Global specialist insurance and reinsurance broker McGill and Partners has expanded its aviation insurance solutions to provide protection for aviation spare parts against the dangers of war on the ground.
The broker is working with certain operators in the London market to offer the cover, which aims to fill a “critical” coverage gap in traditional policies.
The new policy is designed to provide ground war coverage and protection for spare parts and equipment transported on the ground rather than by sea or air, and will have clear limits on the amount insured per item, subject to a prescribed aggregate annual limit.
The broker confirms that the policy provides war risk coverage for material loss or damage caused by war, invasion, act of foreign enemy, hostilities (whether war is declared or not), civil war, insurrection, revolution, rebellion, martial law, military or usurpation or attempted usurpation of power.
The coverage gap exists because historically, aviation hull war insurance only covered spare parts in the event of a war hazard while in transit by sea or air, leaving ground assets exposed.
The broker explained that with the value of a single aircraft engine approaching $50 million, the lack of ground war hazard insurance poses an immediate and significant risk to the balance sheets of airlines and lessors on these multi-million dollar assets.
Jon Petursson, Partner, Aviation Practice at McGill and Partners, commented: “The launch of this new policy is timely and demonstrates how McGill and Partners continues to innovate to deliver comprehensive protection where customers need it most. For many years, traditional hull war policies have left airlines and lessors exposed to significant financial losses due to limited cover for spare parts while in storage.
“Holding large inventories of high-value assets across multiple warehouses and hangars, including individual engines worth up to $50 million, with no existing protection for stored spare parts affected by physical damage from war, represents a significant and growing balance sheet risk. This solution can provide operators with the assurance, protection and financial security they need to protect essential equipment and high-value assets, regardless of their operational status.”
In February this year, the broker also renewed its Ukraine war risk reinsurance facility for another year, increasing the maximum limit for each risk from $50 million to $100 million.