The airline insurance market is expected to stay soft through the first half of 2025, with early reinsurance renewals showing that direct insurers will continue to negotiate in line with trends from late 2024, according to WTW’s latest Airline Insurance Market Renewal Outlook: Q1 2025.
Excess capacity has kept rates on a downward trajectory throughout 2024, despite efforts from insurers to raise hull and liability prices. Unless insurance capacity reduces, the trend of rate cuts is likely to continue into early 2025. However, increasing competition for premium income in late 2024 may start to ease as insurers reassess their positions.
With a limited number of airline insurance programs renewing during the first two quarters of 2025, the market’s direction in the short term remains uncertain. While recent liability claims from airline incidents in Azerbaijan and South Korea in December are not expected to have a major impact on the direct insurance market, insurers remain focused on rising repair costs for airframes, expensive engine replacements, and inflation-driven liability claims.
A potentially significant claim from the January American Airlines incident could influence the market, but with limited placement activity in Q1 and unclear loss causation, its overall impact is still uncertain.
Unless another major loss event occurs or ongoing aircraft leasing disputes result in financial strain for insurers, direct insurers are likely to continue offering favorable terms for risk management and insurance programs, particularly for clients with strong loss histories.
In this evolving market, airline insurance buyers must carefully balance short-term pricing opportunities with the long-term stability of their insurer relationships, as market conditions remain volatile.
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