By Michael Jones

Feb 21 - (The Insurer) - New entrants into the aviation hull war market have increased competition in the segment and pushed it into rate reduction territory, broker Willis said in its Q1 airline market update.

• New entrants challenge longstanding hull war insurers

• AVN52E class in much healthier position

• Lessor claims could cause “sharp change” in aviation market: Willis

Charles Hollingworth, Willis’ executive director for global aviation and space, said that the market has seen new entrants challenge hull war insurers' longstanding positions.

As previously reported by The Insurer, new capacity into the market since the start of 2024 has included AIG, Allianz, La Réunion Aérienne, Nexus and Applied Underwriters.

This capacity has combined with a lack of major losses in 2024 and an increased appetite from established players, which has helped brokers push for small reductions at the end of 2024. Early 2025 renewals are also seeing certain accounts price down by as much as 10%, according to sources.

Like hull war, the excess AVN52E market has also undertaken a remediation in recent years, with significant rate increases across a number of successive renewals.

“Insurers have mostly achieved their objective of increasing the excess AVN52E premium base from a level that they perceived as not representing reasonable value for the capital they exposed,” said Hollingworth.

Willis said the rating adjustment has attracted new market entrants, which has pushed capacity into a much healthier position. The broker said capacity remains tight for some aviation lines outside of airline cover, such as manufacturing.

While there is a significant surplus of capacity for most AVN52W placements, Willis said the market has a much clearer floor below which pricing is inadequate.

“A likely outcome of surplus supply in the hull war and excess AVN52E markets is a review of limits on some placements where increasing coverage may be an appropriate objective,” said Hollingworth.

Ongoing aviation lessor court cases also leave strong potential for a “sharp change” in the aviation market as 2025 progresses, said Willis.

A resolution to the court cases that puts some of the claims on the reinsurance market could see its capacity retreat, which could reduce the supply into the direct market and narrow buyers' choices.

Fidelis Insurance Group saw its share price fall by 11% on Thursday after it incurred a $287.2 million adverse development charge in relation to the litigation.

However, one senior aviation broking source said they did not expect the impact of the aviation lessor claims, if they fall on the hull war class, to be too substantive. They noted that prospective loss has been priced in over the last few years, with significant rate increases and coverage changes from underwriters.