Flight delay insurance in China: not a high-flying business

Flight delays in mainland China are so bad that air travellers and insurance companies have lost interest in betting against them.

Insurers are either moving away from the product or tightening the claim conditions as delays happen so frequently, while customers are deterred from buying the insurance by the complex compensation procedures.

Shanghai Pudong International Airport, the mainland’s ­second-busiest airport after Beijing and the worst when it comes to delays, would continue to be banned from adding flights as punishment after its on-time rates had fallen below the standard for three consecutive months since March, the Civil ­Aviation Administration of China said on its website on July 1.

The start of the summer rainy season has worsened delays caused by air traffic control at ­major hubs. But flight delay in­surances, a market that emerged more than a decade ago, remains less than popular.

Air Union Insurance Brokers, an insurer set up by 13 state-owned aviation companies on the mainland, currently has only two flight delay products on offer on its website, compared with six in January 2014. Two similar products offered by Ping An Insurance on its official website are no longer available. A product manager said the in­surance could only be bought on airlines’ websites when booking tickets now.

An executive with a major insurer said: “Delay insurance itself is a bad business for us. Flight delays are too frequent and can be caused by all sorts of reasons. It is very difficult to calculate the risk. We only sell it as part of bigger travel insurances.”