Aerospace insurance capacity outstrips rate adjustments: WTW
The fourth quarter sees about 70% of global annual airline premiums renewed.
Competition remains strong and market capacity is ample in the aerospace insurance and reinsurance sector, despite pricing inadequacy raised in the third quarter (Q3 2024), WTW said.
Although, there are no indications that this trend will shift in 2025.
The fourth quarter, known as the airline renewal season, sees about 70% of global annual airline premiums renewed.
Many aerospace accounts, including those renewing in January, are also negotiated during this period. Sub-sectors such as maintenance, repair, and overhaul (MRO), airports, ground handling, and manufacturing highlight the sector's varied risk profiles and challenges.
MRO operators face consistent attritional losses from incidents like dropped engines or hangar collisions, leading insurers to limit their appetite for this sector.
Despite efforts by MROs to reduce these losses, securing favourable terms remains difficult. In contrast, airports, particularly those without ancillary service responsibilities, benefit from ample capacity and competitive pricing due to insurer confidence in their risk management practices.
Ground handling risks resemble MROs in terms of exposure to both major and attritional losses, which restricts insurer appetite.
Manufacturing risks have experienced significant losses recently, yet pricing remains steady due to abundant capacity, which continues to outweigh insurer efforts to adjust rates.
Discussions about policy sub-limits, such as grounding coverage and AVN52 limits, have surfaced during 2024 renewals.
However, no significant changes have been implemented, as reinsurers appear reluctant to alter terms whilst capacity remains high.
Unresolved issues, such as Boeing 737 Max losses and the Russian government’s seizure of over 400 leased aircraft following sanctions, could influence pricing and capital strategies in 2025.
Despite these challenges, rates have largely flattened, with competition keeping premium increases in check. Insurers may seek adjustments in the coming year, but strong capacity is expected to temper their ambitions.