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On the ground and in the air

Portrait

La Réunion Aérienne is, as the name suggests, an aviation association. It consists of three globally operating insurance groups – Generali, a subsidiary of Generali Italy, and MMA and SCOR, both from France – that have outsourced their aviation activities.

“La Réunion Aérienne combines the activities of these three leading insurance firms in the aviation and aerospace market and is one of five largest specialized insurers in this segment in the world,” explains Chief Excecutive Officer Christophe Graber.

La Réunion Aérienne was established 40 years ago at a time when the aviation industry started commercializing, and more and more planes were being used for the transport of passengers and goods. It was the insurance agent Robert Malatier who had the idea of providing tailored insurance coverage to this dynamically evolving sector.

That way, a number of insurance groups joined forces and set up a consortium with the objective of offering aviation-specific insurance contracts. “The consortium pioneered this special niche market, followed by other insurance companies,” states Mr. Graber.

Today, La Réunion Aérienne is a global leader in the aviation insurance market, with headquarters in Levallois-Perret near Paris, a branch office in London, a total of 100 employees and annual sales of 260 million USD. The company includes a smaller division, La Réunion Spatiale, which is specialized in custom-designed insurance coverage for the aerospace industry.

La Réunion Spatiale turns over 30 million USD, or 10% of total group revenues, and focuses on insuring satellites during launch and commissioning. La Réunion Aérienne provides insurance coverage along the entire value creation chain in the aviation industry, from the building of new aircraft to airport operations through to aircraft during flight.

“Our main target markets are aircraft, airlines of all sizes, manufacturers, airports and general aviation, including individual planes and helicopters,” explains Mr. Graber. “The large airlines, such as Air France, British Airways or Lufthansa, major national and intertional airports, and the leading aircraft firms Airbus and Boeing have such high demands from insurance coverage that, in most cases, several insurance groups share a customer. A single firm alone could not cover this demand.”

La Réunion Aérienne, however, is not focused on the national airlines. “Low-cost carriers have become an important market for us, too,” says Mr. Graber. “They have changed the market and squeezed out a number of local aviation firms.”

La Réunion Aérienne’s market is international. “We have customers all over the world, and we have long-established contacts to airlines, airport operators and aircraft manufacturers in the fast-evolving aviation market,” states Mr. Graber.

La Réunion Aérienne works together with insurance brokers and networks across the globe. What sets the consortium apart from the competition is that it provides consulting. “We are more than an insurance company,” explains Mr. Graber. “We also provide tailored consulting and risk management services to our customers. Air traffic is the safest means of transportation worldwide, but if something happens, the effect will most likely be dramatic. Accident prevention is indispensable in the aviation sector, and this is one of our particular strengths.”

Many of the underwriters employed by La Réunion Aérienne are former pilots and thus have in-depth knowledge of the risks involved with flying. “We have many declared experts in our team who speak the customers’ language and have the same background.” The French consortium is operating in a global growth market: Worldwide, air traffic is on the up and up, and the demand for tailored insurance coverage is continuing to develop rapidly, especially in Asia and the Middle East.

“China alone is forecast to witness a multiplication of domestic flights in the next years,” says Mr. Graber. While benefiting from a global growth scenario, La Réunion Aérienne is also confronted with a number of threats. One is the increasing pressure on the price of insurance. “The number of air traffic accidents is decreasing. This is, of course, good news, but fewer accidents mean increasing pricing pressure and growing competition among insurance providers.”

A second, persistent trend in the aviation sector is growing concentration on airline mergers in major markets worldwide. “This means a smaller number of existing and potential customers which do not necessarily have lower demands from insurance coverage but often want to bundle their insurance contracts,” explains Mr. Graber. “In general, however, aviation insurance is a clear growth market, and we have the knowledge and experience to develop with the market.”

La Réunion Aérienne sees particular potential in Asia and the Middle East, aviation markets with many recognized air transportation firms on the one hand and less reputable providers on the other. Here, the French insurance consortium makes a difference.

“We attach great importance to safety,” says Mr. Graber. “We are very selective and only offer insurance coverage to firms that meet certain safety standards.”

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