08 October 2025
Airline Insurance
Market Update Q3 2025
As the third quarter concludes, the aviation insurance market enters its most active phase, with attention shifting to the critical fourth-quarter renewals – a decisive period for both aviation insurers and the broader market. Surprisingly, the market remains stable at this stage, with supply and demand dynamics continuing to create conditions that are generally satisfactory for buyers. However, as we have consistently emphasised, in such a complex and competitive environment, renewals require careful navigation and a well-prepared and executed strategy to achieve the best outcomes.
Capacity suppressing insurers’ ambitions
As highlighted in our previous edition, the airline sector continues to experience robust capacity levels, with theoretical availability remaining strong across most placements. Capacity availability remains the primary factor influencing market pricing. Despite some early market exits, buyers have benefited from the entry of several new participants through 2025. Most recently, Ark Syndicate 4020 and AdA Syndicate have begun underwriting war risks from Q4, with AdA announcing its intentions to expand into additional lines by Q1 2026 as it transitions to full Lloyd’s syndicate status.
Positive for buyers, this high level of capacity continues to help temper some insurers' efforts to steer the market towards harder conditions. However, a clear divide in underwriting sentiment persists between legacy insurers, particularly those impacted by losses, and newer market entrants. Many established insurers express ongoing concerns about the aviation insurance market's underperformance, citing a disconnect between premium growth and the rising volume of claims. With several major insurers reportedly reevaluating their strategic business plans, the sustainability of the current market cycle remains uncertain. The year-end insurer results and the 1 January reinsurance renewals are expected to play a pivotal role in shaping the trajectory of 2026, influencing future capacity, pricing, and overall underwriting sentiment for the year ahead.
Loss activity eases, but rising claims are an issue
Following a turbulent first half of the year in terms of major losses, the third quarter was a far less remarkable period. We did record one further fatal airline loss, this being that of Angara Airlines flight 2G-2311, which crashed in Russia, killing 48, but positively for aviation insurers, this tragic loss was not insured in the global insurance market due to sanctions restrictions, and so will not result in any claims.
That’s not to say there wasn’t other loss activity through the third quarter, and various engine damage, ground collisions and other mishaps were observed, including a foam fire suppression incident at Spirit’s hangar at Detroit. Such day-to-day attritional type claims continue to increase in costs, driven by higher values of aircraft, increased repair/parts costs and rising liability awards and many insurers now estimate these combined claims now account for almost double what they did some 5 years ago. As we highlighted in our last edition, 2025 looks set to become a loss-making year on a pure claims versus premium basis, and with three months of the year still to play out, insurers will be anxiously hoping no new major losses materialise to further compound the situation.
All Risks Premium and Rating Trends
Based on our analysis of third-quarter renewal results and insights from upcoming October renewals that are either finalised or nearing completion, market conditions appear to be consistent with those observed in the previous quarter. As noted in our last edition, the all-risks sector is experiencing some rate hardening, with modest pricing adjustments being applied across most accounts. However, the abundance of market capacity continues to stabilise all-risks pricing and hamper the efforts of certain insurers pushing for more significant rate increases.
For now, constructive negotiations can still be had and satisfactory outcomes remain achievable, particularly for clients with strong risk profiles and attractive claims ratios. This is a big positive for buyers, particularly as many might have anticipated a more challenging environment entering the fourth quarter, as highlighted by the commentary of our 2025 Lead Lines contributors. Looking ahead, the fourth quarter represents the most critical transactional period for the airline insurance market, with an estimated 60%–70% of the world’s carriers renewing during this time. Given the high volume of renewals and the substantial premiums at stake, this period will likely shape year-end results for airline underwriters and set the tone for 2026. As we approach this pivotal renewal season, outcomes will inevitably vary based on individual risk profiles and existing program structures, but regardless, negotiations are expected to remain complex and require careful engagement.
Russia Leasing Claims and Reinsurance Market Implications
As highlighted in our previous edition, the long-disputed Russia leasing claims have reached some resolution; however, this is far from the end of this matter, with several unresolved questions and uncertainties remaining. Most recently, a London High Court judge rejected insurers' application to appeal and ordered them to pay approximately USD240 million in interest. While some insurers are reportedly considering taking the case to the Court of Appeal, it is unclear whether the court will agree to revisit the matter. This development has further strained relations between direct insurers and reinsurers, adding to the complexities within the market.
Aviation reinsurers, already under pressure from significant losses in recent years, have faced additional challenges from this year’s major loss activity. With further claims likely to impact this sector, reinsurers are expected to adopt a firmer stance during upcoming aviation reinsurance renewals, pushing for pricing increases and applying greater scrutiny to coverage structures and policy wordings. However, the extent of any meaningful reaction from reinsurers to these losses and the recent lessor court judgment at the forthcoming 1 January renewal date, remains uncertain, as do any potential ripple effects on the direct aviation insurance market. Clarity may take time to emerge, but it is prudent to remain cautious for potential shifts in the months ahead.
Hull War and Excess War Third-Party (AVN52)
While the UK court ruled that the Russia leasing claims are to be paid under the Hull War policy, as we reported previously, there has been no reaction to this ruling. Insurers had seemingly already priced this outcome into current premium levels by way of substantial rate increases on all renewals over the past 36 months. An over-inflation of the Hull War premium has occurred, and subsequently, this has attracted several new market entrants. As we enter Q4, we now find ourselves in a soft market with significant overcapacity and rate reductions readily available.
New market entrants continue to enter the class (including two in Q3), and total available capacity is now approaching USD1 billion. As ‘All Risks’ market conditions become more challenging, we expect insurers writing both classes to attempt to leverage their ‘All Risks’ position to secure their Hull War share.
Alongside Hull War, new entrants have also continued to enter the Excess AVN52E market, with total capacity expected to shortly hit circa USD2 billion. Flat renewals or small reductions are anticipated to be available as we enter Q4, but renewal outcomes will vary.
Looking ahead, as mentioned in previous editions, we are mindful that the war market is highly reactive to losses and sensitive to global volatility, so pricing can change very quickly.
Short-term Outlook
- The market requires careful navigation and a well-prepared strategy, but we anticipate a continuation of current trends through Q4 2025.
- Pricing adjustments being targeted by insurers, but positive deals can still be achieved with risk differentiation, particularly for clients with attractive risk profiles and claims records.
- Differing underwriting sentiment between legacy/loss affected underwriters and newer entrants creating both challenges and opportunities.
- Capacity levels remain high and continue to help moderate the impact of recent losses/events, but any new loss activity or withdrawals could have negative consequences.
- The Airline insurance class remains under scrutiny with several market drivers in play and many unresolved questions around losses, the impact of which is yet to be determined.
- The situation is complex and it is prudent to remain cautious as things can change very quickly.
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