Airline rates could see effect in H2 following loss events: WTW

Airline insurance rates show little signs of hardening in the first half of 2025, but more challenging market conditions could emerge in the second half due to recent loss events, Willis Towers Watson PLC said in a report released Wednesday.

Capacity remains plentiful and early reinsurance renewals suggest that direct insurers will be receptive to negotiation as momentum from last year’s fourth quarter shows few signs of abating, Willis said.

“Unless there is a squeeze in the supply of insurance capacity, it seems likely that rate reductions will continue to be offered in the early part of 2025,” the report said.

Heightened competition for premium income that defined the final quarter of 2024 is likely to be subdued initially as insurers take stock, according to the report.

Liability claims arising from a Jan. 29 collision between an American Airlines aircraft and a military helicopter could be significant, but market reaction is “difficult to gauge” given that few airline renewals occur in the first quarter of the year and the cause of loss is currently unknown, the report said.

The potential resolution of litigation between aircraft lessors and insurers arising from the confiscation of Western-owned aircraft in Russia following its invasion of Ukraine could “rapidly reduce reinsurer or insurer appetite, altering market conditions,” however.

Composite airframe repair costs, high-value engines and the effect of inflation in liability claims will continue to attract scrutiny from insurers as the year develops, the report said.