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Q2 2023 airline insurance market renewal outlook

The moment between past and future

By Simon Knechtli | May 4, 2023

Healthy market capacity is currently keeping aviation insurance rates stable, but there is mounting pressure. Equilibrium in 2023 is likely to give way to tougher conditions in 2024.

The airline insurance market is comparatively quiet during the first half of the year in terms of the number of policies that are being renewed. In the background though, there are several evolving factors which are influencing ongoing negotiations.1

Wider economic considerations are the first factor to take into account. Like every business in the current environment, insurers across every sector face a significant increase in the cost of doing business, and they are having to adapt business models to reflect the fast-changing environment.2

There are several other factors in play that are putting specific pressures on the overall airline insurance market. As a result, there could be a significant gap between where aviation underwriters need market-pricing to be and where airlines would like it to be. This is likely to mean that negotiations in the aviation insurance market will be challenging for the rest of 2023. The current level of capacity will help, but conditions have the potential to deteriorate during 2024 as capacity becomes more constricted.

In this short article, we will look at each factor in turn and explain how they are likely to influence negotiations for the rest of 2023 and into 2024.

The crisis between Russia and Ukraine

The crisis between Russia and Ukraine has had several consequences, the most important of which are the terrible circumstances that the people on the ground are having to endure. For the aviation industry, it has also seen the Russian government seize hundreds of aircraft that had been leased to airlines in the country.3 This has potentially created one of the largest claims in the history of aviation insurance.4

While there have been reported potential resolutions between airlines and lessors5, the claims are still going to be both complicated and expensive. Each day that passes puts the seized aircraft further from their standard maintenance schedule, which increases the likelihood that they will have to be declared to be constructive total losses.

Hull war

Related to this, after a long time of being treated as a low-spend ancillary part of an airline insurance programme, the claims as a result of the Russian government’s aircraft seizures have forced a complete reappraisal of pricing to this policy purchase.

It is a complicated issue that we discuss in more detail in the recent article that focuses on hull war, but there is likely to be significant ramifications for the entire aviation insurance market over the next couple of years, with particular focus on leased aircraft.


Putting further pressure on direct insurers is their reinsurers reacting to the changing overall reality by restricting coverage and increasing rates. Most direct insurers need to purchase reinsurance, typically to lay off their catastrophe exposure, smooth their claims experience over time and make the loss profile more predictable.

Several major insurers renewed their reinsurance treaty programs on January 1, 2023 and there are further key insurers renewing in April, June and July. Direct insurers will have to err on the side of caution in their insurance pricing, deployment of capacity and breadth of cover to manage the expected pricing and coverage changes on their 2023 reinsurance programmes.

Hull and liability

Amidst all the challenges, the airline hull and liability market is relatively calm, at least for now. Renewals at the end of 2022 and into 2023 without direct exposure to Belarus, Russia or Ukraine have only had to react to cost of the increased cost of business and wider economic considerations that we mentioned at the start of this article.

With competition among insurers for inclusion on a well-managed airline insurance policy, even where there is an increase in rates for the lead share, following insurers have had to be more accommodating on price to achieve their desired participation. This dynamic may become less client-positive as the year progresses, if business pressures on insurers require them to become more reactive. This is being driven by a surplus of direct insurer capacity which, if it remains stable, may prevent insurers raising rates and premium to levels that they would ideally desire, which is a positive dynamic for the airlines.

COVID-19 in the background

With the almost total easing of lockdown restrictions globally over the last few months, the airline insurance sector has taken the lessons of risk into account and will be pricing accordingly in the future.6

COVID-19 has complicated the normal aviation insurance market cycle though, with underwriters and airlines trying to come to a clear understanding of the current levels of risk after 18 months of sporadic restrictions.

The pandemic is becoming less of a salient issue, with operational experience in the process of replacing estimates, but it is still a factor in insurance negotiations, particularly with the current concerns being raised about the re-emergence of H5N1.7

The outlook

The bottom line is that insurers face a spiralling cost of business challenge that is going to take some time to come under control.

There is enough capacity in the aviation insurance market to create competition for a well-managed aviation insurance programme that presents its risk positively, but some insurers may find themselves struggling to meet their underwriting targets and as a result may look to reduce their presence in the market as the year progresses.

Assuming the potential leasing claims in Russia continue to sit unresolved in the courts this could mean that the market will be relatively level for the rest of 2023, but while the market is buyer-friendly in terms of value in the short term, the complex factors facing insurers make market-pricing uncertain in the medium-term. The more quickly insurers have to take large claim events into account on their balance sheets, the more likely there will be a reaction.

This is a traditionally quiet time of year for insurance placements. We strongly recommend that clients use this time to positively engage with the insurance markets and explain the measures that they have in place to reduce their levels of risk. It seems likely that despite readily available capacity currently, underwriters will potentially be looking to move away from distressed lines of business over the next 18 months. This could well mean a sudden, and costly, reduction in capacity and mean that 2024 paints a markedly tougher picture.


1 Q1 2023 airline insurance market renewal outlook: Uncertain times ahead
2 Shock to the system: Insurance’s role in absorbing the impact of inflation
3 Five Russian airlines have returned leased jets -document
4 Assessing the airline insurance implications of the crisis between Russia and Ukraine
5 Russia's Aeroflot bought 10 Boeing 777 from Russian bank VEB, sources say
6 Has COVID-19 changed the aviation industry’s attitude to risk?
7 Bird flu: Health officials draw up COVID-style model looking at pandemic possibilities


Managing Director, Global Aerospace


Pat Doherty
CEO, Australasian Aviation Division

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