Aviation insurance market update (Q3 2018)

15 October 2018

With the airline insurance market renewal season now in an advanced stage, focus has shifted firmly towards negotiations for the fourth quarter (Q4).

As we enter this busy period the aviation market is showing definitive upwards movement across all business sectors. Underwriters are sustaining the pressure they have built throughout 2018 and are now pushing for increases in premiums for all renewals.

Underwriting discipline and risk selectivity remain key contributors, but the continual decline in capacity levels by way of consolidation and market withdrawals has ultimately helped support this position by affording underwriter’s greater leverage in their renewal negotiations. Management pressure and year-end profit expectations as well as the steady flow of losses seen throughout 2018 have also motivated underwriters to remain resilient.

Looking ahead to Q4, while the potential for volatility exists, we would expect market conditions to continue the current upwards trending. Given the volume of renewals and subsequent premium income available, underwriters are likely to push harder on pricing in the final quarter, and therefore it is probable that we will see some uptick in rates.

However as this editions lead lines author comments, capacity will return if rate increases become too high, therefore, we expect underwriters to continue to take a measured approach.

The aviation insurance sector looks set to remain a challenging trading environment and it will be interesting to analyse come yearend the state of the market and its position as we enter 2019.

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For further information, please contact Richard Adams, Partner on +44 (0)20 7466 5220 or email publications@jltgroup.com.

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