Aviation lines may fend off rising competition for mild Q2 hardening
Specialty insurers are back to seeking rate gains in aviation lines and could deliver a market hardening in the second quarter, in part as the industry plays catch-up against rising reinsurance costs and major claims experience, analysts at US brokerage Brown & Brown are telling clients.
“The aviation marketplace is anticipated to harden again in the second quarter of this year, possibly flattening into the third quarter of 2023,” brokerage analysts wrote in a quarterly review of the commercial insurance market.
“The immediate focus of domestic aviation insurers is capturing single-digit rate increases upon renewal, although some are now actively competing on renewals and insureds considering changing markets.”
That will constitute a light reversal from conditions prevailing through the end of 2022 and the beginning of 2023 when insureds had gained ground across all segments, Brown & Brown claimed.
The Boeing 737 Max grounding loss, now put by Brown & Brown at $3 billion versus prior tallies near $1.3 billion, is now the market’s all-time largest claim and is bearing down on contingent liability, war risk and terrorism premiums. “This factor will continue to affect aviation carriers’ reinsurance renewals through July 2023.”
Reinsurers are delivering double-digit rate increases for the line to keep up the pressure on primary carriers, Brown & Brown notes, highlighting the loss story from the ongoing Russia/Ukraine conflict and the ca 400 leased but trapped aircraft backing reported hull war claims which Brown & Brown tallies at $6.5 billion.
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