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Insurance Update: A Hardening Market

Beginning in 2010, there was a further influx of companies starting their own aviation divisions. These included Travelers, SwissRe, QBE, Hallmark, XL Catlin, Great American and W.R. Berkley. General aviation did not grow much in that time, so by 2016 there were a lot more insurance dollars chasing each airplane and helicopter than there had been 10 years before. The market was awash in what insurers refer to as "capacity." Capacity is basically the capital required for insurers to set aside as reserves as they take on the risk that comes with new insurance policies. As the new companies entered the market, the legacy companies, including USAIG, Global Aerospace, AIG and Old Republic (Phoenix), were forced into a defensive position in order to maintain their market share against the new invaders, and we were off to the races.

Jon Doolittle
Verified

The soft aviation insurance market has been going on for 10 years, such a long time that many underwriters, brokers and their clients have never experienced anything else. Among aviation insurance people, there was more and more talk about this so-called new normal as if the wildly cyclical nature of the business had disappeared and would never return.

And while this latest market swing has a somewhat tentative feel to it, there are reasons to think it is the beginning of the next hard market cycle. And reasons to think not.

Jon Doolittle