27 April 2026
Getting insurance right in aerospace partnerships
The aerospace industry has long been interdependent, but technological progress is more than ever built on partnership. You can't build next-generation aircraft or develop cutting-edge propulsion systems without working with others. The pursuit of progress as an industry is a shared goal and one that many companies are pooling their resources to better achieve. Joint ventures, strategic alliances, cross-border collaborations, they're all part of the game now.
The problem? Partnerships can be messy and, as a result, can be risky.
Aerospace deals can fall apart over IP disputes, get derailed by supply chain breakdowns and fail when regulatory requirements clash across different countries. The complexity is real, and despite best efforts, it’s getting worse. The question that many companies grapple with is whether, or perhaps should, all parties have the same amount of ‘skin in the game’ from a financial, reputational or operational risk perspective? For manufacturers, particular partnerships and joint ventures can be a gateway to huge technological leaps forward and something that we are seeing more and more of. How much ‘risk’ is reasonable to take in order to drive towards the next leap in performance and efficiency?
The concept of companies operating in partnership isn’t exactly new. Precedents for such methods of seeking mutual success can be seen at airports and airfields across the globe. Contractual agreements such as IATA SGHA & Tarbox have long been a way of achieving shared positive outcomes for multiple companies. By aligning contracts, risk frameworks and insurance programmes airlines, airport operators and companies on the ground have been able to co-exist in such a complex risk environment.
In the new landscape of aerospace, companies and nations are coming together to pursue greater, expedited levels of innovation than ever before. Examples include:
- Prime manufacturers contributing towards reaching new horizons of space flight
- International collaboration on Generation 5 and 6 fighter jet platforms
- New entrants into the commercial airframe sector targeting emerging markets
- Collaboration between traditional competitors in the Sustainable Aviation Fuel (SAF) space
The pursuit of such innovation necessitates a level of partnership between organisations that have more often than not acted as competitors. Business cultures, best practices, risk appetites, all of these considerations now need to be managed jointly in order to achieve the optimal outcome.
Why insurance can't be an afterthought
Here's what we have learned: if you wait until the contracts are signed to think about risk/insurance, you have already missed the boat. The best insurance strategies are baked into the deal at inception through risk and revenue sharing agreement(s).
When you get insurance right early, several things happen:
- Risk ownership becomes clear. Nobody's arguing about who pays what when something goes wrong because the insurance structure already defines it.
- You build in financial resilience. Launch delays happen. Components fail. When they do, proper insurance keeps the lights on and the project moving.
- Regulatory compliance gets easier. Cross-border partnerships mean navigating different legal frameworks. Insurance helps you meet local requirements and shows regulators you are serious about risk management.
- Your IP stays protected. In aerospace, intellectual property is everything. Specialist coverage protects against infringement claims and misuse.
Real world example - Global Combat Air Programme
A joint project designing a 6th-generation combat air system through collaboration between several of the major aerospace manufacturers worldwide. The aim of this trilateral agreement between the UK, Italy and Japan is to deliver a highly advanced, network-enabled fighter which will be supported by autonomous aircraft, utilising secure combat cloud technology to provide air superiority in an increasingly complex environment.
Global Combat Air Programme (GCAP) draws on the expertise of its contributors to create an asset of world-leading capability. By pooling resources towards a shared end goal, it is possible to achieve a level of technological innovation aimed at providing greater security in an increasingly unstable world. At the heart of this is the contractual and risk agreements, which give clarity from the outset and facilitate the open exchange of information to further drive innovation and international cooperation.
Repeat risks
Every aerospace partnership is different, but we see the same risk patterns again and again:
- Contractual liability issues. Vague indemnity clauses and unclear responsibility definitions are lawsuit magnets. Partnerships implode over these details.
- Supply chain vulnerabilities. One supplier goes down and suddenly your entire program is at risk. Contingent business interruption coverage can help you here.
- Technology and cyber risks. As aerospace systems become more connected, cyber threats become shared problems. Companies need joint cyber insurance strategies.
- Geopolitical instability. International partnerships navigate sanctions, export controls, and shifting political winds. Political risk insurance provides a crucial buffer.
Building insurance into the partnership DNA
The most successful aerospace partnerships do not treat insurance as a separate concern; they weave it into the fabric of the collaboration itself.
- Joint insurance clauses should spell out exactly what coverage is required, what the limits are, and who's responsible for buying and paying for it.
- Transparency is central to any positive business relationship; openness over costs, innovation and indemnity agreements are key.
- Cross-indemnity provisions need to be backed by actual insurance coverage. Too many deals have contractual obligations that don't match the policy terms.
- Ongoing risk reviews are essential. Partnerships evolve, and your insurance program needs to evolve with them.
The bottom line
Isolating risk management and insurance from an overall strategy will always leave it as an afterthought, and something that needs to catch up to the extraordinary innovation the aerospace sector is currently achieving. The insurance market itself is seeking to innovate, and to stand side by side with its industry partners to give financial security to those who strive to do great things. By bringing risk and insurance into the discussion at the commencement of partnerships clients are able to push forward without the concern of how their bottom line will be protected. This is what insurance is for, and when engaged with in a thoughtful and collaborative way, the partnership grows beyond just the industry partners.
At Gallagher Specialty, we've learned that the best aerospace partnerships are the ones where insurance strategy aligns with business objectives from the start. When you get that right, complexity becomes an opportunity instead of an obstacle.
The aerospace industry will only get more collaborative. The companies that figure out how to manage partnership risk effectively will be the ones that win. So – how can we help?
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