Soft landing for aviation insurance premiums amid benign loss trends

Aviation insurance rates have softened due to excess reinsurance capacity and lower global losses, though geopolitical risks continue to influence underwriting conditions

Aviation insurance rates for Indian carriers have softened, even after last July’s Air India crash, as excess global reinsurance capacity and fewer mishaps keep losses low, industry insiders said.

 

They added that reinsurers are offering discounts of nearly 10–12 per cent on premiums across segments in the aviation market. 

That said, reinsurers have turned cautious amid ongoing geopolitical tensions in West Asia and have begun imposing stricter underwriting conditions, including approvals for flight schedules, tighter regulatory compliance, and operational restrictions such as limited ground time and no overnight stays in certain regions. 

“Excess capacity remains the key driver behind the softening of aviation reinsurance rates, with reinsurers keen to deploy capital in what continues to be a generally profitable and highly competitive line of business. Relatively benign claims experience in recent periods, except for a few large losses, has further supported more competitive pricing,” said Saurabh Verma, chief business officer, Howden India. He added that improvements in aircraft safety and increased participation from insurers have also contributed to downward pressure on rates.

 

Within general aviation, including helicopters and fixed-wing aircraft, rates are expected to continue softening, although outcomes will vary by insurer and risk profile. However, pricing in hull and liability segments will remain sensitive to geopolitical developments. Prolonged conflicts could trigger hardening, while shorter-term disruptions are unlikely to materially affect rates, Verma said.

 

Another insurance broker said rates have softened due to three factors: the absence of large global claims (except for the Air India incident), excess capacity, and reduced flying activity in parts of West Asia due to the ongoing conflict.

 

The aviation insurance market in India is heavily dependent on global reinsurers, as aviation risks require considerable capital capacity that domestic insurers are unable to retain on their books. As a result, a large portion of risks is ceded to international reinsurers.

 

Gautam B Boda, vice-chairman of JB Boda Group, said the aviation reinsurance market in 2026 is stabilising after years of sharp price increases and tight capacity. “The impact of Air India’s recent crash has not yet led to any significant increase in pricing. However, the market remains sensitive, and geopolitical risks could push up premiums for specific covers,” he said.

 

The conflict in West Asia has also led to several aircraft being grounded, which may result in reinsurers paying partial premium refunds, known as “lay-up returns”, for periods when aircraft remain inactive. This has further intensified competition among reinsurers to retain business.

 

According to data from the General Insurance Council, aviation premiums declined 7.82 per cent year-on-year to ₹929.75 crore in the first 11 months of the current financial year (2025-26). In April–February of 2024-25 (FY25), premiums had risen 3.96 per cent to ₹1,008.65 crore, while full-year FY25 premiums grew 4 per cent to ₹1,097.82 crore.

 

“The primary driver of the decline in premiums is consolidation among major airlines, which were earlier insured separately but are now part of a single programme. This has resulted in scale benefits and lower overall premiums,” said Sudhir Khare, chief commercial business officer, Tata AIG General Insurance. He added that while helicopter insurance premiums have risen due to recent incidents, rates for fixed-wing aircraft have declined, offsetting overall growth.

 

Separately, following an increase in chopper-related incidents in India, domestic insurers have become more cautious in underwriting such risks. Some insurers have raised deductibles, while others have increased premiums by as much as 80 per cent compared to 2025 levels.