Stay ahead in 2025 with the latest aviation insurance trends. Learn about premium adjustments, underwriting profitability, claim cost drivers, and key market insights from Sky Aviation Insurance Services.
As we head into 2025, the aviation insurance market remains in a state of flux. At Sky Aviation Insurance Services (SAI), we continuously analyze industry reports and market data to keep our clients informed and prepared.Â
Recent insights from Milliman’s 2023 U.S. General Aviation Market Report and Q4 2024 aviation insurance trends reveal critical shifts in the industry, influencing pricing, claims, and coverage expectations for aircraft owners and operators.
One of the most significant influences on the aviation insurance market is the occurrence of major losses. Over the past year, the industry has witnessed multiple high-profile incidents, including:
Japan Airlines A350 collision – $130M hull loss (Jan ’24)
Alaska Airlines 737 Max 9 door plug incident – $50M in grounding and passenger liability costs (Jan ’24)
Tornado damage at Eppley Airfield (Omaha, NE) – Four hangars and 32 aircraft damaged or destroyed (Apr ’24)
Multiple fatal crashes, including Citation 680 (NC), Citation 550 (TX), and Robinson R44 (TX), contributing to heightened underwriting caution.
With an increasing number of severe claims, insurers are reassessing risk models and pricing strategies.
For several years, the aviation insurance market has experienced sharp rate hikes, but signs indicate a possible stabilization. According to Milliman’s 2023 market summary, written premiums in the general aviation sector grew by 7% in 2023—down from 11% in 2022 and significantly lower than the 15% annual increases seen in 2019-2021. This suggests that while rates continue to rise, the pace is slowing.
For 2025, projected rate adjustments vary by segment:
Piston General Aviation: 0-5% increase
Turbine General Aviation: 0-5% increase
Commercial Aviation (including charter): 0-7% increase
Commercial Helicopter Operations: 5-10% increase
While the rate hikes are moderating, aircraft owners should still anticipate incremental increases, particularly for turbine and commercial operations.
Even as rate hikes slow, claims costs continue to rise, driven by several key factors:
Attritional losses – Hard landings, bird strikes, and runway incursions remain persistent.
Rising repair costs – Higher labor rates and increased aircraft parts expenses are driving up claims payouts.
Next-gen aircraft materials – Composite structures take longer to repair and require specialized expertise, making hull claims more expensive.
Social inflation – Legal costs and settlement amounts continue to rise, with liability claim values more than tripling from $1.5M (2007) to $5.1M (2022).
Supply chain disruptions – Delays in parts availability and repairs extend downtime, increasing operational costs and reliance on loaner aircraft.
The U.S. General Aviation (USGA) market reported $2.9 billion in direct written premiums in 2023, reflecting a 7% increase from 2022 and an 84% cumulative rise since 2018.Â
This period marks the most substantial premium growth for USGA since the post-9/11 era.
Despite this, the pace of premium growth has been slowing. After three consecutive years of approximately 15% increases, 2022 saw an 11% rise, followed by a 7% increase in 2023.Â
Looking ahead, 2024 projections suggest further deceleration, with expected premium growth of around 5%.
From an underwriting perspective, 2023 saw an industry-wide underwriting income of $343 million, a significant recovery from losses suffered between 2016 and 2020, when the market lost approximately $700 million cumulatively.Â
The recent shift back to profitability signals a potential stabilization, but underwriting expenses remain high due to agent commissions, brokerage fees, and increased acquisition costs.
Another key trend is the reliance on reinsurance, with USGA insurers ceding around 50% of premiums to reinsurers.Â
This risk transfer mechanism helps insurers mitigate the financial impact of high-dollar aviation claims and maintain solvency despite exposure to catastrophic losses.
While general aviation insurers posted a $343M underwriting profit in 2023 (compared to $100M in 2022), historical data reveals an industry that has struggled with consistent profitability.Â
From 2008 to 2021, underwriting profits averaged just 2%, highlighting the ongoing volatility in risk assessment and premium adequacy.
The good news?Â
The aviation insurance market represents less than 0.5% of the overall U.S. property and casualty insurance sector, making it a niche market where specialized brokers like SAI can provide tailored solutions to mitigate risks and control costs.
From discussions at Corporate Jet Investor Miami 2024, industry leaders have identified key trends shaping the aviation insurance outlook:
OEMs (Original Equipment Manufacturers) are maintaining strong delivery backlogs, ensuring continued fleet growth.
Private equity is becoming a bigger player in aviation financing, potentially influencing future risk appetites.
Regulatory and economic factors post-election will play a significant role in the next 12 months, particularly as the new administration completes its first 100 days by May 2025.
Catering costs and supply chain challenges, even down to packaged silverware, are impacting operational efficiency in unexpected ways.
While the rate of insurance increases may be slowing, cost containment strategies remain essential for policyholders. Here’s how you can stay ahead:
Review and update your coverage – Ensure your policy aligns with current aircraft values and operational risks.
Enhance risk management practices – Proactive maintenance and pilot training can help mitigate claims.
Work with an experienced aviation insurance broker – At SAI, we provide customized risk assessments to help you navigate the evolving insurance landscape.
Plan for potential regulatory shifts – Stay informed about new policies that may impact liability or coverage requirements.
The aviation insurance market is leveling off, but challenges remain. With claims costs rising, regulatory uncertainties ahead, and market shifts affecting aircraft values and operations, now is the time to be proactive.
At Sky Aviation Insurance Services, we are dedicated to helping you make informed decisions, optimize coverage, and minimize costs.
Want to discuss your insurance strategy for 2025? Contact us today. Let’s keep you flying safely and affordably in the year ahead.