Aviation insurance market overview H1 2026

The first half of 2026 has reinforced a clear market reality: aviation insurance capacity remains available, but it is being deployed with increasing selectivity.

Across the market, the themes that accelerated through 2025 have continued to shape underwriting behavior. Insurers are still responding to elevated claims costs, rising repair and replacement expenses, social inflation, supply chain disruption, and geopolitical uncertainty. As a result, the market cannot be described in simple terms. Strong levels of competition remain in some areas, and yet outcomes are increasingly influenced by risk quality, claims experience, exposure profile, and the strength of the renewal narrative.

In the airline market, the focus of insurers has remained on pricing adequacy and their long-term profitability. Capacity is stable overall, but it is not distributed evenly, and underwriting scrutiny has increased, particularly for more complex or loss-affected risks. By contrast, the war market has remained more stable through the first half of the year, supported by steady capacity and improved insurer confidence in exposure reporting and aggregate management, even as geopolitical developments persisted as a concern. In aerospace, broad stability has continued, but that stability is increasingly conditional, with underwriters placing more weight on operational resilience, governance, and confidence in the future risk story. In general aviation, high levels of competition remain, creating attractive conditions for many buyers, although insurer questions around pricing sustainability continue to sit beneath the surface.

What stands out most from the first half of the year is that preparation matters more than ever. In this market, strong outcomes increasingly go to clients who engage early, present their risks clearly, and support their placements with credible data, clear strategy, and evidence of risk management progress.

This review looks back at the key developments that shaped the market in the first half of 2026 across airline, war, aerospace, and general aviation. Our aim is to provide a clear, practical perspective on the forces influencing pricing, capacity, and underwriting decisions, and to help clients navigate the second half of the year with greater confidence and clarity.

At Marsh, we believe that well-informed decisions begin with clear insight and strong advocacy. We hope this review supports both.

Airline

Airline insurance market conditions remain complex, as the recalibration that gathered pace through 2025 continued into the first half of 2026. Insurers are seeking to achieve pricing adequacy after multiple years in which claims outstripped premiums, with rising cost expectations threatening the outlook for future underwriting performance. Elevated claims activity, rising repair costs, social inflation, and ongoing geopolitical uncertainty are therefore all factors placing pressure on both pricing and appetite. The result is underwriters taking a more cautious approach to capacity deployment and a sharper focus on underlying risk quality.

Hull, spares, and liability loss trends from 2025 — including increased cost of attritional claims and several high-severity events — have materially increased insurer loss expectations and reinforced concerns around rating adequacy. Although H1 2026 did not see the same level of major airline claims activity, recent events nevertheless underscore the scale of maximum probable loss scenarios and are influencing how insurers assess and price catastrophic exposure going forward.

Insurers are also contending with a structural increase in attritional loss costs, driven by the rising value of newer aircraft, engines, and equipment, the increasing use and cost of composite materials, and ongoing challenges around parts availability. Losses above the traditional US$10 million attritional threshold are becoming more common, while repair slot constraints and parts inflation are extending settlement timelines and increasing the potential for prior-year deterioration. As a result, underwriters are increasingly looking beyond expiring-year performance and assessing profitability over three-, five-, and even ten-year periods.

While overall airline market capacity remains stable, it is being deployed with far greater selectivity, leading to a fragmented marketplace. For well-performing, lower-limit, narrowbody, or regional operators, there can still be meaningful excess capacity for placements. However, airlines seeking larger liability limits, or those with recent losses, higher-value fleets, or more challenging operating profiles, are likely to encounter more demanding lead market discussions and tighter support from follow markets.

For US airline exposures, conditions remain materially more challenging. Underwriting sentiment for pricing and capacity deployment is being shaped not only by the broader market themes affecting the sector, but also by the specific severity and volatility associated with US exposures. Higher attritional loss activity, concern around social inflation driving inflated liability awards, and the impact of major high-profile US airline losses in 2025 are contributing to a significantly tougher renewal environment.

Although the majority of airline placement activity takes place during the second half of the year, these trends are already evident. On a year-to-date basis across our global portfolio, average lead gross premium change stands at +5.01%, with average gross rate change of +4.61% and exposure change of +0.38%. This indicates that premium growth is being driven primarily by rating increases rather than underlying exposure expansion.

Against this backdrop, insurers are applying greater scrutiny to operational performance, safety culture, risk management frameworks, and the overall structuring of insurance programs. That said, differentiation remains achievable through early and high-quality insurer engagement, data-driven renewal submissions, and targeted placement strategies. Strong preparation and a clear risk narrative are increasingly important in pursuing the best available outcomes.

By contrast, conditions in the hull war and excess war third-party liability markets remain relatively stable. Capacity is holding steady or increasing, and pricing pressure is less acute than in the core hull, spares, and liability market.

Following the market disruption caused by the Russia–Ukraine conflict, insurers invested in and became more comfortable with reporting and aggregate management processes. This improvement, supported by transparent engagement from operators, enabled more measured and collaborative discussions during the escalation of conflict in the Middle East at the start of 2026. Although the market initially responded with additional premium charges in relation to changes in exposure profile, overall capacity remained supportive of renewal activity, and rating reductions continued to be achievable through the first half of the year.

Similarly, with no direct loss activity affecting the excess war third-party liability market, conditions remained favorable for clients. Premium levels continued to be influenced by capacity deployment and broader aviation market return considerations; however, premium reductions remained available.

As the market moves into the second half of 2026, particularly toward the final quarter when airline renewal activity increases, the factors influencing aviation insurance conditions show little sign of easing. The current environment is expected to continue through the remainder of the year, with sustained underwriting scrutiny and further pressure on pricing in the core hull, spares, and liability markets, particularly for US exposures, larger-limit purchases, loss-affected accounts, and more complex operating profiles.

While overall market capacity is expected to remain available, deployment is likely to become increasingly selective. In this environment, early preparation and proactive insurer engagement will be important in supporting renewal outcomes. Well-structured submissions, supported by high-quality exposure data, a clear strategic narrative, and transparent communication around performance and risk management, will be key to helping underwriters assess and differentiate individual risks in what is expected to remain a more challenging negotiating environment.

Individual loss performance will remain a central feature of the underwriter review. Insurers are generally expecting to examine claims experience across three-, five-, and ten-year periods to assess both recent performance and longer-term loss trends. As such, accounts able to demonstrate strong operational controls, effective claims management, and a credible risk narrative may be better placed as renewal discussions progress.

By contrast, conditions in the hull war and excess war third-party liability markets are expected to remain relatively stable through the rest of the year, with capacity holding steady or increasing and pricing pressure remaining less acute than in the core hull, spares, and liability market. Improved insurer comfort with reporting and aggregate management processes has supported a more measured response to geopolitical developments. Although geopolitical changes could quickly influence market conditions, overall market support and current conditions are expected to remain intact, absent of major loss activity.

Please contact your Marsh representative if you would like to discuss how these conditions may affect your program.

Aerospace

The first half of 2026 has seen the aerospace insurance market remain broadly stable overall, but that stability is increasingly conditional. Based on available comparable renewal data, premium outcomes have generally been flat or somewhat decreased for insureds, particularly where claims activity has been limited and exposure growth has been modest, and reductions have remained achievable for well-positioned risks. However, renewal outcomes are becoming more clearly differentiated, with pricing, structure, and long-term commitments now being driven by the quality of the risk story, the claims record, and the placement strategy.

Recent significant losses continue to shape insurer sentiment across aerospace, with much of the pressure still stemming from airline accident activity and the wider spillover effects across aviation. That loss experience, combined with deterioration in major loss activity in prior periods, has made insurers more selective and less willing to give broad pricing concessions. Across the market, liability severity remains a concern, particularly where US casualty exposure and nuclear verdicts are involved, while elevated reinsurance costs are sustaining underwriting caution and limiting the scope for broad-based rate reductions.

The effect of those pressures is not uniform — for manufacturers and MRO risks, recent loss experience, litigation spillover, and the insurers’ views of future liability volatility remain central to pricing. In H1 2026 across our global portfolio, average lead gross premium change stands at -0.68%. Insurers are also continuing to absorb elevated parts and component costs, inflationary pressure, staff shortages, and supply chain disruptions, all of which continue to weigh on more technically complex and operationally sensitive risks.

For airports and service providers, the pressure points are different. Geopolitical tensions remain a live factor, with Russia-Ukraine continuing to influence war and contingent war thinking, while wider Middle East tensions have shown how quickly insurer behavior can fragment when geopolitical risk becomes an insurance event. Conflict-adjacent exposure, operational sensitivity, airspace disruption and sanctions-related uncertainty can all affect pricing, capacity, and terms, even where the insured itself has not suffered a loss. In H1 2026 across our global portfolio, average lead gross premium change is +1.99%. Within this broader group, outcomes remain highly dependent on risk profile, claims history, and exposure patterns.

Underwriting is moving beyond a simple exposure-based assessment and is increasingly being shaped by confidence in the future risk story. Traditional measures such as revenue, headcount, claims history, and geographic exposure remain relevant, but they are now being weighed alongside safety culture, governance, operational resilience, technology dependence, supply chain visibility, and third-party oversight.

This is why the quality of the risk presentation matters more than ever. Underwriters are not only asking what the exposure is, but how well it is controlled, how incidents are managed, how governance is evidenced, and how quickly the organization can respond to disruption. In practice, two similar accounts can produce materially different outcomes depending on the level of confidence insurers have in the insured’s ability to prevent and respond to loss.

Capacity remains broadly available across the aerospace market, but it is not distributed evenly. Underwriting appetite is generally more selective, with greater support for what underwriters regard as strong programs.

Certain sub-segments continue to attract greater scrutiny because of their more volatile and less predictable loss profiles. Ground handling is a clear example, particularly where US exposure is involved, given the weight insurers place on human factors, operational congestion, and the frequency of interaction with aircraft, passengers, and moving vehicles in busy environments. MRO risks can also encounter more constraints where insurers perceive exposure to more complex operational or liability pathways. In these classes, capacity may still be available, but insurers are typically more selective and may require stronger evidence of control, risk management, and claims performance before deploying it.

Long-term agreements (LTAs) remain important for clients seeking greater certainty and continuity, but insurers are generally less willing to lock in future years at today’s pricing levels without enough allowance for the loss environment. Bolt-on years on existing LTAs are attracting greater scrutiny, and some insurers are pushing for increases in year 1 or year 2 rather than maintaining a flat trajectory. In practical terms, capacity remains available, but insurers are increasingly reluctant to extend pricing commitments too far into the future unless they believe the underlying risk justifies it.

The market is therefore more fragmented. Some insurers remain willing to support line size over time, while others are focused on rate and may prefer to reduce participation rather than stretch terms. Renewal outcomes are increasingly dependent on insurer appetite, program structure, and confidence in the risk, rather than market-wide conditions alone. Loss-affected placements, particularly where claims experience is less favorable or exposure to US liability remains elevated, can still be more capacity-constrained and may attract limited appetite from some insurers.

As insurers show increasing selectivity, early engagement remains critical. Clients should work closely with their Marsh broker to see that the renewal presentation clearly and accurately reflects operational performance, safety investment, and broader resilience measures.

In particular, clients should be ready to evidence:

Continued investment in safety and operational controls
Clear governance and accountability
Effective management of technology and emerging risks
A credible approach to exposure control, loss prevention, and incident response
A clear placement strategy that reflects both current market conditions and longer-term program objectives

Clients should also consider how they can evidence and support their risk improvement journey beyond the renewal itself. Marsh's Operational risk consulting for aviation (ORCA) team can help clients assess and strengthen areas such as safety culture, controls, incident response, and wider risk management practices, and support for those services may be provided through an aviation risk management bursary available as part of certain policies.

A well-supported underwriting presentation remains key to effectively pursuing the best available outcome.

The aerospace market is expected to remain broadly stable through the second half of 2026, but conditions are unlikely to become uniformly easier. Capacity remain available, and well-prepared risks may continue to see favorable outcomes, but insurers are becoming more selective in how they deploy capacity. Pressure may remain most visible in longer-term commitments, bolt-on years, and more volatile or loss-affected placements, where insurers may be less willing to extend flat pricing without strong evidence of risk improvement.

At the same time, the market remains vulnerable to a sharper shift if claims activity begins to crystallize more visibly. A meaningful backlog of losses, reserve development, and claims yet to be fully paid continues to sit behind the current pricing environment, and deterioration in larger airline or manufacturer/MRO loss records could prompt faster pricing movements than have been seen so far in 2026. While the timing of that shift is not predictable, underwriters have expressed concerns that the current pricing environment is leaving limited room for profitability.

For clients with stable loss records and a clear placement strategy, flat or modestly improved results may remain achievable. For others, the second half of the year may prove slightly more challenging, particularly where insurers perceive limited headroom on price or future volatility into 2027. The market is expected to remain differentiated, with outcomes increasingly driven by claims experience, exposure profile, and the overall strength of the renewal presentation.

Please contact your Marsh broker if you would like to discuss any of the above in relation to your program.

General aviation

The general aviation market, over the first half of 2026, saw decreases in pricing and available coverage. Based on premium and rating data analysis, second quarter reductions stretched by a further 5-6% downwards from first quarter levels – a product of insurer efforts to win new business and maintain renewals.

Attritional losses continue to occur with relative frequency, although major liability losses remain uncommon. Nevertheless, recent firefighting activities and some losses arising out of these activities would suggest the potential for greater scrutiny from insurers throughout the remainder of the year.

The business jet market has seen relatively new entrants and increased appetite produce increased levels of competition. Line size deployment on these risks have increased and are also driving pricing competition. This class has not seen major liability claims in the first half of the year, supporting continued insurer appetite.

Commercial passenger and industrial aid classes remain desirable to insurers and there is an increase in appetite and line deployment in this segment. High value, small fleet rotor wing business is seeing a particular increase in insurer appetite.

Large commercial rotor wing and fixed wing operators tend to be viewed as attractive by underwriters, with a more selective insurer appetite for smaller risks.

The general aviation market in the first half of 2026 saw high levels of competition, budgetary pressures, and market uncertainty.

It is also a period of underwriting differentiation and expanding insurer appetites. With fewer new accounts, underwriters are tending to accept higher risk profile accounts.

Another rising trend is a greater number of potential lead insurers for placements. Additional insurers now have the capabilities and desire to quote lead business — so lead experience and claims capabilities that have not yet been fully tested.

During the first half of 2026, there were several new MGA entrants into the general aviation space, with more planned for the remainder of the year. This may contribute to the current trends.

Pricing levels by account varied, but overall have been lower than in other aviation classes.

The reinsurance market may influence future capacity and pricing. However, these may not be seen until 2027.

This is a strong environment for clients to achieve value for their general aviation insurance products. Clients may have an array of options, attractive pricing, and a broader scope of coverage than in prior years. However, caution would be warranted, with consideration given to long-term relationships, market environments, and potential difficult or complex claims.

A clear, concise, and accurate presentation of risk remains a key to pursuing a favorable outcome.

Information that is vital to a strong renewal presentation includes these core facts:

Aircraft – type, age, and other physical characteristics
Pilots – certifications, total time, type time, make and model time, and special uses (if applicable)
Utilization of the aircraft(s)
Uses
Loss information – at least 5 years

In addition, and especially for larger clients, there are many qualitative features that are important to present: safety management procedures, initiatives, and reporting; pilot training; retention; human factors training; and procedures, among many others.

Marsh’s ORCA risk advisory team can help clients to assess and strengthen areas such as safety culture, controls, incident response and wider risk management practices, and support for those services may be provided through an aviation risk management bursary available as part of certain policies.

There may be no change in trajectory for the next half year, with available capacity and reduced pricing levels expected to continue. Among the events that might affect this trajectory are capacity withdrawals following insurer pricing reviews or significant claims. The general aviation market could also see influences from the airline and aerospace markets.

Barring significant changes, clients with loss experience viewed favorably by underwriters can expect to see an array of choice in the second half of the year.