04 April 2025
General Aviation Insurance Market Update Q1 2025
Following a series of high-profile airline and GA losses at the end of 2024 and through Q1 2025, questions are being asked regarding aviation pricing adequacy. In the wake of recent losses, some insurers are now targeting rate ‘corrections’, yet while airline pricing is under pressure, for now, the large General Aviation sector remains unchanged with overcapacity continuing to drive rates down, a trend we anticipate continuing through H1 2025.
Overcapacity and its implications
There has been widespread discussion, following Swiss Re’s decision to exit the direct aviation insurance market, that others may decide to follow suit. Whilst such speculation often becomes a self-fulfilling prophecy, the withdrawal of Swiss Re has not had a direct impact on the available capacity for General Aviation insurance buyers…yet.
The general aviation insurance market continues to experience significant overcapacity, creating both opportunities and challenges for stakeholders. Multiple insurers are competing for a relatively stable pool of general aviation risks. This overcapacity has pushed premiums down while expanding coverage options for clients. The availability of relatively cheap capital and affordable reinsurance has significantly increased the capacity in the General Aviation sector, over recent years. This overcapacity has produced several significant effects: For Aircraft Owners and Operators:
· Lower premiums across most general aviation segments
· More favourable/flexible coverage terms and conditions
· Greater negotiating power with insurers
· Reduced scrutiny of pilot qualifications and training
For (Re)Insurers:
· Reduced profit margins and pressure on underwriting discipline
· Increased competition for profitable accounts
· Challenges in maintaining adequate reserves for future claims
· Difficulty in raising rates even when actuarially justified
Whilst beneficial to aircraft owners and operators in the short term, persistent overcapacity presents long-term challenges for the stability of the General Aviation insurance marketplace. Industry stakeholders should prepare for eventual market withdrawals and pricing corrections.
Whilst beneficial to aircraft owners and operators in the short term, persistent overcapacity presents long-term challenges for the stability of the General Aviation insurance marketplace.
Supply chain delays and labour shortages in the sector
The General Aviation industry, has experienced significant supply chain disruptions in recent years. These pressures have affected manufacturers, operators, and maintenance facilities alike, creating a complex web of challenges that continue to impact the industry's growth and operational efficiency. Aircraft manufacturers and maintenance providers are grappling with extended lead times for critical components, including:
· Specialised composite materials
· Engine parts and accessories
· Interior components and furnishings
Many suppliers are reporting a 12 to 24-month delay for parts that previously had 3 to 6-month lead times, creating cascading delays throughout the production and maintenance processes.
In addition to the shortage of physical parts and components, the industry also faces a significant skilled labour shortage across multiple sectors:
· Experienced aircraft mechanics and technicians
· Specialised manufacturing personnel
· Quality assurance specialists
This talent gap has reduced production capacity while simultaneously increasing labour costs, creating a difficult environment for maintaining consistent operations. As a direct result, aircraft awaiting maintenance or repair are grounded for extended periods, the increased costs are passed on to aircraft operators and the number of AOG (Aircraft on Ground) situations has increased.
All of these knock-on effects, impact the cost of repair and replacement.
· New aircraft prices have increased approximately 15-25% over pre-pandemic levels
· Used aircraft values at a historic high due to new aircraft unavailability
· Operating costs rising due to parts and increased labour expenses
In reality, complete recovery to pre-pandemic supply chain efficiency is likely to be several years away, with many industry analysts projecting 2026-2027 as a realistic timeframe.
General aviation losses
The general aviation sector has seen, somewhat unsurprisingly, a steady increase in accident rates, since the pandemic, including a significant number of accidents, resulting in fatalities. The NTSB has recently highlighted, that while the overall accident rate per flight hour has remained relatively constant, the severity of accidents has increased, resulting in higher costs per incident.
The cost of repair and replacement of modern technology aircraft has risen dramatically over recent years. The complexity of physical damage and liability claims has also become a major factor and is driving the cost of claims, ever higher.
As the insurance industry navigates these challenges, the need for expert claims advocacy, remains paramount.
General aviation outlook
Although there is a general feeling amongst insurers that current level pricing is not sufficient to return an acceptable Underwriting profit, there remains significant overcapacity in the sector.
Barring a significant market-changing loss and/or a significant reduction in available capacity, 2025 looks to be another good year for the General Aviation insurance buyer.
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