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Working in the cabin and cockpit of an airplane is a special job in many aspects. This is also reflected in the Disability Insurance (DI) of aircrews.
The medical requirements for this group are particularly high and must be continuously met since even the slightest sign of a mental or physical problem may question the ability to operate in the air. Failing to meet the requirements could ultimately lead to the loss of the required pilot’s license or cabin crew member’s attestation (a certificate known as a CCA). Due to the very high standards of the requirements, for example, a member of this professional group might not be allowed to work any longer, even before an illness displays its full effect. The risk of an insured event is therefore particularly high for these professions.
As a result, aircrews have always represented a special risk for insurers. This risk could increase even further as the coronavirus pandemic keeps the world in suspense. It seems conceivable that the number of insured claims will increase noticeably in the foreseeable future, not least because of the economic situation of air carriers.
Having the extreme decline in passengers and the high running costs at the same time has led to a situation that is threatening the existence of many airlines. It is questionable whether and when the industry will recover comprehensively. For example, Eurocontrol, the European Organisation for the Safety of Air Navigation, estimates that the level of air traffic in 2019 will not be reached again until 2024 - provided that a vaccination is widely available for travelers by summer 2021.1 However, some speculate that the aviation industry will not recover for a much longer period. Prominent explanations cite either a permanent decrease of business travel as a result of the advancing corporate digitization or the shift of private individuals to appreciating a vacation in the vicinity.
While some airlines have already received extensive financial support from their governments to avert insolvency, others have taken additional steps. The Lufthansa Group, for example, the largest European airline (measured by the number of employees), plans to reduce its staff numbers from around 138,000 (end of 2019) to just over 100,000.2 This is likely to affect both administrative and flight personnel.
This special economic situation of airlines could also affect the area of DI for aircrews. It cannot be ruled out that SARS-CoV-2 will have a medium to long-term indirect negative impact on the health of individuals. For example, mental or physical conditions may arise or deepen due to ongoing existential fears and social isolation. In that case, the person may not meet the medical requirements, which are very high, for either a pilot’s license or a CCA. It is also conceivable that anyone working in a cockpit or cabin may make an insurance claim in the context of an impending job loss due to airline industry constriction, even though a mental or physical condition does not yet indicate any impairment of fitness to fly. Both scenarios could ultimately lead to an accumulation of expensive insurance claims.
However, insurance risk assessment needs to consider the different implications of unemployment and disability for cockpit and cabin crew members. With regard to the crew that works in the cabin, a disability seems more likely to be temporary than permanent. The assumption is that members of the cabin crew generally do not risk a permanent loss of their flight attestation in the event of a temporary disability because a CCA is usually issued by the respective airline. Losing a CCA due to a medical condition that is, for example, difficult to objectify, does not mean a general future inability to fly with all potential employers. Re-entry into the previous occupation as part of a cabin crew would be possible, especially as soon as new positions open after the economic recovery.
By contrast, the risk is assessed differently for the cockpit crew and must take into account that the members of this crew have usually completed several years of training and generally do not have any other professional qualifications. Consequently, their income depends on having a flight license, which could be permanently threatened by any kind of a health problem. Even more significantly, in contrast to the flight attendants' attestation, the licenses of commercial pilots are usually centrally administered by governmental institutions, such that if a license is lost once, obtaining a new license is more difficult.
An insured pilot’s claim of job loss due to disability could thus have a lasting and significant impact on his or her professional future. As a result, younger pilots are likely to be careful not to call their medical fitness into question. On the other hand, a permanent loss of a flight license would be less serious for insureds close to retirement age if an insurance benefit can be expected.
In the current situation, it is essential for insurers to monitor developments closely in the context of DI for aircrews in order to be able to respond quickly. Gen Re has many years of experience and extensive expertise in the area of insurance against special risks, such as aircrews. This particularly includes aspects of underwriting, product development, premium calculation and claims management.
We would be happy to advise you on this subject. Your Account Executive at Gen Re looks forward to hearing from you.
