The aviation insurance implications of the English High Court's Russia leasing ruling

A little over three years ago, the long-brewing crisis between Russia and Ukraine erupted with significant ramifications that continue to be felt in the aviation insurance world.

The resulting imposition of economic sanctions meant that aircraft and aircraft equipment could not be sold or leased to Russia. This included aircraft and equipment that was already being used by Russian airlines, but lessors’ efforts to re-take physical possession of their assets were thwarted when the Russian government made it illegal for aviation equipment to leave the country.

This stranded more than 400 leased aircraft and items of aviation-related equipment.^[1]

We discussed the situation from an insurance perspective in detail in this article, but in short, it was unclear how the insurance claims would develop. Taken together, it was initially estimated that the aircraft and equipment had a value of up to $12 billion, which potentially represented one of the largest losses in the history of the aviation insurance sector (for comparison, the total aviation liability losses following the 9/11 attacks on the U.S. are estimated to have been in the region of $2bn^[2]).

A significant question for the insurance sector was whether the resulting claims would fall on the hull war or, alternatively, the hull all risk section of lessors’ contingent and possessed insurance programs. If the losses fell under hull war, the aggregate limit element would constrain the amount that could be claimed. If they fell under hull and liability, the exposure for insurers would be more significant because there is no aggregate limit restriction in the hull section of hull and liability policies. There was also the potential that the claims might be outside the scope of contingent and possessed coverage altogether.

Negotiations between lessors and insurers appear to have been very complicated, and after a period of impasse, several cases ended up in various courts around the world. By reason of the varied law and jurisdiction clauses of lessors’ contingent and possessed policies, there have been several court cases proceeding in various U.S. states and in Ireland. But the aggregate value of the assets involved and therefore its potential impact on the aviation insurance market meant that there was particular interest in the findings of the case that had been put before the High Court of Justice in London, one of the Senior Courts of England and Wales.

English High Court ruling

In mid-June 2025, a High Court judge ruled that the claims were covered under the contingent section of the lessors’ hull war insurance. The court found that the aircraft losses were caused by legislation in Russia that banned the export of aircraft or aviation equipment on March 10, 2022.

The judgment covered 147 aircraft, 16 individual engines and one other piece of equipment with an estimated combined insured value of $4.5bn. There have been several settlements reached during the course of the case, and as a result the total value of the claims resolved by the judgment is thought to have fallen by around a third to $3bn.^[3] This is a large amount for the aviation insurance market to absorb, particularly because it is only a portion of the overall claims and negotiated settlements relating to Russia’s actions.

While this ruling has the potential to improve clarity for the market, there remains the possibility of appeals from hull war insurers and perhaps even lessors, some of which have found their claims restricted by the aggregate limit applicable to hull war coverage.

Ramifications for the insurance market

The High Court ruling provided clarity on a number of points regarding how the lessors’ contingent and possessed policies applied to the losses. First, it delivered certainty about the date on which the losses occurred, which is important for policyholders as aviation insurance policies require a date of loss in order for the cover to be triggered. In most cases, the date of an aviation loss is usually quite apparent and does not need to be discussed.

However, in this instance, the position was complicated by various factors, including:

• the different dates on which insurers issued notices to exclude Russia as a covered territory under their insurances;
• when the sanctions were announced;
• when sanctions came into force;
• when and how the Russian government responded;
• and if the “grip of the peril” doctrine operated.

With a date of loss established, and clarification that this is not a hull “all risks” loss event, we now turn to the potential reactions we might see from the aviation insurance market.

Hull war: Two cycles of heightened premium

The losses occurred more than three years ago, and it would be fair to say that many commentators suggested at the outset that the claims were likely to fall to hull war insurers.

In spring 2022, insurers responded primarily with a withdrawal of capacity from the market, providing the leasing sector with hull “all risks” and liability coverage. The insurers that remained implemented a sharp increase in rates and a contraction in coverage, with individual insurer coverage restrictions becoming common. Hull war insurers also either reduced their participation or exited the leasing sector entirely.

The insurers that remained engaged in the hull war class put rating on lessor placements up by hundreds, sometimes thousands, of percent, particularly if confiscation coverage was purchased. Premiums on war risks placements for airlines were also increased, although not at the same scale. While this initial reaction abated as the market found its new equilibrium, the Willis airline insurance team estimate that increases have pushed up the global insurance premium income for war risks at least five-fold from the 2022 airline renewal season onwards.^[4]

Given that there have been nearly three cycles of increases, it would be easy to suggest that current conditions in the aviation insurance market overall will continue broadly unchanged.^[5] It should be pointed out though that even at this elevated level, some insurers could struggle to balance the scale of the Russian losses with the premiums received, particularly if some sectors are considered in isolation, which could be a contributing factor in recent exits from the market.^[6]

In response, some might try to push for more rate increases, but the harder market conditions have attracted several new entrants to the airline, leasing and hull war sectors since 2022. They are unencumbered by the Russian loss event, unlike the insurers with exposure to it who could struggle to increase rates and remain competitive.

From a coverage perspective, it seems likely that hull war insurers will continue to impose aggregate limit restrictions, particularly on confiscation coverage, as they look to ensure that they are able to control their accumulation of risks in the event of a future event on an equivalent scale.

Hull and liability: Rippling consequences

While hull and liability insurers will feel some relief at the High Court’s ruling, the situation remains complicated. Many insurers engage in multiple lines of aviation insurance and could struggle to absorb this loss in their war portfolio alone. As a result, we may see some rate firming on hull and liability placements as insurers try to mutualize the claim across their wider aviation portfolios.

It is also worth noting that the High Court case involved insurers and lessors, and there is another High Court case due to go to trial in autumn 2026 that involves lessors and the question of whether they are able to access the Russian aircraft operators’ policies and the reinsurance of those policies.

Coverage implications

There has already been some reaction from the leasing hull war sector on coverage, with restrictions for aggregate limits overall, restrictions on available aggregate for confiscation coverage, and further restrictions within the confiscation sublimit being applied to aircraft confiscation events from certain countries. For leasing “all risks” insurers, it will be interesting to see if there are further developments with regards to the “theft” by an operator issue that was part of the High Court considerations and which some insurers have looked to address via the imposition of a “theft” aggregate.

It is possible that some policy language will be re-written following the High Court’s conclusions, but it could be that the lessor/operator policy case will need to reach its conclusion before this task could be given proper consideration.

Reinsurance

A defined date of loss was essential to determine whether or not hull war leasing insurers were on risk at the time of the event, but it is also a key requirement for reinsurance policies to be triggered.

While quota share reinsurance should present a straightforward process for claim collection, the excess of loss programs involved could lead to additional complications for insurers looking to make recoveries through their reinsurance. At the time of the loss, some aviation insurers had their hull war reinsurance cover provided by a marine war policy, or a political risks insurance policy, or even from composite reinsurance programs which covered multiple war risks classes, including aviation war. While these are all similar products, event definitions within the policy wording of each could vary, which may impact the ability of insurers to recover under their reinsurance programs.

If insurers find they are unable to collect from their excess of loss reinsurers, they will need to absorb the loss on their own account fully. This could set off another reaction from insurers, be it increased rates, reduced capacity or both.

That said, some insurers might be able to access their excess of loss policies and cede a proportion of these claims to their reinsurers. It is also worth noting that reinsurance for many insurance sectors funnels into a small group of major reinsurance companies. These organizations could be suffering claims from the Russia/Ukraine crisis across many lines of business beyond aviation.

Even if insurers can collect from their excess of loss treaties, in some cases the scale of the loss could exhaust the limit of their reinsurance. Any uncollected balance would then fall back to the insurer.

Reinsurers might react in the same way that direct insurers have over the last couple of years, pushing up pricing and imposing coverage restrictions to insurers. At a certain point, these increases will be passed on to direct insurance customers.

While there has been a lot of focus on the potential of the High Court case to clarify the position in the aviation leasing sector, the situation remains exceptionally complicated. The ramifications of the decision will be felt in different ways by different parts of the insurance market, but with so many factors involved, it is almost impossible to suggest how insurers, reinsurers and the market as a whole will respond. This remains one of the largest and most complicated incidents in the history of the global aviation industry, and while the recent decision certainly brings some clarity, there is still a long way to go.

Footnotes

1. Lloyd’s of London prepares to fight over picking the tab up for $10bn Russian-seized planes. Return to article undo
2. World Events: Litigation Arising from the 9/11 Terrorist Attacks Concludes. Return to article undo
3. London High Court rules war-risk carriers on hook in AerCap lessor suit. Return to article undo
4. Reinsurers hike rates, exclude Russia and Ukraine – brokers. Return to article undo
5. Abundant supply drives accelerated softening in aviation war market. Return to article undo
6. Swiss Re exits direct aviation business. Return to article undo

Authors

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Jared Seth

Managing Director
Global Aviation and Space

email Email phone +44 20 3124 6827

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John Wadhams

Managing Director, Client Relationship Management
Global Aviation & Space

email Email phone +44 7880 770602

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