Navigating the 2026 airline insurance landscape
The aviation insurance sector entered 2026 still grappling with the aftershocks of geopolitical upheaval, market volatility, and evolving risk landscapes. For insurers, brokers, and operators alike, 2025 was a year of recalibration—marked by ongoing litigation, significant settlements (some public and others shrouded by non-disclosure agreements), and a reassessment of risk appetite across the industry.
As we look back on the defining developments of 2025 and contemplate what potentially lies in store, one thing is clear: the sector remains in a state of dynamic transition.
In the middle of 2025, the aviation insurance markets reached a significant stage in the ongoing repercussions from the Russia/Ukraine crisis that began in February 2022. The conflict led to the effective seizure of approximately 400 western-owned aircraft leased to Russian airlines, with lessors unable to repossess their assets due to Russian legislation and international sanctions.
An unprecedented wave of insurance claims, legal disputes, and settlements followed, but the market reached one of the most notable legal milestones with the ruling from the High Court of Justice, one of the three senior courts for England and Wales, that coverage fell under the lessor hull war policies.
Initially, the judgement prompted a swift and significant adjustment in war risk pricing. The reaction was relatively short lived though, because rates had already surged between 2022 and 2024, as insurers sought to restore balance sheets and recalibrate risk models. As reserves stabilized and claims were settled, competitive forces reasserted themselves.
Once the initial response to the judgement was digested, new entrants—focused on growth rather than legacy losses—started offering aggressive terms for war risk pricing, and established players had to moderate their pricing.
There are other residual legal claims making their way through various jurisdictions, but these seem less likely to have the potential to deliver a market-moving judgement, and by the final quarter of 2025, the war market was softening. The consensus is that the trend will continue in 2026, at least during the first few months.
While war risk pricing softened as 2025 progressed, airline hull and liability was more challenging. Throughout 2025, the market absorbed a series of costly aircraft losses involving both cargo and passenger aircraft. These events, coupled with inflationary pressures on repair costs and rising liability awards, drove insurers to push for double-digit rate increases during renewal negotiations.
The Q4 renewal season was particularly telling. Major carriers with high value widebody fleets and elevated liability limits, particularly in the US with its more litigious environment, faced the steepest hikes. Underwriters tightened terms and scrutinized coverage, but their overarching focus was on pricing adequacy. Buyers with clean loss records fared better, but even they encountered firming rates as insurers sought to offset deteriorating combined ratios. The message was clear: while capacity remained available, pricing discipline was back in force.
Several themes emerged during the critical year-end renewal period for hull and liability renewals:
01
Airlines with robust safety records and proactive risk management secured more favorable terms, while those with recent losses faced punitive pricing. The gap between best-in-class and distressed accounts widened significantly.
02
Despite firming rates, capacity remained abundant for most buyers. Some insurers deployed new capital opportunistically, particularly through managing general agents (MGAs) and niche carriers targeting growth segments.
03
Treaty renewals in late 2025 signaled reinsurers’ cautious stance, especially on liability layers. This filtered down to primary insurers, reinforcing upward pressure on pricing and tightening terms.
04
Insurers increasingly leverage telematics, predictive analytics, and fleet performance data to refine pricing and coverage structures. The integration of technology into underwriting is now a competitive necessity.
Throughout 2025 there were several legal cases—from engine failure claims to contractual liability disputes—that highlighted the complexity of aviation risks and underscored the importance of accurate modelling, sustainable pricing, and robust reserving.
Insurers spent much of the year recalibrating their models to account for systemic risks, inflationary trends, and evolving liability exposures. The industry’s reliance on historical loss data is being challenged by emerging and often interconnected risks such as cyber threats, supply chain disruptions, and geopolitical shocks. As a result, forward-looking analytics and scenario modelling are gaining traction as essential tools for risk assessment.
The first quarter of 2026 has only a handful of renewals to monitor, and their treatment may not fully represent insurers’ ambitions for the year. Early indicators, however, suggest a continued firming of hull and liability pricing, albeit at a moderated pace. Insurers are likely to target increases, starting around 10% for clean risks and higher adjustments for major or distressed accounts. Competitive pressures in the war risks market may sustain continued rate reductions, but geopolitical uncertainty could reverse this trend quickly.
New entrants and adjusted risk appetites, supported by increased pricing, will keep hull and liability capacity plentiful. However, recalibrated modelling and treaty reinsurers’ strong stance on systemic risks—such as geopolitical shocks and cyber events—may constrain placements requiring large limits or covering high aircraft values. Buyers seeking exceptionally high liability limits or coverage for emerging exposures may face more challenging negotiations.
Several emerging themes are likely to shape the aviation insurance market in 2026:
2025 was a year of recalibration for aviation insurance following a period of litigation, settlements, and strategic repositioning. As 2026 unfolds, everyone involved in the aviation insurance market will be navigating a landscape defined by competitive pricing pressures, evolving risk profiles, and technological disruption. Those who adapt swiftly, embrace data-driven decision-making, and anticipate emerging exposures will be best positioned to thrive.
For insurers, the challenge lies in balancing profitability with responsiveness. For insurance buyers, proactive risk management and transparent data sharing will be critical to securing favorable terms. And for brokers, the ability to interpret market signals and advocate effectively for clients will remain a differentiator.
The aviation insurance market is undoubtedly challenging. Insurers are flexing their pricing to gain profitability, but new entrants are emerging with experienced individuals underwriting for new capital providers. These new entrants are nipping at the heels of more established insurers as they strive to gain a share of the portfolio.
The journey ahead is complex—but for those prepared to innovate and collaborate, it is also full of opportunity.
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