10 July 2026
Aerospace Manufacturing and Infrastructure Insurance Update Q2 2026
Pricing is stable, but the market is fragile. Capacity remains strong and is still growing, which is mitigating rate movement even as some underwriters face real pressure from senior management to push corrective pricing across all their lines of aviation business, including Aerospace Manufacturers & Infrastructure (AM&I). Markets that push too hard on price find clients have somewhere else to go - there's no shortage of options at the moment. Distressed risks are the exception and receive a more consistent approach from across the market.
Reinsurance and Retrocession
Reinsurance costs have held steady. Capacity remains high enough to offset the push for increases and new entrants - Conduit Re and Tokio Marine Kiln, among them, have been building more meaningful positions in aviation since the changes in the market around Boeing.
Structures are largely unchanged. There was plenty of talk earlier in the year that retentions would move up significantly. This hasn't materialised because capacity levels are too high for reinsurers to hold the line. The exposure bases those retentions sit against is growing too: Boeing's 737 MAX production line is ramping up from 42 to 47 aircraft a month, with an eye on going further, and the Spirit AeroSystems integration following its acquisition puts more of the supply chain under one roof. That pace is putting real pressure on the supply chain - more output from more suppliers with less room to absorb the kind of quality issues already familiar to this class. More capacity chasing a bigger, more strained book is part of why pricing keeps holding rather than moving.
Retrocession pricing did briefly see a single-digit percentage rise in Q1, following the UPS loss among others, but this flattened out by the April renewal cycle.
Ground Handling, MRO and U.S. Liability
Ground handling and Maintenance, Repair and Overhaul (MRO) remain under closer scrutiny than the rest of the sector. Repair costs are rising, and composite aircraft are taking even longer to fix. Fleet utilisation is running high, which is pushing more work through MRO providers than capacity necessarily supports. Underwriters are watching that combination closely: rising costs, longer turnarounds and stretched capacity all point the same way for claims. Claims-active MRO clients have to demonstrate clear risk management practices to achieve better terms.
The civil lawsuits following the loss of UPS Flight 2976 underline the exposure: alongside Boeing and GE, the suits name VT San Antonio Aerospace, the MRO that serviced the aircraft in the weeks before the crash.
U.S. exposure remains the deep concern it was last quarter. Some markets are cutting capacity to manage participation in U.S.-exposed accounts. The NTSB's hearings into the UPS crash won't have eased that: investigators found ten prior recorded failures of the same pylon bearing across the fleet, most of which were never reported to the FAA. These are the kind of details that keep reserving conversations, and therefore litigation funding, active for years. The tail on liability claims in the AM&I sector keeps trending upward, with no sign of that changing.
UPS Flight 2976
The tragic loss of UPS Flight 2976 in Kentucky on 4 November 2025 is still the biggest unresolved variable for the sector, and Q2 added detail rather than resolution. May's two-day NTSB hearing examined pylon and bearing design closely, rather than focusing on maintenance history alone, which widens the scope of who eventually pays. Boeing is now reviewing similar installations across the wider fleet. UPS has since retired its entire MD-11 fleet and cut 30,000 jobs. FedEx has resumed flying its own MD-11’s under tighter inspection requirements following FAA approval of Boeing's revised protocol.
The final NTSB report isn't expected for well over a year. The reserve against this loss has already moved materially since November, and market talk points to further movement before the picture settles.
Long-term agreements
24-month deals (and more) remain within appetite for high-performing accounts with steady growth. We continue to recommend exploring this option for clients who want certainty in their budget across the next two renewal cycles, rather than betting on where pricing lands at each one individually.
Emerging exposures: War Liability and Advanced Air Mobility (AAM)
Airports in the Middle East are facing a slight worsening in market sentiment toward their War Liability exposure. The conflict doesn't change the probability of an airport being found legally liable to a third party when acting with integrity, so it isn't feeding through to the core aviation liability book. The pressure is isolated to the War Liability layer for now, and we could see this filter through to adverse pricing in the coming renewal cycles.
On AAM, the FAA's eVTOL Integration Pilot Programme has moved from planning to practice: pre-certification aircraft are flying revenue routes into commercial airports this summer, ahead of full type certification. Vertiport and AAM ground infrastructure have gone from a future topic to a live one, accelerating growth in exposure in the manufacturing space.
Outlook
We expect the AM&I sector to stay broadly stable through the rest of the year. That stability rests on real tension - claims activity against capacity levels - creating a delicate balance. Additional major incidents could shift the picture quickly.
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