Reinsurers adjust costs, aerospace premiums unaffected

Market has remained competitive, driven by overcapacity and stable demand.

The aerospace insurance market in 2024 has been shaped by a stable premium environment, despite insurers' calls for higher pricing due to rising claims and reinsurance costs, according to WTW. 

Whilst insurers cite inflation, reinsurance restructuring, and geopolitical tensions as reasons for premium increases, the market has remained competitive, driven by overcapacity and stable demand from buyers, according to WTW’s Aerospace Insurance Market Renewal Outlook: Q3 2024.

Reinsurers increased costs and adjusted programs in 2023, but direct buyers have seen little impact on premiums due to competition amongst insurers.

Additionally, insurers have struggled to raise premiums as new capacity enters the market, leading to technical rate reductions despite higher exposures.

Losses from maintenance, repair, and overhaul (MRO), manufacturing, and ground handling have also worsened, but securing long-term capacity remains the focus for many insurers. Recent high-profile incidents, such as turbulence-related accidents and the Russia-Ukraine crisis, keep claims in focus but have not significantly affected pricing or capacity.

Although the industry continues to monitor potential claims from the Ukraine-Russia conflict, other concerns such as portfolio rebalancing have taken precedence, with court cases expected later in 2024.

Despite turbulence-related losses and some high-profile incidents in early 2024, there has been no significant shift in pricing or coverage restrictions. Capacity remains ample, especially for businesses with good claims performance and risk management strategies. 

One notable trend in 2024 is the return of long-term agreements (LTAs) in the aviation insurance sector. These agreements allow insurers to lock in participation whilst providing clients with premium certainty. This resurgence of LTAs suggests a move towards more stable, predictable partnerships between insurers and insureds in a competitive market.