5 Explanations for Increased Insurance Premium Costs

1. Some large losses have occurred in different risk segments, including aviation. Some of these losses came from natural causes such as hurricanes, floods, earthquakes, and fires.
2. Some insurers have left the aviation market, leaving less competition.
3. Total premiums collected are less than the amount of losses paid in some cases.
4. Some carriers are changing their appetite, or what they are willing to insure. An aircraft or pilot that they would have insured two years ago may not be a risk they want to cover today.
5. Prior to the current state of the market, there was a 12-year period of a soft market, or companies competing for business and lowering premiums to acquire that business. This obviously would weaken the insurance companies’ position when faced with large losses. After covering these large losses, these companies need to recuperate their position to stay in the business and continue to be self-sufficient.