Adam Hemingway, who leads the Global Aviation & Space division at WTW, an advisory, broking and solutions firm, offers a candid look at how a succession of costly airline incidents has transformed expectations for 2025.
What was meant to be a relatively steady renewal year has shifted into a challenging one, with insurers trying to protect portfolio positions while grappling with rising claims, pressure from reinsurers and an abundance of competing capacity. Hemingway sets out how these forces are shaping negotiations as the busiest renewal period of the year unfolds.
Hemingway explains that insurers now find themselves trying to secure firmer pricing while avoiding displacement from long-established airline programmes. They must also meet premium thresholds linked to their reinsurance arrangements. Yet competition remains strong enough to cap the level of increases many had hoped for, prompting concern that unresolved pricing tension may spill over into 2026.
He notes that the year began with forecasts of softer terms for airlines. Strong results in recent years, expanding capacity and limited major losses had pointed towards a favourable environment for buyers. That shifted rapidly once several significant events materialised.
The Jeju Airlines incident at the end of 2024 fell into 2025 results for some insurers, and early-year losses involving Air Busan, American Airlines and Air India added further strain. Two cargo incidents followed: one in Hong Kong, expected to generate notable salvage and removal costs, and another in Kentucky where ground-based liability claims are anticipated.
Routine claims add further weight. Hemingway highlights that annual airline and aerospace losses typically fall between USD 850 million and USD 1.15 billion, depending on the criteria applied. Even with plentiful underwriting capacity, many insurers now argue that current rating levels do not reflect loss activity or their operating costs.
Efforts to lift pricing earlier in 2025 delivered mixed outcomes. Hemingway observes that competition limited meaningful increases for airlines with clean records or modest liability requirements.
Insurers that pushed too firmly risked losing share, while others accepted smaller adjustments and turned their attention to Q4, when most global airline premium is placed. The exit of a major European primary insurer did little to alter conditions, underscoring the depth of the market.
As Q4 progresses, Hemingway describes renewal discussions as finely balanced. Around 70% of global hull and liability premium renews in this period, and another significant loss could make it difficult for insurers to accept the modest increases some programmes have secured. Without further incidents, however, competition is likely to continue holding pricing back, potentially shifting some of the most difficult negotiations into early 2026.
Although the airline portfolio produced broadly positive results between 2021 and 2024, Hemingway notes that many insurers now believe rating levels are insufficient to support returns, even in an average loss year.
Increasing repair and parts costs, higher claims frequency and wider inflation continue to weigh on performance. Airlines with extensive claims histories, high-value fleets or very large liability limits face the most intense renewal pressure, while those purchasing lower limits may see more stable outcomes.
Reinsurance renewals for January 2026 add further complexity. Hemingway points out that some reinsurers expect direct insurers to hold firmer pricing positions or face more challenging treaty terms, though strong results elsewhere in their portfolios may shape their approach.
Meanwhile, the war and terrorism market is behaving differently. Hemingway reports that following the resolution of major lessor-related disputes linked to the Russia–Ukraine situation, activity returned to normal quickly, helped by new capacity. Rates continue to ease, with reductions exceeding 10% for hull war and up to 10% for excess war liability, depending on exposure. Cover for operations involving Russia has also stabilised, though some restrictions and cost implications remain.
As the year closes, Hemingway stresses that insurers’ immediate focus is to reach the end of 2025 without further erosion of results. Rising claims, constrained premium movement and higher reinsurance costs create a demanding backdrop, and defining a sustainable strategy for 2026 will be the next major hurdle.
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