Here at Air Courtage, we admire the pioneering spirit and endeavour that make the dreams of innovators and ordinary people come true.
On the 4th of August 2019, Francky Zapata, founder of the company that created the Flyboard, an individual air mobility platform, achieved his dream to be called “the flying man”. He crossed the English Channel on board his Flyboard Air at 20 meters above the water. Standing on his board, he flew the 21 miles that separate France and England at a speed that reached 170 kph (105 mph).
It was a truly remarkable achievement that could not, in today’s risk mitigated world, have been accomplished without proper insurance in force. Fortunately, Air Courtage Assurance was here to help Francky to find and set-up an insurance solution for what many insurers considered uninsurable venture.
There are various reasons why an insurer is worried about a ‘new risk’, and the main one is related to the absence of statistics. In fact, a prototype is, by nature, an increased risk for the insurer as the test flights have not yet been carried out. If we take a look at some recent examples, we can in fact see that there could be quite a lot of incidents/accidents at these early stages of the testing process. For example, Boeing and its subsidiary Aurora Flight Science’s unmanned passenger air vehicle (PAV) prototype, crashed on the 4th of June 2019 during its fifth test flight in Manassas.
Additionally, it is a very heterogeneous risk for the insurer, with no statistical information to enable the insurer to determine with precision what could be the maximum possible loss, or the potential frequency of such a loss occurring. The ‘product’ being new, the insurer does not know yet if it really is reliable and safe, so the perception of the risk is inherently subjective. You may, for instance recall an innovative American amphibious light-sport aircraft which appeared to be a very promising aircraft during initial testing. Unfortunately, it then suffered a couple of serious accidents, tragically resulting in the death of the test pilot in in one and a famous US baseball player in the other, which clearly put its launch in jeopardy. From the insurer’s point of view, even if they supported the risk from the very beginning, the necessary continuity to ensure some acceptable premium volume is not guaranteed.
Furthermore, insurers tend to be quite reluctant to take on innovative risks, as they cannot reach the critical mass, which is one of the pillars of insurance, especially if they fail to mutualize individual initiatives. They usually feel that the limit they cover is not in line with the extent of the premium earned, and that they will never recover from a claim. Even though it is in contradiction with insurance and its principle of mutualisation of risks, insurers tend to look at the ‘Payback Period’, which is the amount of time needed to earn back the cost of a potential claim. This is a growing trend as most companies now look for ‘safe risks’, a balanced portfolio and immediate profits.
All of these reasons justify the tendency of insurers to keep away from risks involving innovation.
There is lot of talent and innovation in the aviation world, and recently our team was pleased to assist with the presentation of Ivan Shaw’s ISA180 SEEKER during the LAA Rallye. We wish the ISA180 a very successful future, as with the Europa!
At Air Courtage, we aim to be especially supportive of those who are designing tomorrow’s aviation solutions and we understand that innovation can be a path full of pitfalls. We are committed to doing everything in our power to simplify its insurance formalities.