Gallagher has released its Q1 2025 edition of Plane Talking, offering a detailed assessment of aviation insurance market conditions, claims activity, and underwriting sentiment across sectors including airlines, aerospace manufacturers, general aviation, and space.
The report notes that Q1 2025 followed the trajectory anticipated at the end of last year, marked by market uncertainty and volatility. Despite continued availability of capacity, pressure on pricing is emerging due to recent major losses, including the Jeju Air incident, reportedly reserved at around US$300 million.
The timing of this loss – after the Q4 2024 renewal cycle – has brought greater attention from insurers as they assess its impact on current underwriting strategies.
Gallagher said the accumulation of both large-scale and attritional losses (under US$10 million) could shift underwriting portfolios into unprofitable territory for the 2024 and 2025 calendar years.
This dynamic, the report added, has heightened scrutiny from senior management and capital providers, who are monitoring underwriting returns and cash flow performance closely.
The aviation insurance market experienced significant developments in 2024, characterised by both a substantial increase in gross written premiums (GWP) and notable large claims events.
The aviation insurance sector's GWP reached a 20-year high, exceeding US$8 billion in 2024. This surge was driven by increased air traffic and heightened demand for coverage.
Airlines contributed approximately 35% of these premiums, while general aviation accounted for about 47%.
An analysis of over 32,000 industry claims from 2019 to 2024, totalling US$15 billion (€14 billion), revealed that collision or crash incidents and faulty workmanship or defective products accounted for 85% of the total claim value.
Following the invasion of Ukraine in 2022, approximately 400 Western-owned aircraft, valued at nearly US$10 billion, were stranded in Russia due to imposed sanctions. Legal battles ensued between aircraft lessors and insurers over claims related to these assets.
By late 2024, settlements were reached in some cases, while others continued to be litigated.
Market data gathered by Gallagher and Starr Insurance suggests that airline hull and liability lines generated approximately US$1.65 billion in net premium in 2024. While claims were lower in 2019 and 2020 due to COVID-19’s impact on aviation activity, 2021 represented a return to more typical attritional loss levels.
Gallagher said that current rating levels across this segment are falling short of sustainability targets, particularly in light of increasing claim severity and the influence of social inflation on liability awards.
One key factor shaping pricing dynamics remains the availability of capacity. However, capital providers are reportedly assessing long-term returns before committing additional resources, and the 2025 withdrawal of a major insurer from the sector may signal further contraction later this year.
The report identified multiple current and emerging challenges for the airline insurance market, including ongoing litigation related to Russia-Ukraine aircraft disputes. The final quantum of losses and resolution timelines remain uncertain.
Other contributing pressures include higher aircraft values, increased repair and parts costs, potential liabilities tied to Boeing 737 MAX issues, and geopolitical risks affecting underwriting decisions.
Reinsurance conditions also factor into market sentiment. After rates softened slightly in 2024 compared to the previous year, some recent losses may influence pricing in upcoming treaty renewals. Direct insurers remain watchful, particularly as reinsurance partners respond to unresolved claims linked to Russia-Ukraine exposures.
Market activity for aerospace manufacturers and infrastructure risks was relatively light in Q1, which is typical for this segment. Early trends suggest continuity from Q4 2024, with stable premium offers and an emphasis on strategic underwriting decisions. The first quarter is seen as a planning period for underwriters as they finalise budgets and forecast premium income.
Gallagher said insurers remain focused on maintaining or growing shares in favourable risks, especially as 2025 progresses toward busier renewal periods.
The general aviation market continues to experience surplus capacity. While the sector remains competitive, recent developments, such as Swiss Re’s decision to exit the direct aviation market, have prompted speculation about further exits. So far, the move has not significantly altered available capacity for general aviation clients.
The oversupply of capacity in this segment has contributed to lower premiums and broader coverage options. Reinsurance availability and capital affordability have helped maintain strong levels of capacity across the general aviation sector.
According to the report, insurer capacity for the space sector in 2025 has now been finalised. While most insurers maintained their capital commitments, a few experienced reductions. Volante exited the space market at the end of January, but no other departures were noted.
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