The aviation insurance market hardened further during the fourth quarter as renewal activity intensified and underwriters exerted greater discipline in pursuit of meeting their year-end targets. Renewal analysis highlights solid upwards movement in rates over 2017 across virtually all segments of the business.
At this point it is too early to say what impact this will have had on individual year-end underwriting results, but however positive it comes against the backdrop of a poor loss year in 2018. Aviation insurers endured significant claims in 2018 across all segments while at the same time attritional losses continued to further erode underwriting profitability.
It is reasonable to predict therefore that 2018 will become another underwriting loss year for most aviation insurers despite a visible increase in rates and a toughening market. This position is before insurer’s expenses and any reinsurance costs are also factored in.
Looking ahead all signs seemingly point to a continuation of the current trend. The insurance market appears resolute in addressing profitability and insurers are under strong pressure to improve or cut back underperforming business lines, which for many include aviation.
Underwriters have been quick to underline their aspirations for further rate improvements in 2019 as they continue in their pursuit of sustainable pricing. Capacity levels, which have contracted notably during the past year, will play a key role in whether this is achieved and to what degree.
Given the current market environment JLT’s advice to buyers would be to engage with your broker as early as possible as better preparation will be beneficial to developing the most effective strategic plan and achieving the best renewal outcome.
While changes to the market produce a number of challenges, JLT will always look for opportunities to create innovative solutions and mitigate cost increases wherever possible.
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For further information, please contact Richard Adams, Partner on +44 (0)20 7466 5220 or email firstname.lastname@example.org