Soft landing for aviation insu

He said reinsurers are offering about 10-12 per cent discount on premium across all segments in the aviation market.

It said, amid the ongoing geopolitical tensions in West Asia, reinsurers have become cautious and have started imposing stringent underwriting conditions, including approval for flight schedules, strict regulatory compliance and operational restrictions such as limited ground time and overnight stays in certain areas.

Saurabh Verma, Chief Business Officer, Howden India, said, “Excess capacity remains the key driver behind the softness in aviation reinsurance rates, with reinsurers keen to deploy capital in a generally profitable and highly competitive business. The relatively benign claims experience in the recent period, barring a few large losses, has supported more competitive pricing.” Improvements in aircraft safety and increased participation by insurers have also contributed to downward pressure on rates, he said.

Within general aviation, including helicopters and fixed-wing aircraft, rates are expected to continue to soften, although outcomes will vary by insurer and risk profile. However, pricing in the hull and liability segments will remain sensitive to geopolitical developments. Verma said a prolonged conflict could tighten the situation, while short-term disruptions are unlikely to have any significant impact on rates.

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

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

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

Many aircraft have also been grounded due to conflict in West Asia, which may result in reinsurers paying partial premium refunds for the period the aircraft were idle, known as “lay-up returns”. This has further intensified the competition among reinsurers to retain business.

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), according to General Insurance Council data. In April-February of 2024-25 (FY25), premiums had increased by 3.96 per cent to ₹1,008.65 crore, while full year FY25 premiums had increased by 4 per cent to ₹1,097.82 crore.

Sudhir Khare, Chief Commercial Business Officer, Tata AIG General Insurance, said, “The primary driver of the decline in premiums is the consolidation among major airlines, which were previously insured separately but are now part of the same program. This has resulted in scale gains and lower overall premiums.” He said while helicopter insurance premiums have increased due to recent events, rates for fixed-wing aircraft have declined, impacting overall growth.