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Aviation insurance market pulse check

As we move through mid-2026, the aviation insurance market continues to recalibrate in response to elevated claims activity, supply chain pressures, geopolitical uncertainty, and ongoing reinsurance discipline. In the airline segment, capacity remains available for well-managed risks. Still, pricing and terms are increasingly differentiated by exposure, with US airline risks facing a materially more challenging environment due to higher attritional loss activity, social inflation, and greater liability severity. Geopolitically exposed accounts also continue to encounter tighter terms and higher premiums, and rate pressure is expected to persist through 2026. In general aviation (GA), abundant capacity continues to support generally soft conditions despite persistent attritional losses. However, underwriting sentiment is more nuanced for US exposures, where elevated repair costs, social inflation, and recent loss activity are prompting greater caution. Higher-performing accounts continue to benefit most from increased competition, but the durability of current pricing may depend on how loss trends develop over the remainder of the year. Across aerospace, underlying conditions are resulting in rate increases, driven by airline loss spillover, manufacturing account deterioration, and broader cost pressures. However, plentiful capacity and competitive behavior have so far suppressed pricing increases. Long-term agreements are gaining greater traction as clients seek certainty and protection against future market shifts.

The first half of 2026 continues to reflect a challenging airline insurance environment, as the market recalibration that accelerated through 2025 remains ongoing. Elevated claims activity, rising repair and supply chain costs, and continued geopolitical uncertainty are sustaining pressure on pricing and terms, while insurers remain focused on restoring underwriting profitability. Capacity is still available for well-managed risks, but it is being deployed with increasing discipline and a sharper focus on underlying exposure.

Loss trends from 2025 — including several high-severity events and the Russia/Ukraine hull war rulings — have increased insurer loss expectations and attritional loss costs. At the same time, repair slot constraints and parts inflation have lengthened claim settlement periods and increased severity, while reinsurance pressures have further reinforced the need for rate adequacy. In response, insurers are applying greater scrutiny to operational performance, safety culture, loss history, and geographic exposure, with pricing and terms increasingly differentiated by risk profile.

For risks viewed positively, meaningful support can still be achieved. However, accounts with recent losses, weaker operating metrics, or heightened geopolitical exposure are encountering greater pressure on premiums, tighter capacity deployment, and more restrictive terms. Insurers are assessing hull and liability exposures with increased granularity, leading to a more selective and exposure-driven underwriting approach.

However, for US airline exposure, the picture is materially more challenging. Here, underwriting conditions are being shaped not only by the broader themes affecting the airline market, but also by the specific severity and volatility associated with US exposures. Higher attritional loss activity, growing concern around social inflation and increasingly severe liability awards, and the impact of large US airline losses in 2025 are all contributing to a significantly tougher renewal environment.

As a result, renewals involving US airline exposure are proving more difficult to complete on target terms. Insurers are seeking more meaningful rate and premium increases, taking a firmer approach to structure, and deploying capacity more cautiously. In some cases, participation is becoming more selective across airline portfolios, reducing flexibility and increasing insurer leverage in negotiations. Consequently, airlines with significant US exposure may need to consider greater risk retention and broader structural adjustments to manage renewal outcomes.

The first half of 2026 continues to see reduced pricing for general aviation insurance, despite a persistently challenging attritional loss environment. Rising repair costs, supply chain disruption, and ongoing geopolitical uncertainty continue to create pressure in the background. Still, abundant insurer and reinsurer capacity is maintaining competitive conditions across much of the sector. As a result, pricing remains favorable for many insureds, with insurers continuing to compete actively for attractive opportunities.

The 2026 loss environment has shown little meaningful improvement, with attritional activity continuing to shape the claims picture even if fatal losses have remained relatively limited. At the same time, ongoing repair delays, parts shortages, and cost inflation are extending claim timelines and creating continued uncertainty around ultimate claims costs. Even so, these pressures have not, to date, translated into a broader market correction. Reinsurance conditions for general aviation remain supportive, with excess of loss renewals generally flat or reducing and quota share capacity continuing to be widely available from both incumbent and new participants.

Capacity remains abundant across most areas of the general aviation market, supported by new entrants in 2026 and the prospect of further participation. Competition is particularly strong for well-performing and highly sought-after accounts, many of which can attract multiple times the required support, resulting in differentiation through price, coverage enhancements, or both. This remains especially true for risks with lower liability exposure relative to other aviation subclasses, where insurers are more comfortable deploying larger line sizes. Competitive pressure is also extending into areas that have historically been considered less attractive, as insurers look to diversify portfolios and deploy excess capacity more broadly.

Large governmental and commercial operations continue to benefit from particularly strong competition, with some insurers prepared to accept further reductions despite inconsistent profitability to secure substantial premium income or strengthen their market position. By contrast, smaller fleets and accounts more typically written on a 100% basis are generally experiencing firmer conditions, as they attract less competition and therefore achieve more modest reductions.

However, for US general aviation exposure, the picture is more nuanced than a simple continuation of soft market conditions. While capacity remains ample — supported by new US-based MGAs, expanded participation from established carriers, and increased interest from UK and European insurers — underwriting response is being shaped by the specific characteristics of US exposure as well as the broader competitive environment.

Insurers remain attracted to profitable US general aviation business with disciplined risk management, and these accounts are still well positioned to achieve premium reductions and, in some cases, improved coverage. Complex quota share placements with meaningful premium volume and strong performance remain especially desirable and often secure the most favorable outcomes. In a competitive market, some insurers are also willing to write risks on a 100% basis that had previously been shared.

Renewals involving US airline exposure are proving more difficult to complete on target terms. Insurers are seeking more meaningful rate and premium increases, taking a firmer approach to structure, and deploying capacity more cautiously. In some cases, participation is becoming more selective across airline portfolios, reducing flexibility and increasing insurer leverage in negotiations. As a result, airlines with significant US exposure may need to consider higher retentions and, where necessary, broader structural adjustments to support renewal objectives.

More broadly, continued claims pressure is affecting insurer appetite across the airline market. In this environment, early engagement with Marsh is important for all clients. Beginning the renewal process in good time will allow options to be reviewed without unnecessary time pressure, support a more informed discussion around structure and capacity, and help position the programme as effectively as possible ahead of market engagement.

Deterioration in historical losses has been a central topic. This is compounded by recent settlements related to the Russia-Ukraine conflict, which have impacted the contingent and war insurance market. In addition, the cost of aircraft parts and components continues to rise, severity trends in liability rulings are worsening, and reinsurance overheads have increased.

Despite current market dynamics, capacity remains plentiful, and major insurers are competing to win and retain lead positions. New entrants are seeking business, aiming to build their books from a small premium base. Collectively, these pressures have counteracted upward pressure on rates.

Many clients are anticipating deteriorating market conditions and are accordingly aiming to shift towards long-term agreements (LTAs). These multi-year structures can offer clear benefits: they provide renewal certainty and protect against future capacity withdrawal that could trigger rate increases or restricted terms. For insurers, LTAs can provide predictable premium flows over multiple years and the ability to secure, or even increase, line size.

This dynamic has created a notable divergence in insurer strategy, with a desire among some for expanded capacity in the out-years of LTAs, against future rate increases being achievable. Others prefer to hold firm on rate, accepting smaller line sizes if necessary, rather than lock in at reduced rates for extended periods.

In a less stable market environment, early and proactive engagement with insurers will remain critical. Clients should work closely with their Marsh broker to position their risk effectively, and demonstrating progress in safety and operational resilience will be important in supporting renewal strategy and securing the best available outcome through the remainder of 2026.

If market conditions deteriorate further, particularly in the event of increased loss activity or reduced capacity, insurers may take a more selective approach to long-term agreements. In that environment, clients may wish to consider structures that preserve flexibility, such as locking in only part of a program for future years while retaining scope to respond to changing market conditions.

Across all segments, underwriting discipline is increasing and renewal outcomes are becoming more closely linked to risk quality, operating performance, and exposure profile. Clear preparation, early marketing, and a well-supported underwriting narrative will be important in helping secure the best available outcome through the remainder of 2026.

The aviation insurance market continues to show different conditions across segments and exposures, with underwriting outcomes increasingly influenced by risk quality, operating performance, and overall exposure profile. In this environment, engaging early with insurers, demonstrating a clear trajectory of risk improvement, and evidencing investment in safety, operational controls, and broader risk mitigation measures will be important in supporting renewal discussions through the rest of 2026.

Please contact your Marsh broker if you would like to discuss any of the above, and look out for the full H1 market commentary next quarter, which will provide further analysis of these trends and what they may mean for your portfolio.

Aircraft jet on maintenance of engine and fuselage check repair in airport hangar

Article

Aviation insurance market pulse check

Airlines

General Aviation

Aerospace

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Aviation insurance market pulse check

Airlines

General Aviation

Aerospace

Related insights

How to transform your Safety Management System into a Center of Safety Intelligence

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