Meet our experts: Dennis Heinen // General Aviation

In our "Meet our experts" series, we regularly introduce our experts from all areas of the Delvag Group. This time: Dennis Heinen, Aviation Underwriter. In this interview, he talks about the situation in general aviation, insuring small aircraft, safety and premiums, and the market in the wake of the Corona pandemic.

Unfortunately, in recent years accidents involving small aircraft have frequently made the headlines. What do you think of the safety in General Aviation?
There haven’t been more accidents in recent years than before. We are experiencing a significant increase in media coverage, especially in the case of tragic accidents, such as the Ju 52 crash in Switzerland approximately three years ago. This makes it seem like there are more accidents. But the number of accidents has actually dropped on average over the last 3 years. Technical advances lead to greater safety, not only when talking about airliners, but also regarding small aircraft which are more and more modern and better equipped. This steadily increases safety.

Accidents often also result in more regulations. Do more regulations automatically mean more safety?
Although regulations do not automatically make aviation safer, we believe that they contribute to establishing standards that ensure greater levels of safety. These are progressively revised, especially in consequence of accidents. Whether for airlines or General Aviation: conclusions are always drawn in order to prevent future accidents. Technical advances and the human component also play a major role. In the end, there is still a human behind the yoke.

Do you see increased risk for the future?
Modern technology will make flying safer and safer in the future. We nevertheless always recommend that pilots thoroughly prepare for each flight. How experienced the pilot is or how many hours they have flown is of secondary importance. After a long break from flying or when flying a new type of aircraft for the first time, even experienced pilots should complete 1 or 2 flying lessons with a flight instructor or safety pilot and focus especially on critical phases of flights. During take-off and landing, where most accidents happen, it is especially important to know the aircraft inside out. There shouldn’t be too much routine either because, in aviation, it is always dangerous for pilots to feel too safe.

We currently see a certain risk that pilots will also have to get used to more traffic in the airspace again once the pandemic is over. At the moment, airspace unfortunately remains relatively empty which means more space for General Aviation. Hopefully, this will change soon and private pilots will have to watch out for more large aircraft again, especially around highly frequented airports.

There is also a risk that climate change will cause more extreme and unpredictable weather which further increases risk. The weather is of utmost importance for General Aviation. There is not only risk when flying. Currently, many aircraft are grounded, which from our point of view means high accumulation risks in the event of extreme weather events, such as hailstorms.  

How difficult is it to insure small aircraft these days?
It’s not difficult, but finding the right partner may be. We therefore recommend that our customers contact specialized aviation insurance brokers or us directly. We believe that trust is very important. We see how well the pilot community is connected. We are told by our customers—brokers and direct customers—that they get recommendations based on good experience with our services. Pilots therefore often contact us directly. We guarantee decades of experience and nearly a century of expertise in aviation insurance. Our customers profit, not only from our expertise, but also from our network in the entire industry which we established as the captive insurance company of the Lufthansa Group.

How do you see the current General Aviation market overall?
We see major national and international participants withdrawing from the market or leaving certain market segments. We blame this on the decline in premiums implemented by many competitors, but also by several brokers over the last few years. This turned out not to be profitable due to the insufficient premiums. Nevertheless, the withdrawal of certain participants offers an opportunity for us to grow in our markets which we will use.

As we want to be a reliable partner for our customers we did not dump our premiums to the extent others did. If we feel that premiums are not adequate, we don’t underwrite the respective policy. This is done out of conviction. Anything else would not be in our insured community’s best interest. At the end of the day, inadequate premiums lead to portfolio restructuring at the expense of all policyholders which we want to avoid.

The significant damages suffered by airlines in recent years—first and foremost, the Boeing 737 MAX crashes—affect the General Aviation market because insurance capacities go hand- in-hand with the international reinsurance business. This is not obvious to most customers and, of course, must be explained.

In theory, fewer providers means higher prices. How are things at Delvag?
That’s true, there is no two ways about it. After several years of decline, the market is recovering and hardening noticeably. Especially in these times, our customers value our continuity and years of trusted cooperation. While other insurance providers use flat and often drastic premium increases to reduce or cancel their portfolios through the shotgun approach, we have remained true to our line and our premiums. We see our role not just as an insurance provider, but also as a long-term partner for our customers. This sets us apart from many other market participants. 

What effects is the coronavirus pandemic having on the General Aviation market?
Airlines were of course hit particularly hard by the pandemic. But flying clubs and flight schools also had to interrupt their operations and suffered substantial losses. As one of the first insurance companies in the General Aviation market, we offered our customers extensive and non-bureaucratic goodwill premium refunds. From our point of view, trust and long-term partnerships are very important in our business. As part of the Lufthansa Group, we are all in the same boat. Solidarity and providing aid quickly is what matters to us.

A huge damper was put on the General Aviation industry. This is demonstrated by the number of aircraft and helicopters delivered. These numbers declined by more than 15% in 2020 compared to the previous year. However, we also see opportunities for General Aviation to benefit from the consequences of the pandemic in the medium term. Due to the thinning of large airlines’ flight schedules and the increasing focus on big hubs, it may be tempting for one company or another to operate their own aircraft. This is one example of many and we are excited to shape the coming years with our customers.

Thank you for the interview.

About Dennis Heinen
Dennis Heinen has been at Delvag for nearly 9 years where has served in various positions. Since 2016, he has been active as an aviation underwriter.  As a consultant in Delvag’s aviation team, Dennis is responsible for General Aviation. Another focus of his scope of work is Hull Deductible Insurance and Delvag’s participation in the Lufthansa Aviation Insurance Group’s policy. Furthermore, Dennis previously served in contracts risk management at Delvag’s subsidiary, Albatros. He not only pursues his passion for aviation in private; before joining Delvag, he worked as a ramp agent at a large German airport. Dennis also displays his affinity for aviation through his travels. Before the pandemic, he enjoyed roaming the world and looks forward to doing so again.

From Philipp Schmid
Corporate Communications Delvag
kommunikation@delvag.de