Humanity is currently enduring the highest number of conflicts since World War II, according to The Global Peace Index 2024.[1] The study points to 56 active conflicts worldwide involving more than 90 different countries, the highest number since the index was created 18 years ago.
56 active conflicts worldwide involving more than 90 different countries.
The ramifications of these conflicts for people on the ground are often devastating, with hopes, dreams, livelihoods and lives shattered as soon as politics and discussion fails and hostilities break out.
The challenges for both the aviation industry and the insurance sector are trivial by comparison, but conflicts create significant complications for organizations trying to operate in or around conflict zones.
Natural disasters also need to be considered. Volcanoes and earthquakes, as well as changing weather patterns, have insurance implications by creating short term no-fly zones and hotspots that airlines need to take into account at short notice.[2]
This article will discuss the insurance implications of flying in and around conflict zones as well as hotspot flying, the act of taking an aircraft into a conflict or natural disaster zone, and how insurance and risk managers can offer perspectives and advice about this dangerous, but often vital, activity. Despite the uncertainties, there are passengers that want or need to travel and there are mercy flights that need to take place.
The insurance sector has clearly defined roles and responsibilities in these circumstances and will often support the aviation sector where the risks are understood and airlines can show that they have taken steps to reduce the possibility of an incident as far as possible.
They are sometimes seen as a blunt instrument (frequently by the governments that are placed under them), but economic sanctions and other restrictions on business and trade are often one of the global community’s first responses to escalating tensions.
Sanctions and trade restrictions can pose challenges for airlines, the passengers that use them and the insurance companies that support them.
Regulators in the financial services have become more active, tightening sanctions regimes to the point that in many cases, organizations are no longer allowed to work with partner entities if they are also working with a sanctioned regime or company active in the territory.
The expectation of transparency has risen, and global operations need to be aware not only of who their clients are, but also who the clients of the clients are.
It’s worth pointing out that not all sanctions apply to all countries, and one person’s enemy is another’s friend. This creates a complex global patchwork of sanctions and trade restrictions and means that organizations sometimes need to approach sanctions more carefully than they might in a less complicated world. This reality applies to both airlines and organizations in the insurance sector.
Although sanctions and trade restrictions can limit some airlines’ destinations rosters, they aren’t the only constraint. Flying over capital cities is often prohibited or restricted to certain corridors, as is flying over most nuclear power stations and other regions deemed to be sensitive. There are also temporary no-fly zones, put in place as a result of natural disasters or conflict. Flight plans need to be lodged with the authorities before flight and the desired flight paths must adhere to approved and recognized air corridors.
From an insurance perspective, these air corridors are generally agreed by governments in negotiation with international aviation authorities, so insurers expect airlines to follow the guidelines closely.
Insurers are in the business of risk – it is undeniably their raison d’etre – however their willingness to provide coverage for certain operations differs from one organization to the next. While insurers have to comply with sanctions and trade restrictions where appropriate, some can be persuaded to cover flights to hotspots, specific destinations, countries or regions where there is a perception of elevated operational risk. This can include regions suffering in the aftermath of a natural disaster, war zones, areas of political instability or exposure to terrorism, or places where there is a perceived or evident greater risk of a malicious act against an insured aircraft or flight operation.
Insurers’ approval for certain routes, especially those that are flying to (or even simply over) areas considered as hotspots, can be difficult to obtain and is invariably expensive, so how does an airline engage with insurers if they have the desire to fly to such locations, either commercially or to offer humanitarian aid?
Insurers will have their own information feeds that aid their decision-making process, but they would expect the airline to have performed a thorough risk assessment before being approached. They would also need to see the relevant elements of this risk assessment before they agree to support hotspot flying.
It’s worth noting that conflict zones heighten risks for all airline policies, not just the hull war. The simple reason for this is that if an aircraft suffers some minor damage or has a technical issue upon landing, maintenance crews or mechanics are more likely to find it difficult to gain safe access to fix the damage. This increases the risk that an aircraft will have to be declared constructive total loss in either a conflict or a natural disaster zone.
Ultimately, most commercial airlines exist to offer regular services for transporting passengers or goods via the air.[3] The way that airlines offer their services differs from one to the next, but they each play a role in making all parts of the world accessible for all.
The current level of international tension has created a peculiar situation. On the one hand we have fare paying passengers seeking airlines to take them where they want to go, and on the other we have various restrictions and sanctions limiting the availability or regularity of such flights.
Sanctions, no-fly zones and hotspots mean that some locations cannot be reached by every airline. Airlines wishing to expand their network or change their operational reach need to detail this to their insurers to ensure adequate coverage can be maintained. Open and frequent engagement is key, although there is likely to be an additional charge for cover to reflect the increased risk.
While the level of geopolitical tension is higher than it has been for some time, there are clearly defined industry and insurance procedures in place to support aviation activity. In the end, airline insurance operates on the same principle as any other kind of vehicle insurance: if the operational requirements and risk assessments are clearly conveyed, understood by insurers and deemed to be at tolerable risk levels, there often is a supportive market available. Such operations are considered on a case-by-case basis, require transparency and are more likely to happen where a relationship has been nurtured.
