Marine and Aviation Insurance Pricing

Marine Insurance

Marine insurance is one of the oldest forms of insurance, covering risks to vessels (hull insurance), cargo, and liability arising from maritime activities. Pricing marine hull insurance considers vessel type, age, tonnage, flag state, trading routes, and management quality. Cargo insurance pricing depends on commodity type, packaging, shipping route, mode of transport, and loss history. The global nature of marine insurance creates unique challenges: multiple jurisdictions, international conventions (like the York-Antwerp Rules for general average), and the potential for catastrophic losses from events like vessel groundings, piracy, or port congestion during natural disasters.

Aviation Insurance

Aviation insurance covers aircraft hull damage, liability to passengers and third parties, and war risks. The market is highly specialized, with relatively few risks but potentially enormous individual losses. Pricing considers aircraft type, use (commercial, general aviation, cargo), pilot experience, geographic exposure, and fleet size. Loss data is limited due to the rarity of major aviation accidents, making traditional frequency-severity modeling difficult. Actuaries rely on engineering assessments, manufacturer safety data, and global loss databases. The market is cyclical, with rates hardening after major losses and softening during periods of favorable experience. Accumulation risk from aircraft at airports or maintenance facilities requires careful assessment.