the world and are equipped to make those determinations swiftly. Learn more about how Insurwave can help you.