London Market aviation capacity builds, can’t tame all rates: Marsh
Capacity continues to build up in the London Market for major swathes of airline and general aviation covers, putting continued downward pressure on rate, but with major exception for ever-pricey hull war and excess AVN52 markets, analysts at Marsh have claimed.
“Despite some uncertainty surrounding losses and reinsurance costs, overall the airline insurance market is showing a continued desire to compete for market share,” analysts wrote in a new quarterly report on the aviation segment.
Even as existing players attempt to hold the line, Marsh sees “competition among insurers, resulting in improved results for the majority of placements.” It’s now a running trend: premium growth rates had peaked in the first quarter of 2023.
Capacity for a hypothetical London line for passenger airlines with clean loss experience and US$2 billion combined single limit was said to have remained flat year on year from Q2 2022.
For general aviation, capacity has also grown in aggregate, but with some palpable exceptions for hull war and the AVN52 market for passenger and third-party liability.
“In Q3, capacity continues to grow in the general aviation market, with line sizes increasing and the addition of new entrants, creating a downward pressure on rates,” Marsh authors wrote.
“Increased capacity could continue counteracting the reinsurance costs faced by insurers as treaty renewals begin to take place,” they wrote.
While capacity is said to be “beginning to rise” in both the hull war and excess AVN52, rate increases nonetheless continued at a heady pace.
“This is largely a result of competition in the general aviation hull war market remaining low and some insurers’ capacity being restricted,” authors claimed.
In hull war, Marsh claims new capacity from such names as Allianz, Apollo, Ark/NOA, Ascot, Everest and Sompo may have begun to take the sting off of prior headline retreats by such names as ADNIC, Chaucer, PICC, Talbot and AXA XL. But the lingering shortfall remains notable.
In AVN52, Allianz may be the sole new player to counterbalance a string of firms reducing or removing their offers, including AXA XL, AIG, Axis, Inigo Lancashire, Partner Re, PICC and Sompo.
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