JLT report sees 2018 as pivotal year for aviation insurance market

The aviation insurance market has seen premium rates flat or increasing a little, with underwriters determined to keep rates from falling again, according to the latest Aviation Insurance Market Summary from JLT. It states that 2018 could prove to be a pivotal year for many companies and syndicates. The broker says the majority of second-quarter programmes concluded with premiums flat or slightly up, in line with current underwriting discipline and general market conditions. “While this rating uptick is an improvement on the soft market in the eyes of underwriters, not all are satisfied and their aspirations are to try to improve on this position in the coming months,” says JLT. “Some underwriters would suggest that this upwards momentum has not been enough, mindful of meeting year-end management expectations, but ultimately this position could prove to be more sustainable long term as opposed to hard-line reactions.” The upwards movement in rating has partly been driven by further airline incidents in the second quarter in both the hull and liability and hull war classes, with other sectors of the aviation market including general aviation and aerospace having also been hit by losses in recent months. “These losses will lead to some significant claims and further strengthen the current resolve of underwriters, who are increasingly focused on the overall quality and profitability of their portfolios,” says JLT. Looking ahead, underwriters will be determined to remain resilient during the third quarter, maintaining or increasing premiums and resisting rate reductions, or at least limiting them to single digits, states the JLT report. Another factor in the coming months is capacity and although levels are generally stable, at least for now, recent withdrawals, rumours of cost-cutting measures and further reports of market consolidation could prove highly influential on future dynamics and pricing, according to JLT. “In recent months we have observed further market personnel moves, staff consultations and another market (WR Berkley) has ceased writing airline business altogether. We have also seen withdrawals in other sectors including general aviation. Industry consolidation remains a hot topic of market conversation and it would seem likely that further activity can be expected, following recent announcements by the owners/shareholders of MSF Pritchard, Chaucer, Starstone and Atrium, that they are exploring their options in respect of the future of these businesses,” states the report. While at present these factors have had no initial effect, JLT anticipates some change in future dynamics and capacity levels in the coming months, although it remains too early to predict just what this will be. “While factors such as industry consolidation and major losses have the potential to cause volatility, our view in the short term is that market conditions will remain stable, albeit fragile. We expect that renewal negotiations will remain challenging and underwriters will be determined to hold their position as we grow closer to the market’s key income-renewal period,” says JLT.

JLT report sees 2018 as pivotal year for aviation insurance market

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