Aviation insurance
Market overview
In general, the airline industry faced a challenging environment throughout 2025, marked by several significant losses and ongoing uncertainty driven by geopolitical tensions and economic factors, including tariffs. The airline insurance market faced financial challenges, with attritional claims consistently nearing US$1 billion and total estimated losses approaching US$3 billion by mid-year.
Airline
Despite these substantial losses, underwriting capacity remained largely stable, with only one major insurer exiting the direct aviation insurance market in the first quarter of 2025. While this withdrawal, along with the long-anticipated UK High Court decision favoring aircraft leasing companies, did not have an immediate impact on premium levels, it intensified scrutiny on sector profitability and raised concerns about potential capacity tightening.
The occurrence of major accidents in the US and Hong Kong during the latter half of the year contributed to insurer efforts to charge higher premiums. This upward pressure on rates was further intensified by prior-year loss deterioration and renewal cycles entering the market with underwriting deficits. By the fourth quarter of 2025, premium increases had become widespread, although the level of increase did not necessarily meet insurers’ desires.
Capacity remains a critical factor in pricing dynamics. Loss-free renewals, particularly for narrow-bodied operators with lower liability limits, have intensified competition among insurers. Conversely, pricing remains challenging for operators with active loss histories or those operating high-value wide-bodied aircraft with liability limits exceeding US$2 billion and US airlines with a perceived higher risk profile due to expected US passenter awards.
The Hull War and AVN52 segments continue to see excess capacity, contributing to higher levels of competition and rate decreases at levels not seen since prior to 2022 (pre- the Russia/Ukraine conflict). Additional capacity in this sector has helped to moderate premium increases within the all-risks segment for many insureds.
Summary
- For the most part, capacity remained ample despite the exit of one major insurer in Q1 2025.
- Significant losses in 2025 prompted insurers to seek premium increases, though increases were generally at levels below insurers’ expressed expectations.
- Loss-free operations with lower limits of liability benefited from increased levels of insurer competition, while pricing challenges persisted for wide-body risks seeking to purchase higher limits of liability.
- Most US airlines experienced material pricing increases as insurers looked to realign rating of US liability exposures following high profile accidents in the US during 2025.
- Hull War and AVN52 capacity remained readily available, helping to counteract rising premiums in the all-risks segment.
- All risks premiums may rise in 2026, but increases will likely be moderated by available capacity.
Aerospace
The aerospace sector experienced a strong resurgence in 2025, reflecting the global airline industry's recovery from the COVID-19 pandemic. Passenger volumes reached record highs, driving increased aircraft utilization, higher flight frequencies, and renewed demand across the aerospace ecosystem. This growth generally led to revenue gains for airlines, manufacturers, airports, and maintenance providers, but also raised insurers’ risk exposure as operations returned to or surpassed pre-pandemic levels.
Claims activity rose in line with increased utilization; however, claim severity and overall loss values surpassed most insurer expectations. The introduction of new-generation aircraft and advanced technologies, while generally improving safety and efficiency, contributed to higher repair costs, greater reliance on specialist parts, and more complex maintenance requirements. Persistent global supply chain disruptions further contributed to loss severity by extending repair times and limiting component availability, impacting both hull and aerospace lines.
One significant concern in 2025 was the growing uncertainty around older policy-year liabilities. Elevated liability awards, social inflation, and evolving legal interpretations challenged some underwriting assumptions and portfolio valuations. These dynamics appeared to prompt greater underwriting scrutiny. However, additional capacity did not allow pricing increases at levels sought by insurers.
Some companies secured 2026 capacity early to aim to mitigate the effects of premium and capacity uncertainties. Late 2025 market developments, including premium increases, have heightened insurer focus on the aerospace sector.
Insurers remain focused on balancing client retention with cautious underwriting and pricing. Meanwhile, reinsurers are maintaining higher loss retentions and fragile excess-of-loss pricing in response to emerging 2025 losses, which is expected to add pressure on direct insurers. Technological advances, such as new aircraft deliveries, enhance operational efficiency but can also drive higher repair costs, attritional losses, and complex claims, especially where specialist expertise and parts are scarce. Insurers are expected to focus on underwriting discipline in 2026, focusing on loss experience and pricing. Insurers’ attempts to align premium income and claims performance will be critical as they face increased aircraft utilization, technological complexity, legal uncertainty, and long-tail liability risks.
Summary
- Claims activity rose, with claim severity and overall losses generally exceeding insurer projections.
- Growing uncertainty around older policy-year liabilities driven by elevated awards.
- Insurers are aiming to manage the volatility of long-tail exposures while pursuing today’s goals.
- Capacity remains ample, though insurers are expected to focus on underwriting discipline in 2026.
Airlines
Pricing environment
The all-risks market became more challenging in the fourth quarter of 2025, driven by significant losses incurred throughout the year that affected many insurers. In response, several insurers made adjustments to their strategies. Meanwhile, some newer market entrants, without recent loss exposure, offered attractive quotes; however, price reductions were generally not observed.
Premium analysis per quarter, 2024–2025
Airlines
All risks: Premium change analysis
Weighted Average is the total premium figure and the percentage change between each quarter. Mean Average is the mean of the individual airline percentage increases. Summary - Weighted average considers premium volume and mean average does not.
Despite this, airlines that demonstrated strong performance metrics and credible safety records typically attracted ample interest from insurers. Some companies achieved flat renewals or modest rate reductions, but these cases were the exception rather than the norm.
Claims
Major losses incurred in 2025 pushed claims to their highest level in the past five years. This situation, coupled with ongoing legal uncertainty related to the Russia lessor claims, pressured underwriters and led to increased premiums in the fourth quarter.
Airline losses* >US$10 million, 2020–2025
Source: Cirium *Excluding attritional claims
Airline insurance market performance, 2016-2025
Source: Cirium
Average claims over 10 years.
The year ahead
Insurance market conditions for well-performing airlines are expected to remain broadly stable in 2026, barring unforeseen changes. However, companies with higher risk profiles or increased exposures may see larger rate increases. Notably, insurers continue to express heightened concern regarding US liabilities. This may result in additional price increases for US airlines, particularly if there is further loss activity in that region.
Hull War
In 2025, the Hull War market shifted away from the compounding rate increases observed in recent years. Insurers’ financial performance appears to have contributed to attracting new capacity. New entrants offered substantial lines at attractive pricing.
Capacity remained available despite the July 2025 court ruling that Russia/Ukraine lessor claims would be covered by Hull War policies. Rate reductions accelerated in the fourth quarter, with lead insurers generally offering double-digit decreases depending on exposure growth, alongside potential composite savings through vertical integration.
While 2026 appears generally favorable for clients, the Hull War segment remains volatile. Insurers continue to exercise caution given global political instability, focusing on exposure selection, aggregate management, and preserving their abilities to amend terms or issue cancellation notices.
Hull war potential capacity, 2021–2025
Note: Capacity is deployed by insurers on a risk-by-risk basis.
Excess AVN52
Excess AVN52 market capacity expanded significantly in Q4 2025, with new entrants and the return of former participants. Existing insurers also increased their line sizes.
This additional capacity eased pressure on higher-limit placements, enabling premium reductions that ranged from flat to 10%. While excess AVN52 is generally not a loss-making sector, in 2026 insurers may focus on strategic capacity deployment, balancing risk against reward.
Excess AVN52 potential capacity, 2022–2025
Note: Based on a combined single limit basis.
Aerospace
Manufacturers and MROs
Coverage environment
Overall, the aerospace industry reported increased turnover in 2025, compared to the previous year, resulting in higher exposure for insurers alongside consistently elevated levels within these sub-sectors. While capacity was available, underwriters exercised greater caution, especially regarding manufacturers, with heightened focus on maintenance, repair, and overhaul (MRO) providers and component manufacturers.
Areas of increased scrutiny included product liability risks and supply chain concentration. Additionally, emerging but significant exposures, such as cybersecurity threats and software failures, were important considerations.
Premium and terms
Rates in this segment remained broadly flat in the fourth quarter, with insurers focused on structure, limit sizes, aggregation risk, retroactive exposures, and contract wording. Insurers scrutinized placements featuring high-limit excess towers and cumulative exposures from connected operations. The recent trend toward long-term agreements continued, but depended on loss experience and exposure conditions.
Manufacturers and MRO: Premium analysis per quarter, 2024-2025
Weighted Average is the total premium figure and the percentage change between each quarter. Mean Average is the mean of the individual airline percentage increases.
Summary - Weighted average considers premium volume and mean average does not.
Airports and service providers
Coverage environment
In the fourth quarter of 2025, the airport industry showed strong growth, particularly in satellite airports, with many hub airports operating near capacity. Investment from public-private partnerships continued, driving multiple new construction projects and accelerating the trend toward electrifying apron operations.
Insurers remained cautious when underwriting major ground handling risks, reflecting concerns over historically high loss attrition in this area.
Premium and terms
Rates in this segment remained stable in the fourth quarter, supported by ample capacity. Many insurers sought to increase their line size or assume lead positions. While some major global insurers indicated that rating increases may be required in the medium term, increases were not seen for stable accounts with loss histories viewed favorably by insurers in 2025.
Airports and service providers: Premium analysis per quarter, 2024-2025
Weighted Average is the total premium figure and the percentage change between each quarter. Mean Average is the mean of the individual airline percentage increases.
Summary - Weighted average considers premium volume and mean average does not.
The year ahead
The rate outlook for airports and service providers is uncertain. Greater underwriting scrutiny is expected in areas linked to new technology exposures, such as autonomous systems, composite materials, and cybersecurity. Underwriting terms may tighten before rate reductions are seen.
General aviation (GA)
Pricing environment
The GA sector continued to see high levels of competition among insurers, particularly for well-managed operations with robust risk controls. In the fourth quarter, renewal rates for programs without losses ranged from flat to 10% reductions.
Underwriting differentiation
There was a widening gap between the experience of risks insurers viewed as “good” versus those viewed as “poor”. For instance, in the fourth quarter, underwriters sought out operators with modern fleets and a robust safety culture and offered favorable terms. Conversely, operators using older equipment, operating in higher-risk regions, or with elevated claims histories, generally faced tighter terms, higher premiums, or reduced capacity.
Emerging risks
- The expansion of electric vertical take-off and landing (eVTOL) and urban air mobility is being closely watched by underwriters.
- Pilot shortages and concerns over pilot quality remain challenges.
- Severe-weather-related claims in certain regions are prompting underwriters to reassess their exposure models.
General aviation: Premium analysis per quarter, 2024-2025
Weighted Average is the total premium figure and the percentage change between each quarter. Mean Average is the mean average of the individual airline percentage increases.
Summary - Weighted average considers premium volume and mean average does not.
The year ahead
Generally, favorable conditions for GA risks with no losses are expected to continue into 2026, particularly for best practice operators where further rate reductions may be offered. For higher-risk niche operators, the trend from 2025 may persist. As new capacity enters the GA market, increased levels of competition may be seen among underwriters.
Reinsurance
In light of mixed results across various business classes in 2025 and ongoing uncertainties related to recent claims, the reinsurance market is expected to respond with measured caution in 2026. Capacity throughout 2025 remained ample in most sectors, although appetite for proportional major risk business decreased compared to the stronger demand seen in general aviation. Reinsurers were concerned about rates in the direct market, especially for hull war and general aviation. In the short term, reinsurance rates are anticipated to remain flat up to and including April 1, 2026, though we expect minor variations depending on account-specific factors and claims experience.
Aviation reinsurance market Q4 2025
Aviation reinsurance market Excess of Loss (XOL)
Structure and pricing
Major risk retentions maintained at US$300 million average (min US$250 million)
Minimum rate on-line (ROL) circa 3.75% for clash cover on international books of business
Post recent loss activity, market generally stable, RARC flat / slightly reduced over the year, depending on specific performance
Rating levels meet / exceed technical adequacy
Social inflation / US Pax liability concerns – some additional vertical cover purchased during 2025
Losses
Russian leasing litigation (settlements and ongoing reserve strengthening)
Reinsurance claims starting to materialise post court ruling
Some large loss activity in 2025 has potential XOL impact
Recent loss deterioration will impact past XOLs where retentions were US$150 million (Jazeera)
Placement, capacity, and timing
Surplus XOL capacity: 140% plus
Swiss Re and one other exit primary classes and some reduced Quota Share (QS) cessions
Divergence of views / behavior across reinsurers and brokers
Major risks and GA QS
Appetite for global, diverse portfolios remains
New capacity available on well performing portfolios
More capacity available when placement linked to XOL
Some new GA QS treaties placed
Loss of QS income due to reduced buying at recent renewals
RI markets looking to align themselves to key partners ahead of potential market upturn
Aviation reinsurance market Q4 2025
Aviation reinsurance market
Aviation event timeline — volatile reinsurance environment, now stabilizing
Authored by
Richard James Aviation Analyst, Marsh Risk
Andy Poulton Senior Vice President, Guy Carpenter