2026 MARKET TRENDS
Commercial Aviation
Key Takeaways
- The commercial aviation market has grown from 18 to 25 insurance carriers, leading to stabilized rates and increased competition
- Claims costs continue to surge due to supply chain disruptions, inflation and labor shortages, profoundly affecting carrier profit and loss outcomes and directly altering the value of the owner’s assets
- Advanced air mobility, drones and new technologies are reshaping insurance strategies
- Premiums are expected to remain stable in 2026, supported by steady reinsurance capacity
- Operators can improve renewal outcomes by prioritizing pilot training, adopting advanced safety technologies, storing aircraft in hangars, protecting assets against weather-related elements and taking actions to prevent claims
While some markets reduced pricing to attract business, others focused on stability by offering higher limits to customers with favorable loss histories.
Overview
Over the past year, rates have stabilized due to expanded market capacity and the introduction of new managing general agents (MGAs), so the same stable rating structure will flow into 2026. The addition of new capacity across products and services is driving long-standing carriers to broaden their appetite and extend more competitive terms. While some markets reduced pricing to attract business, others focused on stability by offering higher limits to customers with favorable loss histories.
However, claims costs have surged due to supply chain disruptions, inflation, tariffs and a shortage of skilled mechanics, leading to longer repair times and higher expenses, particularly for labor and parts. Additionally, the growth of advanced technologies in aviation is driving the need for new insurance approaches, risk models and skills centered on real-time operational data.
Market Conditions
The commercial aviation insurance market offers significant opportunities, with carrier numbers rising from 18 to 25 in recent years, fostering robust capacity and favorable conditions for reassessing exposures and coverage needs. Aviation debt capital remains readily available, and manufacturers continue delivering "green" aircraft to lessors. Private buyers are investing in airline equipment at record values, while tax incentives for business aircraft owners and new entrants enhance liquidity for reinvestment and growth.
The aviation industry is also navigating a dynamic landscape shaped by regulatory advancements, economic pressures and technological evolution. From new safety frameworks and rising operational costs to market stability, government shutdown impacts and litigation risks, these factors collectively influence the industry's resilience and future growth.
Regulatory updates:
New frameworks for Part 135 Drone operators and advanced air mobility emphasize safety, security and maintenance, with requirements such as collision avoidance technology, enhanced security vetting and expanded responsibilities for manufacturers and pilots
Rising costs and operational challenges:
Rising repair and claim costs, driven by supply chain complexity, inflation and labor shortages, combined with geopolitical factors like trade disputes and global instability, are increasing operational risks and requiring carriers to adopt more realistic reserve setting and settlement planning
Market stability:
The 2025 rating model helps ensure stability for general aviation into 2026, while agile capital models and steady reinsurance capacity support pricing stability for advanced aircraft amid rising claims
Government shutdowns:
Government shutdowns disrupt aviation by delaying safety initiatives, halting projects, challenging customs and reducing revenue through passenger confidence and business aviation restrictions
Reliability and groundings:
Modern aviation groundings disrupt general aviation activities like training, commercial operations, supply chains and parts availability, while financial hardships for key suppliers further strain aviation business operations
Litigation and technology:
The rapid adoption of new aviation technologies increases litigation risks, pushing underwriters to adopt real-time data-driven models and collaborate with regulators to address evolving safety challenges
Impacts & Considerations
The commercial aviation sector is contending with a complex array of challenges, ranging from changes in Federal Aviation Administration (FAA) regulations to rapid technological shifts. Awareness of these impacts remains essential for effective navigation of the current insurance market. To address these risks and support improved renewal outcomes, the following measures should be considered:
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