The aviation reinsurance market is facing a period of uncertainty as renewal discussions for 2026 approach. According to Paul Smith and Dominic Riley, Managing Directors in Howden Re’s Aviation & Space team, two major factors are influencing current sentiment: the accumulation of losses from recent incidents and growing sensitivity around retrocession arrangements.
In the first half of 2025, two significant events have drawn attention. The American Airlines loss in January remains under review but is expected to be substantial. In June, an Air India incident reportedly resulted in reserves exceeding $400 million. Other contributing factors include the Jeju Air crash from late 2024 and ongoing deterioration of earlier losses, as well as initial realizations of claims linked to Russia/Ukraine exposures. These developments are affecting pricing strategies among insurers and reinsurers, with expectations that rates could rise heading into the final quarter.
“These losses are expected to flow through quota share and 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,” said Paul Smith.
Retrocession pricing at mid-year renewals remained largely stable; however, industry participants anticipate changes due to the scale of potential payouts from incidents like the American Airlines loss. Retrocession structures often activate at $400 million in original insured losses. There is also speculation that government involvement might help reduce some financial impact on insurers.
Managing General Agents (MGAs) continue to expand their presence in aviation insurance during 2025. Their ability to make swift underwriting decisions has made them valuable partners where traditional insurers may move more slowly due to governance requirements.
“MGA-led platforms continue to expand their role in the aviation space,” said Smith. “They’re well-positioned to respond quickly in a market that increasingly demands speed, specialisation, and clear risk appetite.”
This trend is likely to affect how insurance programs are designed for next year’s renewals—especially where rapid response offers a competitive edge.
Looking ahead to the second half of 2025, reinsurers appear cautious but methodical as they reassess their risk exposure and retentions based on recent experience. Pricing for upper excess-of-loss (XoL) layers and retrocession coverage is expected to firm up further as cedants adjust program designs in response.
“The full impact of the current set of circumstances will become evident by the turn of the year,” added Dominic Riley. “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”