There has been much discussion in recent weeks as to the direction the insurance market will take not only in the forthcoming months but in 2018 and indeed in the longer-term. For some time now the aviation insurance class, as with the wider global market, has on the whole experienced soft market conditions and rate reductions. While there have been signs during the past 12 months that this trend is slowing and could be coming to an end, many have remained sceptical and believed that we would need to witness a number of factors or a significant event for this to be realised.
However, in recent weeks we have witnessed a series of catastrophic incidents around the world including earthquakes in Mexico and Hurricane’s Harvey, Maria and Irma, the latter of which is predicted to be the costliest storm in US history. The magnitude of these events has led many to suggest that they may be the catalyst for a turn in the market and could lead to a fundamental and structural impact on global insurance/reinsurance market conditions.
The insurance industry is still assessing the cost of these losses and there is yet to be any withdrawal of capacity, therefore we do not expect to see any dramatic impact on the aviation insurance market, at least in the short-term. What we believe is a more realistic scenario, in aviation, is that we will see a flattening out of rates as underwriters assess their individual exposure. We expect that many insurers will adopt a cautious approach to the risks they write across their whole portfolio of business, tightening coverage, pushing harder for ‘as before’ rates and resisting reductions where possible. Those less attractive risks with poor loss records will likely experience a much tougher stance.
Taking this into account, more than ever the right preparation and strategy for each renewal placement will be crucial in the level of pricing that is available and the overall result that the broker is able to obtain. JLT feels very well placed to navigate and deliver the results for our clients whatever direction the market may take.
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For further information, please contact Richard Adams, Partner on +44 (0)20 7466 5220 or email firstname.lastname@example.org