07 October 2026
Aerospace Manufacturers and Infrastructure Insurance market update Q3 2026
A sector defying logic?
While much of the focus in aviation insurance remains on airline market conditions, the aerospace insurance sector continues to chart its own course. Encompassing everything from manufacturers and maintenance providers to airports, air navigation service providers and ground handling operations, aerospace is arguably the most diverse segment of the aviation insurance market. That diversity creates both opportunities and challenges for insurers and insureds alike.
As we move through 2026, the AM&I market remains characterised by abundant capacity, competitive pricing and remarkably stable conditions. Yet beneath the surface, growing exposures and deteriorating loss trends are raising important questions about how long the status quo can continue.
Logic suggests that a market correction is required to ensure long-term sustainability. Yet, for now, market dynamics continue to defy that logic.
Defining the AM&I Insurance Sector
The AM&I insurance sector includes virtually every aviation-related risk that is not directly involved in operating aircraft.
At one end of the spectrum are the major aircraft and engine manufacturers, such as Boeing, Airbus, Rolls-Royce and GE Aerospace, together with thousands of component manufacturers supplying everything from avionics systems to cabin interiors. Alongside them sit maintenance, repair and overhaul (MRO) organisations responsible for keeping aircraft airworthy.
The sector extends far beyond manufacturing and maintenance. It also includes airports, air traffic management providers, ground handling companies, refuellers, caterers, security providers and a wide range of specialist airside service organisations that support the safe and efficient operation of aviation worldwide.
The challenge for insurers is obvious. The risk profile of a global aircraft manufacturer bears little resemblance to that of a major international airport, yet both reside within the same insurance market. This diversity makes benchmarking difficult and explains why underwriters increasingly seek to assess each risk on its individual merits while balancing broader sector-wide performance.
A Relatively Small Market with Significant Exposure
The global aviation insurance market is estimated to generate approximately USD 8.5 billion in annual premium, of which AM&I represents around USD 1.5 billion.
Aircraft and engine manufacturers account for approximately two-thirds of AM&I premium income, leaving only around USD 500 million spread across the remainder of the sector, which includes airports, ANSPs, MROs, ground handlers and other infrastructure providers.
While premium volumes may appear modest, the liability exposures are anything but. Many organisations operating airside require liability limits of USD 50 million or more, while larger operations frequently purchase limits of USD 1 billion or higher.
This creates an inherent challenge for insurers. Even relatively modest losses can quickly erode an individual account's premium contribution. In many cases, the premium charged bears little resemblance to the scale of the exposure being assumed.
Estimated annual global aviation premium
AM&I representation of annual global premium
Growth in Exposure, But Not in Premium
One of the most notable features of the AM&I market in recent years has been the disconnect between industry growth and insurance pricing.
Unlike airline insurance programmes, which are often linked to exposure metrics and adjustable ratings, many aerospace accounts are placed on fixed annual premiums. As a result, growth in revenues, passenger numbers and operational activity does not automatically translate into increased premium income for insurers.
Across much of the aerospace infrastructure sector, organisations have reported annual growth rates of between 5% and 10%, with some businesses experiencing considerably higher expansion. Yet insurance costs have remained largely static or increased only marginally.
From an underwriting perspective, this trend is difficult to ignore. While revenue is not a perfect measure of risk, it remains one of the primary indicators that insurers use to assess exposure growth and monitor portfolio development. Consequently, insurers are increasingly questioning whether current pricing adequately reflects the scale and complexity of today's operations.
Capacity Continues to Drive Competition
Despite concerns around profitability, the dominant characteristic of the AM&I insurance market remains excess capacity.
For many placements, available insurer participation still exceeds 100% of programme requirements. This competitive environment continues to limit insurers' ability to implement the premium increases they believe are necessary to improve underwriting results.
Risks with adverse loss records are seeing greater scrutiny and more challenging renewal negotiations. However, for well-performing accounts, competition remains strong and continues to provide buyers with significant leverage.
This stands in contrast to the airline sector, where pricing momentum has shifted more noticeably in favour of insurers over the last 12 to 18 months.
Loss Trends Are Becoming Increasingly Significant
The longer-term profitability of the AM&I market remains a growing concern.
While headline results may suggest the sector has generated a modest underwriting profit over the last decade, those figures are subject to significant reserve uncertainty. Large aviation liability claims often take many years to develop and settle, meaning today's profitability assessments may look very different in the future.
Major industry losses continue to impact insurer perceptions. Recent aviation incidents are expected to generate substantial claims activity involving multiple aerospace participants, while loss deterioration across historic claims remains a persistent challenge.
The manufacturing sector continues to experience particular pressure. Over the past decade, losses affecting major manufacturers have exceeded premium income generated by those accounts, leading some insurers to argue that this segment is already operating at an underwriting deficit.
The Challenge of Long-Tail Liability Exposure
One of the defining characteristics of aerospace insurance is its reliance on liability coverage rather than physical damage protection.
Unlike airline hull losses, where the financial impact is generally understood relatively quickly, AM&I liability claims can take years, or even decades, to develop. Investigations into causation, product responsibility and legal liability can be lengthy and complex, often involving multiple parties across multiple jurisdictions.
In some cases, litigation may emerge many years after the original event, creating significant reserve uncertainty for insurers. This long-tail exposure remains one of the most difficult aspects of AM&I underwriting and is a key reason why insurers continue to focus closely on profitability and portfolio management.
Emerging Claims Across Aerospace Infrastructure
Beyond the manufacturing sector, insurers are also observing an increase in significant losses across other aerospace subsectors. Several notable trends have emerged:
- Larger bodily injury settlements, particularly in the US, involving ground handling and refuelling operations.
- Runway incursions and airside vehicle incidents involving airports, air traffic service providers and ground operators.
- Increasing MRO losses, commonly referred to as ‘hangar rash’, involving damage to aircraft during maintenance activities.
- Escalating repair costs driven by inflation, supply chain pressures and increasing aircraft complexity.
Importantly, these losses are not indicative of poor performance across the sector as a whole. Most aerospace organisations continue to demonstrate strong risk management standards and favourable claims experience. However, the increasing severity of individual losses is contributing to growing insurer concern.
Why Hasn't the Market Turned?
Perhaps the most intriguing question facing the sector today is why market conditions remain so favourable given the underlying loss trends.
Historically, the AM&I insurance market has tended to follow developments in the airline market with a delay of approximately 12 to 18 months. Yet despite the airline sector experiencing more pronounced pricing pressure, AM&I remains relatively stable.
The simple answer is capacity. There is currently little evidence of meaningful capacity withdrawal, and as long as competition remains intense, insurers will continue to struggle to secure the broad-based pricing increases they seek.
Outlook for 2026 and beyond
Looking ahead, insurers are expected to continue seeking premium increases and tighter underwriting discipline, particularly on risks with significant claims activity, exposure growth or weaker risk management controls.
However, unless capacity materially reduces, competition is likely to constrain insurers' ability to achieve substantial pricing improvements across the broader market.
For buyers, current conditions continue to present opportunities. Longer-term agreements remain available from a few insurers seeking to secure premium income and protect market share. For organisations with strong risk profiles, these arrangements may offer an attractive way to lock in favourable terms before market conditions eventually change.
While predicting exactly what will trigger a shift remains difficult, the current market trajectory appears increasingly difficult to reconcile with underlying loss trends and exposure growth. The AM&I sector has so far resisted the hardening experienced elsewhere in aviation insurance, but it would be ambitious to assume this environment will remain unchanged indefinitely.
For now, AM&I remains one of the few areas of the aviation market where buyers continue to benefit from abundant capacity and strong competition. The question is not whether market conditions will evolve, but when.
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