08 January 2026
Manufacturing and Infrastructure Market Update Q4 2025
As 2025 draws to a close, it is both evident and somewhat surprising that the Aerospace Manufacturing and Infrastructure sector has experienced minimal changes since the start of the year. The uncertainty surrounding the Russia-Ukraine claims saw resolution, yet this appears to have had no discernible impact on the sector. While there has been considerable discussion about potential effects on the reinsurance market, any significant impact on the Manufacturing and Infrastructure market seems increasingly unlikely.
Airline losses and their impact on the aviation market
The past 12 months have seen a series of major airline losses, placing significant pressure on the aviation (re)insurance market. This began with the Azerbaijan Airlines incident on 25 December 2024 and most recently included the UPS Airlines MD-11 cargo aircraft crash on 4 November 2025. Although formal reserves have yet to be set for the more recent events, market loss estimates exceed USD1 billion, positioning 2025 as another consecutive loss-making year for the airline sector on a pure premium versus claims basis. This realisation has prompted a change in underwriting sentiment, and subsequently, the airline insurance sector experienced market hardening and rate increases through 2025.
Why is this relevant to the Manufacturing and Infrastructure sector? Historically, the airline sector has been a key driver of wider overall aviation insurance market trends. However, as 2025 concludes, the Manufacturing and Infrastructure sector has yet to follow suit and experience such rate increases, proving positive for buyers. While Manufacturing and Infrastructure insurers continue to aim to achieve premium increases during renewal negotiations, these efforts are often moderated by the abundance of market capacity or growth in risk exposures. As a result, any premium increases are generally smaller than the growth in exposure for individual risks.
Market Capacity and Insurer Dynamics
For the past few years, we have reported a healthy availability of capacity for attractive risks, and this trend is expected to continue into 2026. The withdrawal of Swiss Re at the start of 2025 did not negatively impact market conditions or prompt a market reaction like some might have anticipated. Indeed, throughout 2025, several insurers stepped forward, willing to take on more prominent roles as leading insurers. This further increased market capacity and competition, as these insurers deployed additional capacity to help secure lead positions, thereby exerting downward pressure on pricing for following insurers.
Loss Trends and Underwriting Challenges
While the Manufacturing and Infrastructure sector has not experienced catastrophic losses in recent years, large legal liability claims continue to erode the premium base. These losses are not confined to a single class but are spread across various areas, with high attritional losses being a consistent challenge. Appetite remains relatively stable in the manufacturing and airport/air traffic control (ATC) sectors. However, a more cautious approach is evident in the ground handling and maintenance, repair, and overhaul (MRO) sectors. Risks with significant loss histories are likely to face pricing adjustments as insurers strive to maintain profitability, irrespective of the nature of their aviation business.
Growth Prospects for the Commercial Aerospace Sector
The commercial aerospace sector is well-positioned for continued growth, driven by increasing fleet utilisation, fleet expansion, and steady growth in passenger and cargo demand. Persistent aircraft production backlogs are encouraging operators to extend the operational life of existing fleets and invest in reliability, availability, and maintainability. This is expected to drive growth, particularly in the spare parts trading and MRO sectors.
As a result, the Aerospace and Infrastructure Insurance sector is also anticipated to grow in 2026. However, several factors will continue to influence insurers' underwriting decisions.
Key Challenges and Future Outlook
Insurers remain concerned about several ongoing challenges, including supply chain volatility, talent shortages, and geopolitical events. These issues have not dissipated and will likely prompt insurers to scrutinise how clients are addressing these challenges. Additionally, the adoption of new technologies and processes, such as artificial intelligence, emerging vehicles, and the rapid evolution of autonomous systems, necessitates that insurers adapt their risk assessment methodologies.
Looking ahead to 2026, we anticipate a shift towards more technical underwriting, with each risk being evaluated on its individual merits. However, the market appears to be at a tipping point. It would not take much for the current conditions to change, potentially leading to a more generalised market environment where significant rate increases may become necessary.
Whatever may transpire, the Gallagher team remain ready to support our clients, delivering strategic and innovative solutions to deliver the best possible outcomes.
Jump back in to Plane Talking Q4 2025
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Airline Insurance Q&A
Nigel Weyman reflects on 2025’s Airline Insurance challenges, renewal trends, and market shifts, sharing insights and strategies to help buyers navigate 2026 with confidence.
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In this second Plane Talking Special feature, we explore CORSIA’s impact on airline economics and carbon risk. Learn how insurance solutions can help carriers manage compliance, offset obligations, and address emerging challenges.
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