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Airline Insurance Market Renewal Outlook: Q4 2023

Anything but humdrum

By John Rooley and John Wadhams | November 10, 2023

The airline insurance market continues to be fascinating. After a turbulent year, the 2023 airline insurance renewal season arrives just as certain issues are starting to become a bit clearer.
Ukraine war

The final quarter of the year is pivotal for the airline insurance sector, with the majority of the airline industry’s total annual hull and liability premium estimated to be placed in the insurance markets between October and December.

There was a particular focus in Q4 last year on the claims resulting from the Russian government’s seizure of around 400 leased aircraft following the escalation of tensions with Ukraine in February 2022.[1] These claims, which were initially widely estimated to have the potential of reaching US$12 billion, made their presence known in insurance rating, and the market hardened considerably for some coverages as 2022 progressed. The impact wasn’t universal though, and some coverages continued to benefit from surplus capacity in the insurance markets.

The first three quarters of 2023 continued the trend, with some sub-sectors of the market reacting as if the claims were imminent despite there still being a lot of debate about where they would end up being paid. There are still uncertainties as insurers strive to balance their books, which tend to be cost heavy in the first half of the year and income heavy in the second half because of the amount of activity in this upcoming renewal season.

As the 2023 renewal season gets underway in earnest though, the situation with the Russian leased aircraft has started to become slightly clearer. [2] As a result, Q4 2023 appears to be a more favorable environment for airlines.

Two challenging decades

Aviation insurance has been challenging over the last couple of decades. The events of 9/11 led to a brief, exceptionally severe hard market. A prolonged soft insurance market followed, lasting for the best part of two decades with only brief interruptions.

Conditions were starting to harden as the 2020s came into view, but COVID-19 reduced aviation activity to virtually zero and forced both insurers and airlines to tear up their long-term plans. Insurers’ hopes for prolonged harder markets were dashed.

The Russia/Ukraine crisis threw the aviation insurance market into further turmoil. Insurers were left reeling with the prospect of a suite of exceptionally complicated claims coupled with the potential for multibillion dollar lawsuits from lessors trying to claim for their re-registered aircraft.

The positive news is that lessors are said to be starting to be able to make deals with Russian airlines and their Russian insurers. The potential claim, which would have been the largest in the history of the airline insurance markets, could be falling to more manageable levels and a significant amount of legal fees could also be saved.

Q4 and beyond?

So, if the seized aircraft issue is potentially closer to being resolved, what happened in the first nine months of 2023, and what issues are influencing pricing in the renewal season?

Insurers reacted quickly to the outbreak of the crisis between Russia and Ukraine. Appetites for airline insurance dwindled, prices rose, breadth of coverage was trimmed, and sub-limits were imposed. Capacity for contingent aircraft risks, aviation hull war, and AVN52 liability war risks withered.

The reinsurance market behaved in a similar way. It applied price rises to all classes of aviation risk, albeit most keenly on the war risk sub-sectors. In addition to increases in reinsurance pricing, reinsurers also imposed increased retentions (deductibles) on their insurance customers.

The challenge created by the Russia/Ukraine crisis was compounded by April’s civil unrest in Sudan, which included heavy fighting around Khartoum International Airport. Several civilian aircraft were damaged or destroyed.[3]

The recent events in Israel are not perceived to have had direct aviation implications at this stage, although insurers with clients operating in the region have been ensuring that effective safety precautions and contingency plans are in place.

War risk sub-sectors

For both hull war and AV52 liability war (AVN52E), the hard market conditions witnessed in 2022 and the early stages of 2023 in the airline insurance markets have attracted new insurers. Capacity is much healthier than it was a year ago.

On hull war, the significant increases witnessed last year have subsided, with capacity fuelling a slide in rating. Benign risks with lower limits are enjoying the best results while airlines requiring large limits, large aggregates and/or challenging route networks are still meeting resistance from insurers who recognize the value of their capacity and are keen to hold rating.

AV52E had fallen to a relatively low premium base prior to 2022, and as a result prices rose massively during 2022 and into 2023. More recently it has followed the hull war rating trend and softened. Prices appear to be still rising, but perhaps not as quickly.

We would, however, caution that any further escalation in civil unrest could cause a knee jerk reaction. Of all airline insurance sub-sectors, hull war and AV52 have proven themselves to be the most reactive to loss events.

Hull and liabilities

Reinsurance capacity has contracted over the last 18 months, with insurers suffering price increases at renewal as a result.

Somewhat surprisingly, these price rises have not tended to be passed on and the appetite for direct placements remains strong. As a result, it seems that despite insurers striving to ensure that they can balance their airline hull and liability premium books, they have been willing to cover the cost of their expensive reinsurance programs, keeping prices keen as they compete for inclusion on airline insurance programs.

Q4 and beyond

So, in a nutshell, while insurers try to hold some pricing resolve, over capacity exists for many risks and this is likely to accelerate the softening market. Rate reductions have been achieved on desirable business, especially where high levels of exposure growth have helped to maintain premium levels, and this could gain momentum as insurers chase premium income towards year-end. Lead insurers, with dominant positions and high levels of client engagement will fare better than following insurers, which will ultimately lead to improving composite pricing from an insurance buyer’s perspective.

The only placements that might go against the trend are those with exposure to Russia/Ukraine/Belarus (which have come to be known as the RUB territories), or those that create high aggregate exposures to other territories currently in the focus of the political lens, such as south China sea or the Middle East. Appetite for inclusion in these cases is lower which means that supply and demand ratios tip back to favor insurers and is in turn reflected in the risk pricing.

Large, unmodelled, unpredicted events have always been met with insurers demanding sharp rate rises, but with an improving outlook from the leasing claims in Russia, and an array of insurers keen to engage in the airline insurance markets, the Q4 2023 renewal outlook should be favorable, at least in comparison with the 2022 renewal season.

It is always worth keeping a weather eye on the reinsurance horizon however, as this may dampen insurers enthusiasm if their premium modelling starts to creak under the strain of the current pricing trend.


  1. Assessing the airline insurance implications of the crisis between Russia and Ukraine. Return to article
  2. Lessor Receives $710 Million Payout Over Aeroflot Aircraft Leases. Return to article
  3. Mapping the heavy fighting in Sudan. Return to article

CEO, Global Aviation & Space

Managing Director, Client Relationship Management


Patrick Richardson
Managing Director
Global Aviation & Space

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