04 April 2025
Aerospace Manufacturers and Infrastructure Insurance Update Q1 2025
As we conclude the first trading quarter of the year in the Aerospace Manufacturers and Infrastructure market, it is clear that significant Underwriter capacity remains available, presenting favourable conditions for our insured clients.
The first quarter of the year typically has a relatively low renewal volume compared to the latter parts of the year. As a result, gauging market movements can be challenging due to the lower volume. However, early indicators suggest a continuation of the trends observed in Q4 2024, with stable renewal premiums generally being offered across the market.
The early months of the year are largely considered the planning stage, with underwriters assessing their budgets and premium forecasts for the next 12 months. This period serves as a valuable temperature check, providing insight into the appetite and projections of major underwriters in the market. The message seems to be clear that the growth of underwriter portfolios continues to remain a priority for 2025, with a strong focus on preserving or maximising shares in attractive risks where possible.
Swiss Re's Market exit and its implications
The withdrawal of Swiss Re from all Aviation insurance lines, effective immediately, has increased the level of uncertainty and potential headwinds moving forward into 2025. Swiss Re had a significant appetite for business in the Aerospace Manufacturers and Infrastructure market, with the underwriting team having looked to grow their portfolio substantially across the Worldwide market over the last 5 or so years. Although the withdrawal of Swiss Re will not do much to dampen the overall capacity levels available to our insured clients, their exit may be seen as a stark warning to many underwriters in the market of the challenges that the market faces, including the ongoing Russia/Ukraine loss disputes.
This development also raises concerns that other underwriting management teams may follow the same sentiment and reassess their positions, not least due to the losses incurred in the airline sector at the beginning of the year. In addition to these airline sector losses, there have also been a number of long-tail Aviation product liability incidents that could substantially dent the overall market profitability should the current claims demand levels be achieved. One of the most notable losses that has been widely publicised at the beginning of 2025 is the claim made by the family of the former Leicester City chairman as a result of the tragic 2018 helicopter crash. The initial legal claim against the aircraft manufacturer is currently at a level of GBP2.15bn, which would likely far exceed the overall limit of indemnity carried by the manufacturer should this demand level be achieved.
Outlook for the remainder of 2025
It is important to remain vigilant to further potential market shifts as significant changes could occur swiftly and have a substantial impact on pricing when they do. However, for now, competition and available capacity are holding stable, and we believe this remains a benefit to our insured clients for upcoming renewals in the short term.
Long-term agreements are also still readily available in the market, with many Underwriters seeing the benefits of locking in their participation and capacity on a longer-term basis for attractive business, albeit at a potentially increased premium level for the second-year resigning to justify this position given the potential uncertainties moving forward.
While the overall market environment remains stable for now, planning will be essential in navigating potential changes throughout the year. We will continue to closely assess developments and provide our clients with further guidance to manage this developing landscape into 2025.
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Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.