While the report acknowledged “notable differentiations” in the results for each risk, depending on individual losses and exposure changes, overall rate increases are now moving from double-digit territory closer to high single digits for the "right” risks.
Premium reductions are also said to be a “possibility”, and some insurers are starting to agree to return premiums below the stated minimums in their policies.
This, coupled with the lower loss levels of the past year, has “probably been influential” in several new entrants’ decisions to start writing airline business in 2021.
Decelerating rate increases in the aviation insurance market was also noted in the previous edition of the Gallagher Plane Talking report.
Gallagher highlighted overall increases in available airline capacity levels across primary All Risks and ancillary covers, and consensus is that technical rating levels are now at or around a level insurers see as “sustainable”.
It said it now saw support for many airline risks far in excess of 100%, and that the increased competition is having a positive effect on composite premiums and leading to an increase in vertical pricing spreads.
The report said the increase in capacity was partly a result of underwriters’ desire to maintain market share and premium income levels, which is resulting in the deployment of increased line sizes (on certain risks).
Gallagher said it remained “mindful” that current 2021 data was still somewhat limited, but, based on its knowledge of early July renewals, “all signs point to a more positive environment for airline insurance buyers in 2021”.
