Why is African aviation cover so expensive?

Insuring a plane based or operating in Africa costs on average four times more than it would cost to insure the same plane in South Africa or any of our neighbouring states. This price difference is almost entirely attributable to the conditions and areas in which many African aircraft operate.

For example, insuring a Beechcraft 1900 with 19 passenger seats would receive a Hull rate of around 1.2% per year in South Africa. Underwriting the same plane based in Sudan would receive a Hull rate anywhere from 3% upwards.  

Yet the basic steps required to comprehensively insure an aircraft whether in South Africa, Africa or overseas remain the same. These include the provision of:

• Hull All Risks cover, or physical damage to the body of the aircraft resulting from accident
• Hull War cover, or physical damage to the body of the aircraft resulting from war or civil strife
• Third party, passenger and cargo legal liability cover
• Personal accident cover
• Loss of use cover
• The deductible or buy down, in layman’s terms ‘the excess’

Yet despite the kind of cover required in Africa being the same as elsewhere, the way planes are used and how pilots fly in Africa is very different.

For example “planes are often required to land on grass, dirt or broken run ways. There is usually no, or very limited, flight control at the smaller airfields. Aircraft maintenance is also a challenge due to lack of facilities, expertise and availability of spare parts” says Alison Penderis, Senior Aviation Broker, Alexander Forbes.

Under these conditions:

• Hull premiums may increase if planes are not hangared and are regularly exposed to rain, wind and hail. Also, landing on poorly constructed or maintained runways, for example, could increase the chance of damage to the aircraft
• Hull war cover will be more expensive in areas of unrest
• Personal accident cover will require higher premiums due to the inherent risks posed by the environment as well as limited access to good medical facilities
• Loss of use increases since delays in repairing and servicing aircraft result in loss of earnings as aircraft spend more time on the ground.
• Even though deductibles are pretty much standard, insurers will request larger deductibles if an area of operation is particularly dangerous. This is because of the potential costs involved in getting a damaged aircraft from a remote or inaccessible location to where it can be repaired.
• Interestingly, Penderis observes that “passenger liability generally remains the same regardless of where a plane is operating, even in Africa.”

Yet in spite of these very real reasons for African aviation insurance costing so much more “the trick in Africa, no matter how difficult conditions are, remains understanding the specifics of the risk on a case by case basis” says Penderis. Knowing the different conditions and circumstances under which aircraft operate in Africa enables an accurate identification of the real risks that each individual aircraft faces.

This, in turn, allows the risk to be matched with the risk appetite of the right underwriter at a suitable price. In short, knowing and understanding “the particular risk that each individual aircraft is facing, as well as those that it isn’t, will ensure that only the right risks are covered and the costs of underwriting aircraft in Africa are kept to a minimum” concludes Penderis.