The global aviation insurance market faces challenges even with capacity remaining at sufficient levels, according to a Gallagher update.

Strong capacity is easing price pressures, but underwriters remain disciplined, the broker says.

“Insurers are increasingly differentiating between risks, meaning buyers with adverse claims histories, significant US exposure or operations in higher-risk regions should expect closer scrutiny and potentially higher costs,” the update says.

“Capacity constraints are becoming more evident for certain categories of risk, particularly those operating in perceived higher-risk regions impacted by ongoing geopolitical developments, such as the Middle East.

“In the wake of several high-profile losses, US operations or those clients with significant US exposures are also experiencing capacity challenges.”

The fourth quarter will be an indicator of aviation underwriting risk appetite, with 60%-70% of global airline programs due for renewal.

Gallagher says the market’s direction remains clear following several years of elevated claims activity and persistent inflationary pressures: insurers are firmly focused on delivering sustainable underwriting profitability.

“While excess capacity continues to provide buyers with valuable negotiating leverage and has helped moderate efforts to drive broader market hardening, the ability to secure capacity on favourable terms is increasingly dependent on the strength of an individual risk rather than prevailing market conditions alone.”