While floods have long been recognised as a natural part of life, recent flash flooding events in Australia, Brazil, Dubai and Texas are reshaping views on the role climate change will play in the future of insurability. Aviation, like many sectors, is facing growing challenges as extreme weather events disrupt operations and increase risks. The question now, on the minds of the insurance and risk management industry, is how best to support aviation organisations in building resilience against these evolving threats.
Offering their insights, specialists from WTW weighed in on the extent to which recent flooding events have impacted the industry – and what can be done to support the sector.
The aviation sector is facing growing disruption from extreme weather events, which are increasing in frequency and severity due to climate change. “While airlines have traditionally been insulated from direct insurable risks, recent events have highlighted vulnerabilities that extend beyond damaged equipment to include substantial operational and revenue impacts,” said Charlotte Dubec (pictured left), head of ESG, global aviation & space at WTW.
She looked to the recent flooding in Dubai, where airlines were largely unaffected in terms of physical loss or damage. However, the cancellation of over 1,200 flights in just two days, whether due to flooded aprons, runways, or access points preventing passenger travel, led to significant revenue losses.
With no clear loss or damage trigger, these disruptions were uninsurable, she said, prompting the exploration of parametric and non-physical damage business interruption (NPDBI) solutions to address future risks.
“Similarly,” she said, “the aviation sector in Texas experienced significant disruptions due to extreme weather. In May 2024, flights were grounded across the state due to damaging winds, hail, and heavy rain, causing further flight cancellations and damage to smaller aircraft and infrastructure. These events, like those in Dubai, reflect the broader trend of extreme weather increasingly affecting aviation operations.”
However, Dubec noted that it’s not just about floods. In Canada, a hailstorm in Calgary became the country’s second-largest insured loss event in history, grounding 16 planes — 10% of WestJet’s fleet — and causing over 600 flight cancellations, affecting more than 20,000 passengers. Some parts of the Calgary airport are expected to take up to 18 months to repair.
“Moreover,” she said, “turbulence-related incidents have surged, particularly on transatlantic flights. Severe turbulence has increased by 55% over the past few decades, further highlighting the long-term risks climate change poses to aviation.”
Each of these events underscores the growing operational and financial risks the aviation industry faces due to climate change. Airports, particularly those in regions not traditionally exposed to such extreme weather, are now facing increasing pressures to maintain operations, leading to mounting economic and logistical challenges. As these disruptions become more frequent, the need for innovative risk management solutions, such as parametric insurance and NPDBI options, is becoming increasingly urgent.
Temitope Omonubi (pictured centre), associate director, international property, direct & facultative at WTW, identified that, from an aviation standpoint, the key insurance implication of this disruption was the realisation that some of these losses will sit uninsured as there is no meaningful trigger, which opens up an array of niche solutions that may now warrant some proper consideration. “The predominant issue to the insurance industry more generally was the losses suffered by motor and household insurers,” she said. “An estimated 100,000 vehicles were written off, for example. Many communities were under water for weeks, so properties and content were ruined.”
She underscored the crucial role flood insurance and risk management play in supporting the resilience of aviation organisations by mitigating financial losses and ensuring continuity of operations. Airports and aviation facilities can often be located in areas prone to flooding, she said, including coastal or low-lying regions. “Flood insurance helps protect against the substantial costs associated with damage to infrastructure, aircraft, and other critical assets. This financial safety net enables aviation organisations to recover more quickly after a flood event, minimising downtime and reducing the impact on air travel and logistics.”
Meanwhile, effective risk management, including flood risk assessment and mitigation strategies, is equally essential. By identifying flood risks and implementing proactive measures, such as flood barriers, drainage systems, and emergency response plans, aviation organisations can reduce the likelihood of disruptions. Integrating flood risk into overall operational planning enhances the organisation's ability to respond to adverse weather conditions, safeguarding both physical assets and operational capacity, which is vital for long-term resilience.
The emphasis for WTW is on finding the ways insureds can be supported in events such as those seen in Dubai and Texas which have highlighted gaps and vulnerabilities within clients’ coverages – putting insured values, and particularly indemnity periods, to the test. “Once the true position from the losses is known we expect that there will be discussions on how insurance can close the gap for clients,” she said. “Risk management across the UAE has historically been more focussed on non-CAT events; we expect that this will change, and a focus will now be on helping clients mitigate any impact from climate change.”
Critical to creating a more holistic overview of the risk environment facing insureds, now and going forward, is the creation – and continuous updating – of accurate risk assessment models. These models help businesses and infrastructure operators to plan for and mitigate future challenges while building greater resilience, noted Daniel Bannister (pictured right) weather & climate risks research lead at the WTW Research Network.
“[They] provide detailed insights into potential flood hazards, including flood frequency, intensity, and impact areas, enabling insureds to identify vulnerable assets and operations. Understanding their risk helps organisations implement targeted risk reduction strategies, such as elevating critical infrastructure, enhancing drainage systems, or relocating vulnerable assets, which reduces exposure to potential flood losses.”
In addition, these models support organisations in better-informed decision making when it comes to securing appropriate flood insurance coverage. By aligning coverage with actual risk levels, insureds can optimise costs while ensuring they are adequately protected.
Looking to the future and the ability – and appetite – of the insurance and risk management industry to proactively support aviation insurance clients, Bannister, Dubec and Omonubi each underscored the positivity they feel about the future. “The scale of the flooding impacts on clients and insurers means that it cannot be overlooked,” Omonubi said. “Clients are also looking for risk management advice on being more resilient. Insurers have been hit severely and will require an understanding of how clients are managing or addressing climate matters. We expect to see new products from insurers addressing the coverage gaps in the near future.”
