Aircraft Insurance: A New Atmosphere
While capacity in the aircraft insurance market remains vast, the landscape is changing. One notable move this year was when W.R. Berkley decided to exit the aviation insurance business. The fact is, appetites are shifting for many aviation underwriters. Older aircraft are becoming harder to place as they approach obsolescence and are more difficult to repair due to parts availability. Hull premiums for lower-value jets also continue to increase as we see more piston owners stepping up to turbine equipment for a low cost of entry.
Transitional pilots present interesting challenges for the underwriting community as well. We are seeing more and more owner pilots moving to turbine equipment with lower hours in their log books than in previous years. The key for these individuals is developing a sound training path to present to underwriters that illustrates their commitment to advancing their skill set in a conservative plan. These owner pilots can expect a much higher first-year premium and lower limits until they’ve achieved ratings and built their time. Given some of the incidents involving low-time pilots in turbine equipment, there are fewer aircraft insurance providers willing to cover these risks.
Finally, claims in the aviation insurance space have outpaced total written premium. Consequently, the reinsurance market has advised domestic aviation insurance underwriters to stop slashing rates to gain market share.
All hope is not lost for the aircraft insurance market. Because of the ample domestic capacity, there are still plenty of viable markets to write the bulk of our aviation risks. This capacity will also buffer any massive shifts in rates. Most can expect single-digit rate increases at renewal. For lower-time pilots or those with claims or more complex risks, rate increases of 10% to 15% will be common.
What Direction Are Your Costs Headed?
We know pilots have a sharp sense of direction, but navigating a changing rate environment can be tricky. Having industry experts on your side can help you secure the most appropriate aircraft insurance based on your particular needs. While rates are headed north, this doesn’t have to be a break-the-bank moment. For help managing your risk, as well as this necessary fixed cost, contact our Aviation Risk Services Team.