18 July 2018Insurance

Aviation insurance market rates harden further

The aviation insurance market faced further upwards pricing pressure in the first half of 2018 driven by “on-going underwriting discipline and three-tier market conditions,” according to the JLT’s most recent Airline Insurance Market Update.

The JLT three-tier market view shows that rates have been hardening for tier A buyers, typically airlines with lower liability limits/hull values, high fleet/traffic growth with smaller aircraft. These are achieving small rate reductions or “as before” rates with exposure growth.

Similarly, tier B buyers, typically with high liability limits/hull values, low fleet/traffic growth and mixed fleets/widebody aircraft are seeing rates hardening and are subject to “as before” rates or small rate increases.

Tier C insurance buyers, typically airlines with poor attritional loss records, major loss/losses and adverse loss ratios are facing “hard rates” and are subject to rate increases.

Underwriters remain resilient, maintaining or increasing premiums and resisting rate reductions, or at least limiting them to single-digits, according to the report.

In terms of capacity, the market is generally stable, the report says. However, it noted that in recent months there have been further market personnel moves, staff consultations and another market (WR Berkley) has ceased writing airline business altogether. JLT has also seen withdrawals in other sectors including general aviation.

Industry consolidation remains a hot topic of market conversation and it seem likely that further activity can be expected, following recent announcements by the owners/shareholders of MSF Pritchard, Chaucer, Starstone and Atrium that they are exploring their options in respect of the future of these businesses, JLT noted.

In terms of losses, most aviation insurers have been hit by airline losses in 2018, according to the report. While the value of total losses has been relatively low, attritional claims have continued to be frequent and expensive. This issue remains a prominent area of concern to underwriters, JLT noted.

For the rest of 2018, JLT expects that renewal negotiations will remain challenging and underwriters will be determined to hold their position as we grow closer to the markets key income renewal period.

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

More of today's news

AIG closes Validus acquisition

Clark replaces Beale as CII president

Miller appoints energy construction lead from Marsh

Don't miss our insurtech email newsletter - sign up today

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk


More on this story

Insurance
15 October 2018   As the renewal season approaches, the airline insurance market is showing definitive upwards movement across all business sectors, according to the latest JLT Aviation newsletter.
Insurance
11 June 2018   The board of London Market Group’s PPL, an electronic placing platform launched in July 2016, has revealed that the aviation classes of business have gone live on the platform.
Insurance
18 April 2018   Airline premium and rates ended 2017 higher than the preceding year for the first time in a decade and the underlying conditions continue to support higher premium and rates in 2018, says David Godley, founder partner of Altitude Risk Partners, a specialist aviation and space underwriting agency.