07 October 2026
Lead Lines: Aviation Insurance Market Q&A with Tokio Marine Kiln
In this feature Q&A, Will Green, Divisional Head of Airline, Contingent and War at Tokio Marine Kiln, discusses the latest trends, challenges, and market conditions in the airline insurance market.
Despite rising rates in 2025 and through 2026, market commentary suggests that airline insurance premium income still falls short of achieving a sustainable position versus rising claims. How do you view the current situation?
Premium adequacy ultimately comes down to claims versus premium. Rates have moved upwards, but if losses continue to outstrip the premium being collected, further rate movement is likely to remain necessary.
Over the past two years, we have seen a sharp and sustained increase in attritional losses, some now larger than the total losses of the past. At the same time, we have potentially seen some of the largest airline liability losses in the history of aviation insurance. Claims have significantly exceeded premiums, and that is now driving a correction in rating which, hopefully, will move the market towards a more sustainable position.
We also need to look beyond the aircraft hull itself. Increasing congestion, pressure on ground operations and wider infrastructure constraints can create loss opportunities around the aircraft before we even consider the rising cost of repairing it.
A closer look at the data shows that pressure from attritional losses is often driven by a new generation of aircraft which feature significant technological advances in engine design and materials. Repairing this advanced machinery requires specialist tooling, replacement parts that often depend on long supply chains, and mechanical capability that is increasingly in demand. Together, these factors are increasing repair costs and extending repair times, both of which have risen consistently over time. Furthermore, liability severity, particularly in the US, remains a concern due to social inflation and other sources of volatility.
Claims inflation can therefore be impacted by compounding factors. The damage itself is becoming more expensive to repair, but supply-chain constraints, limited MRO capacity and the need for increasingly specialist repairs can then also extend the duration and therefore the ultimate cost of the claim.
This attritional load, when quantified alongside the potential for a major loss, then drives the required size of the premium base which is sufficient to absorb both the ongoing cost of attritional claims and the more occasional, but significantly larger losses. What we are seeing today is not what I would describe as a uniformly hard market - capacity remains available and particularly for airlines with good loss records and attractive risk profiles.
In conclusion, my view is that the market remains in a period of correction rather than having reached the end of it. There has been progress, but underwriting discipline will remain important through the rest of 2026 and into the next renewal cycle.
Aviation is a sector inherently exposed to risk and is particularly vulnerable to shifting international political and security situations, the Middle East conflict being the most recent example. In an ever-changing environment, how do you assess such risks when underwriting, and what can clients do better to help differentiate themselves?
Geopolitical exposure is something we assess continuously. It is difficult to treat it as something that can be reviewed once a year at renewal because circumstances can change very quickly.
From an underwriting perspective, we look at where aircraft are operating, what airspace they are using, where they are on the ground, and whether there are significant concentrations of aircraft in particular locations.
We are also interested in how quickly an airline can respond if the risk environment changes.
That is where clients can really differentiate themselves. A route map tells us where an airline flies, but it does not tell us how the airline manages a developing situation. We want to understand who is monitoring the intelligence, who has the authority to change a route or reposition aircraft and how quickly contingency decisions can be made.
Effective communication is also critical. In a live situation, such as the ongoing conflict in the Middle East, situational context can change too quickly for relationships to become purely transactional. Early engagement between airlines, brokers, and insurers gives everyone a deeper understanding of a developing situation, which enables fast and informed decision-making.
We would much rather have an early conversation based on the information available at the time than learn about a significant change later on. There are often improved outcomes for the client when relevant information is quickly assessed and actioned upon, as opposed to working through significant changes after the event.
Airlines, especially those with mature and well-established decision-making frameworks and controls, show us time and again that they best manage any rapidly changing geopolitical situation. They get ahead of events and rapidly adapt their planning and risk management strategies which in turn helps us better understand and support any changing risk needs.
Insurers regularly speak about needing to innovate or evolve the aviation insurance product. What, if anything, would you most like to change, and why?
One area that deserves a more fundamental look is policy wording. Much of the language still used in aviation insurance has its origins from decades ago, and in some cases more than 50 years ago.
Since then, the industry has faced new technologies, operating models and exposures that were never contemplated when many of those policies were originally drafted.
We at TMK are prepared to review established wording where necessary. That means being clear about what the product is intended to cover, addressing any perceived ambiguities where possible, and working with clients and brokers to ensure policy language keeps pace with the risks we are insuring today. That does require a degree of bravery. It is often easier to continue using familiar language because it is well understood and has been used for a long time. However, major events have shown the value of regularly reviewing policy wordings to ensure they continue to provide clarity and certainty for all parties.
That modernisation should not stop at reviews of policy wording. Deductible structures also need to remain relevant to the aircraft we are insuring today, particularly as aircraft values and repair costs have increased materially. Likewise, our pricing models need to identify changes in loss trends earlier rather than simply reacting once those trends are firmly established.
There is also an opportunity to make better use of operational data in underwriting. We often work from a snapshot of a risk at renewal, whereas the way an aircraft is actually being used can change materially during the policy period.
For me, useful innovation is not about adding complexity but should provide greater clarity for clients, better information for underwriters and allow informed decisions to be made more swiftly.
Lastly, how do you see the aviation insurance market trending through the remainder of 2026, and do you have any advice for insurance buyers with renewals approaching in the months ahead?
I expect the market to remain firm throughout the remainder of 2026, although I think we will continue to see increasing differentiation between individual risks. Airlines with low levels of loss activity and limited attritional claims are likely to remain attractive to the market and should continue to benefit from strong competition for their business. For buyers with renewals approaching, I would encourage them not to look at price as the only differentiator. It is also worth considering the quality and consistency of the insurer relationship, particularly how they have responded during more challenging periods and whether they have demonstrated a long-term commitment to the class.
The ability to engage constructively after a significant loss, maintain underwriting capability and continue investing in talent and innovation can be just as important as the headline premium.
At TMK, we place a lot of value on long-term relationships. As part of the wider Tokio Marine Group, our approach is not simply about the result of an individual renewal, but about being a consistent partner to clients over time. That means being prepared to engage constructively after a major loss, maintaining underwriting capability through different market conditions and continuing to invest in the people and capabilities needed to support the class.
That reflects the wider Tokio Marine philosophy of looking beyond short-term profit and seeking to have a positive and sustainable impact on clients, employees and society. For airline buyers, I think that consistency and commitment can be just as important as the headline premium
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