A global insurer has ceased the operations of its aviation business in Australia, raising fears of higher insurance premiums among aircraft owners and operators.
Since May 09, the American International Group (
AIG) has cut off its aviation business in Australia and New Zealand, citing a strategic review of local market conditions and its portfolio.
It is understood though that AIG will continue to write “certain” components of the portfolio from its Asia-Pacific hub in Singapore where possible, where claims will still be serviced,
The Australian reported.
“Given the aggressive level of price reductions and breadth of coverage being offered by our competitors, AIG Australia is simply unable to achieve long-term scale and sustainable profitability across the full suite of aviation products being offered in the Australia marketplace,” a spokesman told the publication.
“As a result of these considerations we have made the difficult decision to exit this line of business locally.”
The insurer said it remained committed to aviation as a core business globally and that subject to regulatory requirements, it was “still looking to support certain components of the portfolio out of the AIG aviation hub located in Singapore.”
AIG told brokers that it would seek to support “a number” of accounts from Singapore, including airports and service providers such as catering, ground service, refuelling, airside liability, and industrial aid aircraft, the spokesman told
The Australian.
The move follows
Allianz’s exit of its aviation business in Australia this year after a review of the local market. The German insurer started putting aviation business written out of the country into run-off from January 01.
Benjamin Morgan, Aircraft Owners and Pilots Association executive director, said he was concerned the withdrawals would reduce competition, consequently resulting in “increased premiums for operators and owners, placing further pressure on an already stressed general aviation economy.”
In response, AIG said that while it was difficult to predict the “exact impact” of its move on aviation businesses in Australia, it believes that there remains “considerable competition” within the insurance marketplace,
The Australian reported.
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