Capacity for aerospace risks remains high in the aerospace insurance market. Nevertheless, in some sub-sectors, higher insurer scrutiny means that early engagement and a structured approach to the market remain the best advice.
Capacity in the aerospace insurance market remains strong, which continues to provide insureds with a degree of choice and competitive tension. This environment can help moderate pricing outcomes, although there can be challenges when seeking to access surplus capacity. The major claims in 2025 put the aviation insurance sector as a whole, under the spotlight, and underwriters are consequently having to justify their strategies to senior management, particularly where profit margins may appear constricted at current pricing levels.
The aerospace insurance market tends to follow the airline sector, but with a degree of delay and with less volatility. It is therefore worth observing the airline trends for a moment. One thing worth highlighting from the airline sector’s frenetic Q4 2025 renewal season is that while rates were generally moving upwards in a measured and expected fashion, major carriers with high value widebody fleets, particularly in the US, saw steeper rate increases. This was driven by several factors including concern around claims inflation and ‘nuclear’ claims judgements in litigious jurisdictions amongst other things.
Aerospace insurers are not immune to nuclear verdicts, but there has not been an adverse effect on pricing related to this; capacity, and therefore competition, remains strong.
Most reinsurance policies renew at the start of the calendar year and the expectation towards the end of 2025 was that reinsurance underwriters, struggling under the weight of significant claims, could impose tougher reinsurance renewals. Such a move would have ramifications for direct renewals; price increases could be passed down to direct insurance buyers, while changes to the offered reinsurance structure could see direct insurers carry more risk themselves.
Despite the concerns, at the start of 2026, the direct insurers were able to negotiate relatively benign renewals and did not face the increases that reinsurers were rumoured to be looking for.
While the level of reinsurance increases was lower than expected, it is possible that any further price increases to the primary treaty reinsurance layer could make the purchase of this layer uneconomical. This would force direct insurers to retain a larger proportion of a risk on their own balance sheet, in which case, underwriting decisions could face tighter scrutiny.
Ultimately, capacity in the aerospace reinsurance market remains widely available,[1] and because movements here can affect direct insurers’ underwriting strategies, it is an area which we will continue to monitor closely.
In the last edition of this update, we discussed how long-term agreements (LTAs) were an indicator of market stability, so it is interesting to note that they are still widely available for accounts with a modest growth outlook and low claims activity.
While lead insurers might be looking for small increases in the second year of an LTA, there is an abundance of capacity in the following market which enables a healthy level of competition to be generated. This can enable the deployment of pricing structures that would result in flat premiums for insureds in many cases.
While overall conditions in the aerospace insurance market continue to be generally benign, there is an increased level of scrutiny by insurers in some areas or certain sub sectors. It is worth touching on these so that insureds can approach the market strategically and enhance renewal results.
After a significant period of post-COVID rebound, airport exposure growth was flatter in 2025. According to the International Air Transport Association (IATA), passenger numbers in the aviation industry exceeded the records set in 2019 and forecasts suggest that the pattern could continue in 2026 if the global economy continues its current trajectory. Passenger growth was at 5.7% according to figures released for November 2025[2], with air cargo showing a similar 5.5% growth[3].
During the post-COVID rebound, premium increases were lower than the steeper percentage growth in passengers. Premium per passenger, the “rate”, therefore reduced. With slower passenger growth, efforts should be made to keep any premium increases at a lower proportion. A demonstration of strong risk resilience and claims management as well as a proactive approach to dealing with a larger number of passengers will help to achieve this. With exposure now rising less steeply and minimal premium growth, there is a suggestion that the airport sub-sector has achieved a post-COVID equilibrium.
The post-COVID growth and increased aviation activity has led to a significant rise in exposure for maintenance, repair and overhaul (MRO) operations.
With delays in the supply chain for manufacturers, the production of new aircraft is delayed and older aircraft are having their lives extended as a result. This causes pressure on MROs who are required to undertake more major maintenance checks to ensure the aircraft can continue to be operated safely. This is resulting in constrained MRO availability and, when coupled with increased maintenance demand and persistent supply chain disruptions for spare parts, is contributing to higher maintenance visit costs for operators.
Manufacturers are now catching up, but there is a lag.
MROs should seek to demonstrate to insurers how they are managing the pressures of the increased workloads. The MRO sector is seen by insurers as claims active, and some insurers might not deploy their full capacity unless they are comfortable with an insured. Data is key here; for example, rather than just submit a simple claims history, can it be shown that the rate of incidents per man-hours worked has fallen? MROs can utilise the risk management bursaries to good effect. Well-presented data will help to avoid insurers simply looking to increase premiums in proportion to exposure growth, and if insurers are more comfortable, then the available capacity increases. With more capacity, there is more competition which can be used to achieve a better outcome.
Ground handling is another area that insurers see as claims-active. Unlike some of the high profile aviation claims in 2025, ground handling claims tend to fall into the “high frequency, low severity” category. These so-called “attritional” losses are an area of focus for insurers because while the frequency might remain proportional to aviation activity, the severity is increasing. Insurers point to the inflation in repair costs arising from more expensive materials and spare parts, and longer and more complex repairs. As with MROs, the presentation of data is key to conveying a clear risk management strategy to insurers.
Another approach is to conduct an analysis of deductible levels to see if money, including from any risk management bursary, is better spent on reducing the frequency of incidents and then carrying a higher deductible – rather than simply paying more premium to insurers to cater for day-to-day attritional claims and dollar swapping.
In recent years, both economic and social inflation have increased the cost of property damage and bodily injury claims, with increases in some parts of the world being more pronounced than others. This has certainly been seen in the aviation market in terms of the level of awards.
As a result, insurance buyers should check that an insurance policy’s limits are still sufficient. These should be set at a level that ensures that the policy limit provides adequate protection while remaining cost-efficient. Taking the time to examine maximum possible loss scenarios could be the difference between buying too much limit or finding out in the event of a claim that your limit may be inadequate.
The key message of the Q3/4 2025 edition of the Willis Aerospace Insurance Market Update was that the market had not moved away from its relatively soft position yet, and that message still broadly holds true. Aerospace insurers are still operating in a very competitive environment, which has held back price increases for insureds that are profitable for insurers, demonstrate proactive risk management strategies and engage with their insurance partners in a thoughtful manner.
While conditions remain good for buyers, insureds should always prepare ahead in case any capacity reduction leads to changes.
Even now, insurers are examining their portfolios and strategies towards specific sub-sectors. The best advice for insurance buyers is to identify the areas of focus for insurers and develop a strategy with your broker to address these in a structured and timely way. Good data and early engagement remain key for achieving the best results.
