03 July 2025
Aerospace Manufacturing and Infrastructure Insurance market update Q2 2025
As we move into the latter half of 2025, it's evident that market developments have remained largely unchanged from the end of 2024 and the beginning of this year.
The unexpected withdrawal of Swiss Re earlier this year has had minimal impact. While it was anticipated that this might intensify the focus of capital providers an d senior management of aviation insurers, no significant effects have been observed so far. In the Aerospace and Infrastructure Sector, Swiss Re held substantial shares in many risks, but their exit has had little to no impact on the majority of placements. Throughout 2024, we consistently reported the positive availability of capacity for attractive risks, which continues today. Other insurers are either willing to take on larger shares to replace Swiss Re, or new markets are eager to engage in new business.
The unexpected withdrawal of Swiss Re earlier this year has had minimal impact. While it was anticipated that this might intensify the focus of capital providers and senior management of aviation insurers, no significant effects have been observed so far. In the Aerospace and Infrastructure Sector, Swiss Re held substantial shares in many risks, but their exit has had little to no impact on the majority of placements. Throughout 2024, we consistently reported the positive availability of capacity for attractive risks, which continues today. Other insurers are either willing to take on larger shares to replace Swiss Re, or new markets are eager to engage in new business.
Despite the abundance of available capacity and some insurers prioritising top-level income over overall profitability, this does not apply to all insurers. A highly competitive market is often referred to as a Soft Market, where insurers compete for market share, driving premiums down. While we are witnessing some premium reductions for attractive risks or those with significant buying power, these reductions remain modest and are insufficient to classify the market as 'Soft.' The market is currently 'Stable,' with some soft elements benefiting our clients. However, insurers argue that these conditions and the overall premium income for the sector are unsustainable given the losses being incurred. Although these losses may not be catastrophic, there are several risks where losses erode multiple years of premium more than once in a 5–10-year period.
While there is significant appetite for certain risks in this sector, some risks face more challenges than others. Ground handling risks attract negative attention due to the high volume of losses, the costs of repairing aircraft, and significant bodily injury awards in recent years. An airside incident involving a vehicle and a person could happen to any insured operating vehicles airside, not just ground handlers. However, insurers are currently cautious about writing large shares in this sector.
A more reserved approach is also taken with maintenance, repair and overhaul companies due to the losses occurring in this sector. A simple mistake while working on an aircraft or engine is more costly than ever, necessitating an adequate premium base for insurers to anticipate these losses. Component manufacturers are competitively priced due to their excellent loss ratios. Major manufacturers wield significant buying power due to their overall premium levels compared to the rest of the sector, with each one rated on its performance. There seems to be competition for several of these risks.
There is ample appetite for airport risks, but those with significant loss activity will find insurers attempting to adjust pricing to ensure profitability.
Since our last article, there have been no major market losses to report in this sector. However, there is speculation regarding the cause of the recent Air India tragedy. Should any allegations arise involving a client in the Aerospace Manufacturing & Infrastructure sector, the second half of 2025 could unfold very differently. We will be closely monitoring the situation.
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