Gallagher Specialty’s Plane Talking Q2 2024 report highlights that excess capacity and heightened competition are driving a softening of rates, creating a more competitive pricing environment that benefits airline insurance buyers.
This surplus capacity stems from increased rates in recent years coupled with lower average claims, intensifying competition and a focus on gaining market share at the expense of strict underwriting standards.
The report notes that many insurers are actively seeking to increase their premium volumes. However, established players are facing profitability pressures and squeezed profit margins, exacerbated by higher retentions and widening gaps between insurance and reinsurance pricing. Insurers’ management will closely monitor the adequacy of rates in the coming months and may reassess capital allocation strategies.
Gallagher Specialty also observed significant movement among insurers’ personnel. Experienced underwriters and product leaders have been switching companies, which poses challenges. Some are still adjusting to new roles, some are on temporary leave, and some insurers are actively recruiting to fill vacancies in their teams.
Gallagher Specialty stated, “During this transition period, there are, inevitably, questions about future underwriting plans and what this means, but, at this point, it is premature to say what impact (if any) this recent activity will have on those markets concerned.”
Looking ahead, Gallagher Specialty expects current trends to continue into Q3’24 barring any new developments, losses, or major market shocks.
The current market conditions favour buyers, with most clients expected to see more favourable renewal outcomes.
Gallagher Specialty predicts this ‘buyer’s market’ to persist in the short term. However, unresolved issues such as potential claims from lessors could influence future capacity and underwriting sentiment as market conditions become clearer.
Lastly, Gallagher Specialty acknowledges the market’s reactive nature, leading to a cautious outlook for the long term due to the potential for rapid changes in circumstances.
