Insurance Marketplace Realities 2026 Spring Update – Global aviation and space

The major losses occurring in the airline segment and the crisis in the Middle East haven't yet impacted the general aviation segment, where competitive capacity remains abundant in the market.

• Insurers look to maintain and grow their portfolio with well-managed risks having a profitable loss record, experienced pilots and a strong safety culture.
• Despite the large amount of capacity available, which is driving competitive rates, insurers would like to see rate/premium increases due to claims inflation driven by continued rising costs for airframe repair and high-valued engines.
• If the second half of 2026 sees additional losses or further significant deterioration in claims in the overall aviation market, we could see additional markets withdraw capacity, which could cause general aviation rates to rise quickly.
• While smaller general aviation risks are more likely to see flat rates, larger risks may achieve small rate reductions due to the capacity available in the global market.
• While competitive capacity remains available, we recommend exploring the option of binding a multiyear deal to lock in terms beyond 2026.

Insurers’ resolve in 2025 resulted in significant rate increases regardless of risk profile, though airlines with profitable loss histories were treated slightly better.

• Implications of the large airline losses throughout 2025 will start to be realized as reserves are posted.
• Rising attritional claims in North America are also a significant factor, as insurers are near the breakeven point on premiums without accounting for potential large losses.
• Potential impacts of the Russia aircraft seizure rulings could finally hit the airline market, and the aviation market as a whole.
• In the hull war and third-party war liability markets, abundant capacity remains, creating downward pressure on pricing models.
• Underwriters participating in both airline hull and liability and war programs are looking to link the renewals to secure a larger portion of the premium.

Transparency and early market engagement remain the best advice looking to the rest of 2026 and beyond.

• Capacity has remained strong on both the reinsurance and insurance aspects of the market. This may be a signal that the market may be starting to contract, which could lead to less capacity on a go-forward basis.
• Passenger growth has normalized after the post‑COVID rebound, helping the airport sector reach a relative equilibrium where exposure growth is flatter. Insurers are therefore focused on keeping premium increases proportionate, with strong claims management and demonstrated resilience key to achieving favorable outcomes.
• Increased aviation activity delayed new aircraft deliveries and extended aircraft lifecycles have driven higher workloads and claims scrutiny for MROs. Insurers view the sector as claims active, making detailed performance data and evidence of effective workload and risk management critical to unlocking capacity and controlling pricing.
• Ground handling remains a high‑frequency, low‑severity loss segment, with rising claim severity driven by inflation in repair costs and parts. Insurers expect a clear risk management strategy, robust incident data and thoughtful use of deductibles to address attritional losses rather than relying solely on premium increases.
• Long-term agreements remain widely available for accounts with modest growth outlooks and low claims activity. Our recommendation remains to secure long-term agreements wherever possible to secure favorable pricing and terms long term.

Geopolitical instability continues to keep insurers and reinsurers focused on high-risk regions.

• Insurers are more willing to compromise on coverage, resulting in a more consistent application of coverage subjectivities.
• After years of legal battles, a K. court ruled in June 2025 that insurers must pay for the aircraft losses under war risk coverage, which helped resolve related cases in Ireland and the U.S., with total losses from all settlements estimated at about $12 billion.
• Jurisdictional focus and geographic aggregation of assets remain key focus areas. Mitigation of these risks allows for the removal of country-specific sub-limits and softening of coverage limitations.
• At the time of writing, losses are expected to primarily impact the personal lines market, and with historic high amounts of reinsurance capacity available, rates for commercial property risks are expected to remain stable in 2026.

The market is in growth mode, as insurers’ primary goal is to reach an income level that allows the market to be consistently profitable.

• Losses in late 2025 significantly reduced what would have been a largely positive year, though the year was still marginally profitable.
• Competition for high-heritage risks generates competitive market responses.
• Market capacity has increased in 2026 as carriers enter or re-enter the market.
• Premium rates have softened for flight-proven hardware but remain at a high level for hardware with low-flight-heritage.
• Insurers are adapting coverage requirements, and are focusing on redundancy, margin and a more disciplined overall underwriting strategy.