With the second quarter now wrapped up, we find ourselves mid-way through another interesting year in the aviation insurance market. On the renewal front, the majority of second quarter programmes concluded with premiums flat or slightly up. This is in-line with current underwriting discipline and general market conditions. While this rating uptick is an improvement on the soft market in the eyes of underwriters, not all are satisfied and their aspirations are to try to improve on this position in the coming months.

In terms of losses the market experienced further airline incidents in the second quarter in both the Hull and Liability and Hull War classes. Other sectors of the aviation market including general aviation and aerospace have also been hit by losses in recent months. These losses will lead to some significant claims and further strengthen the current resolve of underwriters, who are increasingly focussed on the overall quality and profitability of their portfolios.

A key factor to monitor in the coming months remains capacity and although levels are generally stable, at least for now, recent withdrawals, rumours of cost cutting measures and further reports of market consolidation could prove highly influential on future dynamics and pricing.

Looking ahead, underwriters will be determined to remain resilient during the third quarter, maintaining or increasing premiums and resisting rate reductions, or at least limiting them.

Underwriters are mindful that the fourth quarter represents approximately two thirds of the annual market premium and therefore they will not want to lose the momentum they have built and conditions to start to revert back to the previously unprofitable rating trend.