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Airline Insurance Market Renewal Outlook: Q2 2024

Opportunity’s there, but be cautious

By Charles Hollingworth | May 15, 2024

The rising price of airline insurance has attracted capacity back to the market. This creates competition and the opportunity for negotiation, but buyers would be wise to be wary of transient capacity.

As the second quarter of 2024 continues, the airline insurance market is as pure a supply/demand model as it ever has been. There is still a lot of uncertainty, but some clarity has started to emerge around the leased aircraft claims emanating from Russia [1], and this is generating competition between insurers in the short- to medium-term.

As a result, insurers face a challenging market as they look to balance competitiveness with commercial viability. While each renewal will present its own merits and circumstances, in the absence of a major claim, the short-term outlook is broadly favourable for insurance buyers.

Perspective and balance when buying airline insurance

The airline insurance market is consistently reactive and cyclical. Capital leaves the market during prolonged spells of unprofitability as investors seek better returns elsewhere. At a certain point though, a rating correction becomes inevitable, and capital comes back into the market, seeking to make the most of the higher rates.

This is precisely what we have seen in the hull and liability market over the last couple of years. Alongside the uncertainty about the aircraft leased to Russia, there was also concern about heightened risk as airspace reopened and airline operators got their fleets back into the air following the COVID-19 pandemic. These concerns drove hull and liability insurance rates up during 2022 and 2023.

Incidents have and will continue to occur, but throughout the period, claims have been around historic averages, testament to the aviation industry’s enduring commitment to investing in safety and training.

Higher prices coupled with claims at around average levels have started to attract capacity back into the market. This has generated competition for inclusion on well managed airline insurance programmes.

Insurers and reinsurers are anticipating more clarity around the Russian leased aircraft as the year progresses. At this stage there is still a lack of clarity around whether the resulting claims should fall on the hull and liability sector or the hull war sector. If any resulting claims come to rest on the hull and liability sector, rates could increase. We discussed the nuances of the situation in more detail in an article from 2022.

This is driving strong competition among underwriters as they compete for market share in the hull and liability market. The effect is amplified by the pressures placed on insurers by their reinsurance programmes. Some insurers could end up fighting to meet their minimum premium income requirements, while others will be competing for attractive accounts that meet their risk appetite. The upshot is that, perhaps counterintuitively, there are deals to be done in the short-term.

Focus on the strategy

The complications of the last few years have reinforced the need to retain perspective, and the value of a trusted intermediary is amplified in the current conditions. At this point, the clear temptation is to drive rates down in the short- to medium-term, but it is important to keep the future in mind, build positive relationships with risk management partners, and have a defined long-term insurance buying strategy when renewing a hull and liability policy.

A balanced approach is key to ensuring that an insurance programme does not become too exposed to transient capacity, which can be attractive in the short-term but quickly move on as the market cycle goes around. It is important to focus on long-term value, no matter how seductive short-term, transient, capacity may be.

Hull war insurance and geopolitical instability

Meanwhile, the geopolitical instability shows little sign of abating and, unfortunately, we continue to witness tragic loss of life in several regions around the world.

There is always a perceived elevated threat to aviation assets operating in and around conflict zones. Various ongoing conflicts and hull war losses arising from them have led to insurers focussing on raising the hull war premium from what they consider to be a low base. Our analysis suggests that after more than two years, insurers are close to achieving their premium ambitions for the hull war sector.

The hull war market is as cyclical as the hull and liability market and rising costs could be on the verge of making the hull war market attractive to new capital. If we do see new capital emerge, we can expect this to increase competition for market share which in turn could lead to the introduction of some new ideas and innovation in the way that the hull war product is offered and traded.

We are already seeing a competitive spirit return as terminology shifts from a default ‘rate increase’ to ‘rate change’. With competition intensifying, it is possible that the market may deliver rate reductions as hull war insurers look to protect market share.

The show must go on

The airline insurance market, and the global insurance market as a whole, will always be pushed and pulled by the competing forces of emerging risk, opportunity and the potential for catastrophic claims.

The effective application of data plays an increasingly important role in the way insurers process, understand and rate risk exposure. Intermediaries should be prepared to embrace this developing aspect of the way in which risk is underwritten. No matter how it evolves, the goal remains unchanged: positive engagement between insurers and insurance buyers.

Insurers and the products that they provide are being tested by an increasingly complex risk landscape, but the market should not forget that it is in the business of taking risk. Airline insurance buyers should rest assured that the market and products that they purchase are mature and will continue to provide competitive, long-term, risk transfer solutions.

Continued competition for now

There is no question that the wider aviation insurance and reinsurance markets face considerable challenges, but the airline hull and liability insurance market has been relatively unscathed up to this point.

In general, we are seeing a return to positive differentiation from insurers towards their airline customers, which means that airline insurance programmes with good claims performance are tending to enjoy a positive reception from insurers. Naturally, those with less favourable track records may face more robust negotiations, but there is some leeway if relationships are good and there is a clear explanation about the risk management strategies that have been put in place to reduce the possibility of similar incidents being repeated. Again, this underscores the benefits of having stable relationships with risk partners.

The long-term market outlook remains challenging, and while the current competition among insurers is welcome, insurance buyers should be alive to the potential for the market to deteriorate pending the outcome of the legal proceedings surrounding the leased aircraft in Russia. In the meantime, until clarity is reached and assuming that there are no major aviation insurance claims, competition among insurers is expected to continue.


  1. Russia's Seized Leased Jets: Return to article

Executive Director, WTW Global Aviation & Space


Biko Meletse
Industry Specialist: Transportation

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