Howden Re’s Aviation outlook at 1.1.2026
Following 1 January 2026 renewals, Howden Re’s Aviation & Space Treaty team said the trajectory of major risk market conditions will most likely hinge on how 2025 losses ultimately crystallise.
Dominic Riley, Managing Director, Howden Re Aviation & Space commented: “Although the ultimate costs of recent losses are still developing, their cumulative impact has reshaped renewal dynamics heading into 2026, with selective rate increases on excess of loss programmes and greater pressure in retrocession layers, while quota share structures remain broadly stable. Looking ahead, absent further material loss deterioration, market conditions are expected to remain steady, with insurers and reinsurers cautiously continuing along a gradual hardening trajectory rather than a full market reset.”
Following a period of relatively modest major risk airline losses, a series of high-profile claims over the last 12 months – including the American Airlines loss in January, Air India in June and UPS in November, all coming after the Jeju Air crash in late 2024 – triggered market tightening across the major risk market in the fourth quarter of 2025.
Whilst the ultimate insured costs of these events remain uncertain – owing to the long development tail typical of aviation liability claims and unresolved issues such as potential government contribution in the American Airlines settlement – the 2025 calendar year losses, combined with some continued deterioration of past year events, was sufficient to counteract continued overcapacity and generate firming overall.
Hardening has been significantly more pronounced in the US airline market, where overcapacity has been less acute than in non-US markets and loss uncertainty is the greatest. Market conditions improved sufficiently in the fourth quarter of 2025 to retain existing capacity levels but not enough, as yet, to attract a significant number of new entrants.
General aviation, with its wide variety of risk types and geographical territories, has continued to soften following its earlier hard market phase, and that overall trend continued through 2025.
The standalone hull war market also saw further softening following sharp rate increases that followed the start of the Russia-Ukraine war.
Last year’s High Court ruling that lessors claim under contingent war-risk policies for aircraft and assets stranded in Russia triggered a small number of loss advices into the aviation nonproportional reinsurance market. The impact so far has been manageable and less acute than it would have been had the judgement gone the other way. However, given the complexity of the loss (or losses), the ultimate effect on the aviation reinsurance market remains uncertain.
This backdrop set the tone for reinsurance renewals through the second half of 2025 and into 1 January 2026. Following the potential significant losses in the major risk market, excess of loss programmes saw low single digit rate increases depending on exposure change, with hardening more pronounced in retrocession layers than in first tier non-proportional reinsurance.
Quota share arrangements remained largely stable in both capacity and commission levels. Reinsurers have become reluctant to increase quota-share support for major risk accounts, opting instead to maintain existing commitments.
Riley added; “Entering 2026, the aviation market sits at a delicate equilibrium, with recent major risk losses having restored a degree of pricing discipline but not yet fundamentally altered capacity dynamics. In the absence of further loss escalation, the year ahead is expected to be characterised by cautious stability, as insurers and reinsurers prioritise measured hardening, disciplined deployment of capital and a continued focus on loss development rather than aggressive growth.”
Read Howden’s 1.1.2026 renewals report Re-balancing here: