The industry is facing an opportunity to look again at pricing, policy conditions and retention levels.
This year’s aerospace insurance and reinsurance renewal season is arriving and is providing the opportunity to make changes for more favorable retention and pricing levels as well as policy conditions, said reinsurance broker Gallagher analysts.
The global market is facing several a number of changes and renewal season is an opportunity to adapt.
The aerospace insurance and reinsurance renewal season can open the door to adapt is a way that will allow insurers and reinsurers to continue to serve its clients, said the analysts. Much of this focus can be directed, said the analysts, on the impact from the Russian invasion of Ukraine, as well as the increasing costs due to inflation and the ongoing risk of a global economic recession. These issues have created an environment that hasn’t been seen in more than four decades, noted Gallagher in its Plane Talking Q4.
The broker stated that diversity within the global aerospace insurance underwriter risk portfolio will offer direct insurers an opportunity to align themselves with their evolving ecosystem. Equally, it cautioned that pressures insurers are facing for margin improvements has been forcing many of them to examine and adjust their pricing models as they are simultaneously facing worldwide barriers.
The top concern insurers continue to express is over inflation and the rising prices it causes.
Swiss Re has confirmed that insurers are most concerned about inflation at the moment. It continues to make things increasingly challenging for insurance companies, said analysts from Gallagher, as it “it erodes nominal premium growth, impacts global demand and creates higher claims costs.”
“In a sector heavily dependent on specialist materials such as composites and high value aerospace engineering skills, rising claims costs will be a major concern for GA insurers,” added the analysts. “Add to these pressures the general rise in social inflation and global supply chain issues and it is easy to understand why many GA insurers are pressing for premium rate increases.”
Gallagher stated that the Russian conflict in Ukraine hasn’t impacted the general aerospace insurance sector in the same way that it has affected commercial passenger services and the commercial aircraft leasing sector.