Competition controlling aviation rates, says Marsh

Most aviation classes are experiencing continued competition, with sufficient capacity across the airline, general aviation, and aerospace insurance markets, according to Marsh. However, uncertainty remains in the hull war and excess AVN52 markets due to ongoing geopolitical instability. In its report General insurance market benchmarking: Aviation insurance market overview H1 2024, the broker said the entry of new capacity is helping to control rates and the market is now witnessing reduced rates when compared to 2022 and 2023. But organisations are continuing to face ongoing challenges including wider macroeconomic risks, supply chain disruptions, and human capital shortages. Garrett Hanrahan, global head, aviation & space, Marsh, said: “We have observed some softening in the reinsurance market, combined with stable capacity available from direct airline, aerospace, and general aviation insurers. This has resulted in somewhat of a downward trend in terms of rates, as insurers compete for income and market share, notwithstanding some significant hull losses in the first half of the year.” According to the report, most direct insurers have completed their second cycle of annual treaty reinsurance programme renewals. “Despite some softening, premium increases continue. The increase in exposures impacts the number of attritional losses advised to the market, which coincides with a noticeable increase in the quantum of average losses. Significant court awards in the US are of concern should a major incident occur involving passengers. Losses emanating from the Russia-Ukraine war are also of concern,” the report states. Marsh said the aerospace insurance market has transitioned from a period of fluctuating capacity to one of relative stability. It noted that many insurers remain focused on increasing their market share, adding that for smaller businesses, new insurers are emerging to challenge established market participants and vie for lead positions on select accounts. Capacity in the market generally remains surplus, with insurers seeking to expand market share and with new entrants contributing to the total capacity, and Marsh said that market capacity across the aviation industry appears sufficient. However, hull war and excess AVN52 war insurers remain somewhat cautious given geopolitical volatility, and so the class remains under scrutiny, said the broker. Most aviation classes are experiencing continued competition, mainly driven by the somewhat buoyant capacity, said Marsh, but it added: “For many insurers, uncertainty remains the prevailing theme, with large losses expected later this year.” The general message is that rates are significantly reduced in the first half of 2024 as compared to 2022 and 2023. “Following a sustained period of aerospace rate increases, market conditions have primarily stabilised. The desire of some insurers to increase their market share is contributing to reduced premiums. For some risks, clients are receiving year-on-year premium reductions,” said Marsh.

Competition controlling aviation rates, says Marsh

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Want to read this article?

Read Next

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