The Hard Market Is Coming
If you read that in a Game of Thrones connotation, you’re in line with exactly how it should read. For the better part of a decade, the aviation insurance market has been very friendly to operators and business owners. Several years ago, it was almost expected to get a 10%—20% renewal decrease, if for no other reason than to guard against other carriers buying up market share with ridiculously low rates. All of this, in addition to regular competition, was to the benefit of the policyholder.
Sadly, as they say, all good things must come to an end. The rash of general aviation accidents over the past year has caught up to the insurance market, which has reared its head significantly over the past few months. What does this mean for operators? In a general sense, it means rates are trending the other way, and it means pilot approval is getting stricter. In other cases, considerations received in the past may no longer be available. All of this is in response to the claim dollars shelled out en masse over the last year or two.
It’s the insurance market’s way of licking its wounds. In other words, much like financial markets and real estate markets, insurance markets are cyclical. For the last decade, operators were living high on the hog; now the market is offering a correction. Once reserves are replenished and the industry trends back toward a safer and more acceptable accident rate, you’ll see it swing back in favor of the operators once more. As brokers, our job is (and always will be) to do best by our policyholders.
We will continue to do just that, but operators and owners should be aware that they may start to see things tightening up as the carriers rein things in. This isn’t us or any other broker trying to squeeze more juice out of the lemon, it’s simply the state of the market at present.
We look forward to getting through this phase together!