According to analysts at Howden, the global insurance and reinsurance broking group, after a “relatively restrained” January 1st aviation renewal, a series of high-profile losses and evolving dynamics in the first half of 2025, market firming could occur heading into the final quarter of the year.
The first half of this year saw two high-profile events: the American Airlines loss in January, whose reserve remains under consideration but is anticipated to be significant, and the Air India incident in June, which has reportedly been reserved at over $400 million, notes Howden.
There’s also the Jeju Air crash of late 2024 to consider, the reported continued deterioration of other historical losses, and then the development of losses from Russia/Ukraine. Together, these past events and the more recent tragedies are forming a view of loss activity that Howden says is influencing insurer and reinsurer pricing assumptions, and could ultimately lead to a hardening market going into Q4.
Paul Smith, Managing Director, Howden Re Aviation & Space, commented, “These losses are expected to flow through quota share and excess of loss (XoL) structures, with American Airlines possibly affecting upper XoL layers, and Air India impacting the first layers of many all-risk general and, potentially, hull war-specific programmes.
“While capacity for non-proportional major risk business remains abundant, ongoing attritional pressure combined with the cumulative scale of these events could directly influence how 2016 reinsurance programmes are structured and priced.”
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Howden reports that at the July 1st, 2025, renewal, first-tier excess of loss and retro pricing were generally flat, but warns that the American Airlines loss could drive repricing across programmes, especially as reinsurers re-examine their exposures in light of historical loss development trends from years with lower retentions and attachment points.
The size of the American Airlines loss has the potential to be quire large, and given that retrocession structures typically trigger at $400 million of original insured loss, Howden expects these structures to come into sharper focus going forward.
“However, speculation around potential government contribution may lessen the potential impact on both price and level,” says the broker.
Another notable trend of 2025 is the continued rise of Managing General Agents (MGAs) in the space. As explained by Howden, the agility and ability of MGAs to make quick underwriting decisions have positioned them as important partners in aviation risk, particularly where traditional insurers face slower governance processes.
Smith added, “MGA-led platforms continue to expand their role in the aviation space. They’re well-positioned to respond quickly in a market that increasingly demands speed, specialisation, and clear risk appetite.”
Looking ahead, Howden states that “all signs point to a more cautious but deliberate reinsurance environment for 2026.”
Currently, reinsurance capacity remains readily available in the aviation sector, but the recent loss activity might push some sellers of protection to review their risk appetite and retentions.
“The full impact of the current set of circumstances will become evident by the turn of the year. All eyes will be on the 4th quarter major risk airline renewal placements to see whether these factors lead to a sustained recalibration or a continued holding pattern,” said Dominic Riley, Managing Directors in Howden Re’s Aviation & Space team.
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