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Aviation Insurance Market

Aviation Insurance Market Size, Share, Competitive Landscape and Trend Analysis Report by Insurance Type and Application : Global Opportunity Analysis and Industry Forecast, 2021-2030

BI : Insurance

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Author's: Pramod Borasi| Monica Chhabra | Onkar Sumant
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The global aviation insurance market size was valued at $3,430.20 million in 2020, and is projected to reach $5,759.97 million by 2030, registering a CAGR of 5.6% from 2021 to 2030. 

Aviation insurance refers to indemnification of a client against losses arising from the result of damages, maintenance, or use of aircraft, and hangars at the airport. In addition, it provides coverages for damage to aircraft, property damage, and personal injury. Aviation insurance is also known as aircraft insurance. This insurance typically covers repair or replacement of damaged parts of accidental aircraft. Generally, the end users of aircraft insurance include airlines, airports, aircraft product manufacturers, leasing companies, air taxi operators, and corporate aircraft operators. Furthermore, surge in adoption of aircraft insurance due to increased global trade and numerous benefits provided in aircraft insurance coverage are the major factors boosting the aviation insurance market growth.

Global-Aviation-Insurance-Market _Image

Rise in air passenger traffic and increase in government rules & regulations for passenger safety positively impacts the growth of the market. However, factors such as costly aviation insurance premium hampers and increase in frequency and cost of claims are limiting the growth of the market. On the contrary, rising expenditure on international airlines is expected to offer remunerative opportunities for the expansion of the market during the forecast period.

By insurance type, the passenger liability insurance segment is expected to garner a significant aviation insurance market size during the forecast period, owing to stringent government regulations; making it compulsory to avail passenger liability insurance to protect damages to the passengers. Moreover, companies majorly focus on creating novel opportunities for growth and revenue generation, thereby increasing the preference for AI and advance machine learning algorithms across industries. However, the in-flight insurance segment is expected to witness growth at the highest rate during the forecast period, owing to increasing cases of airline accidents from various causes such as bird collision, bad weather, engine failure and other.

Region wise, the aviation insurance market share was dominated by Asia-Pacific in 2020 and is expected to witness the highest growth rate during the forecast period owing to economically emergent countries such as China and India, which have manufacturing plants of several industries. In addition, rise in investment from the government in this region toward development of airports and runways is anticipated to boost the growth of the market.

The report focuses on growth prospects, restraints, and trends of the aviation insurance market analysis. The study provides Porter’s five forces analysis to understand impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the aviation insurance market share.

Segment review

The global aviation insurance market revenue share is segmented on the basis of insurance type, application, and region. Based on insurance type, the market is divided into public liability insurance, passenger liability insurance, combined single limit (CSL), in-flight insurance, and others. In terms of application, the market is categorized into commercial aviation, general & business aviation and others. Region wise, the market is analyzed across several regions such as North America, Europe, Asia-Pacific, and Latin America, Middle East & Africa (LAMEA).

Aviation Insurance Market
By Insurance Type
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Passenger Liability Insurance is segment is projected as one of the most lucrative segments.

COVID-19 impact analysis

The COVID-19 outbreak has a significant impact on growth of the aviation insurance market size, mainly owing to large, well-documented claims from Original Equipment Manufacturers (OEMs) in the aerospace division. In addition, there has been a steady and significant rise in passenger traffic since the COVID-19 impact. There has also been an increase in government rules & regulations for passenger safety. In addition, globalization has led to an increasing demand for airline services as emerging nations are aiming to expand their existing airport terminals. Moreover, COVID-19 has exponentially hampered the travel industry. For instance, in 2020, the arrival of tourists in Spain dropped by 78% with approximately 19.2 million visitors. This creates a hindrance to the aviation insurance market growth. However, in such conditions, insurance companies can develop new tailor-made offers for consumers. Furthermore, the reduced airline activity brought severe impact on aviation insurance as airline premiums are generally assessed according to hours flown, the global aviation premiums collected were down by an estimated 25% as compared to 2019 numbers. In addition, claims continued to occur from weather and ground collision damage such as individual incidents of hail and wind damage to sitting aircraft. For instance, in 2020, airports in five U.S. states suffered direct tornado hits, causing $125 million in insured damage. Thus, number of such developments across the globe are anticipated to provide lucrative opportunities for the expansion of the aircraft insurance market.

Aviation Insurance Market
By Application
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Commericial Aviation Insurance is projected as one of the most lucrative segments.

Market landscape and trends

The aviation insurance market is a subset of the insurance industry that provides protection against hazards associated with aircraft activities. It includes hull insurance, liability insurance, war risk insurance, and other insurances. Furthermore, over the years, the aviation industry has seen a steady increase in global air traffic.  The aviation insurance expands as more airlines, aircraft operators, and other businesses seek coverage.  In addition, the aviation insurance market is highly consolidated, with a few large insurance companies monopolizing the industry. These well-known insurers have vast experience and competence in underwriting aviation risks, as well as a sizable market share. Moreover, rise in aircraft prices, liability risks, and higher claims expenses contributed to increase in aviation insurance premiums. Insurers are altering their pricing to sustain profits while effectively covering the risks. However, , rising fuel costs, increasing aircraft values, and the potential for catastrophic events such as accidents or acts of terrorism contribute to higher insurance premiums and greater risks for insurers, making it challenging to provide affordable coverage while maintaining profitability in the aviation insurance sector. Therefore, . insurers are developing new coverage alternatives and risk assessment tools to handle these new risks. Moreover, the aviation sector places a premium on safety. Insurers are actively cooperating with aviation stakeholders to promote safety efforts and risk management practices. This includes rewarding organizations with exemplary safety records and investing in risk avoidance and mitigation measures. Therefore, increase in global air traffic, dominance of established insurers, and increasing premium rates are the major market trends of the aviation insurance market.

Government Initiatives

Governments create regulatory frameworks to oversee insurance activity and ensure that laws and regulations are followed. Typically, these frameworks address licensing rules, solvency standards, consumer protection, and market conduct. Furthermore, governments in certain nations set up insurance pools or reinsurance programs to manage specific aviation hazards. These programs are expected to provide coverage for catastrophic catastrophes or terrorist attacks that could result in significant losses for insurers. Moreover, governments play an important role in developing and implementing aviation safety laws to maintain the general safety of air travel. These rules have a direct impact on the aviation industry's risk profile, which in turn influences the price and coverage of aviation insurance plans. Furthermore, governments are anticipated to provide financial assistance or incentives in some situations to enhance the availability of aviation insurance coverage. This assistance includes  subsidies, guarantees, or risk-sharing arrangements to help airlines, aircraft manufacturers, and other industry partners to increase their insurance capacity.

Top impacting factors

Rise in air passenger traffic

Rise in number of passengers opting for air travel mode has increased tremendously in the market. In addition, with this growing demand for airline services, emerging nations are developing and expanding their existing airport terminals. Therefore, massive development of airports, which involves automated baggage handling & self-check-ins, further propels the market growth. In addition, rapid increase in national and international travelling for business is accelerating the growth of the aviation insurance market revenue across the globe. With rise in tourism, the incidence such as cancelled flights, accidents, natural calamities, and other such occurrences of uncertainties, has been increasing during travelling. This fosters the demand for aviation insurance, thereby contributing toward the growth of the global market. Moreover, rapid digitalization in the corporate and tourism sectors and surge in penetration of Internet of Things (IoT) in various business have boosted international travelling, which notably contributed toward the growth of the aircraft insurance market.

Increase in government rules & regulations for passenger safety

With rise in travelers across the globe, various governments are introducing new regulations for aviation industry, which acts as a key driving factor for the global market. In addition to this, various countries across the European region require aviation insurance while travelling from one place to another, which enhances the growth of the market. Moreover, various countries have aviation insurance policies to meet the diplomatic relations, which propel the aviation insurance market growth. For instance, due to the adverse relationship between Cuba and the U.S., both countries agreed to allow travel for limited reasons. The Government of Cuba has mandated aviation insurance for each individual travelling to the U.S., which is driving the growth of the market. In addition, with rise of COVID-19 cases, many countries are mandating business travel insurance, and some international destinations are now mandating travelers to have a specific aviation insurance that covers COVID-19. Thus, all these factors are anticipated to foster the growth of the market in the upcoming years.

Aviation Insurance Market
By Region
North America

Asia-Pacific would exhibit the highest CAGR of 8.2% during 2021-2030.

Key Benefits For Stakeholders     

  • The study provides an in-depth analysis of the aviation insurance market forecast along with the current trends and future estimations to explain the imminent investment pockets.
  • Information about key drivers, restraints, & opportunities and their impact analysis on the global aviation insurance market is provided in the report.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
  • The quantitative analysis of the market from 2021 to 2030 is provided to determine the aviation insurance market potential.

Aviation Insurance Market Report Highlights

Aspects Details
  • Public liability insurance
  • Passenger liability insurance
  • Combined Single Limit
  • In-flight Insurance
  • Others
  • Commercial Aviation Insurance
  • General and Business Aviation Insurance
  • Others
By Region
  • North America  (U.S., Canada)
  • Europe  (UK, Germany, France, Italy, Spain, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
Key Market Players

Global Aerospace Services Inc., American International Group, Inc., USAA, EXPERIMENTAL AIRCRAFT ASSOCIATION INC., USAIG, BWI AVIATION INSURANCE, STARR INTERNATIONAL COMPANY, INC., Travers & Associates Aviation Insurance Agency, LLC., Tokio Marine Holdings, Inc., AXA

Analyst Review

The adoption of aviation insurance solutions has increased over the years to help organizations to cover liability of the owner or operator for bodily injury to passengers or to persons other than passengers and for property damage. Medical costs, including loss of income, are usually paid to passengers suffering permanent total disability without the requirement of proving negligence. Furthermore, the type of coverage and the amount of premium depends on the type of aircraft that is being covered by the policy. Some policies even provide first flight coverage for aircraft that are built at home, which in turn is expected to drive the growth of the market.

Key providers of aviation insurance market such as Allianz, American International Group, Inc., and AXA account for a significant share in the market. For instance, in November 2020, SkyWatch, the leading InsurTech company for aviation in collaboration with Global Aerospace, Inc launched a usage-based insurance product for rented light aircraft that offers yearly, monthly, weekly, and daily coverage options. With the collaboration, kyWatch will distribute the product - available in most U.S. states - directly to pilots and via select partners, while Global Aerospace will provide underwriting expertise and prompt claims handling.

Furthermore, many insurance agencies are collaborating with tech companies to enhance their existing AI system for better and secure systems. For instance, in October 2021, Tata AIG General Insurance Co. Ltd partnered with TropoGo, a deep-tech startup to launch Remotely Piloted Aircraft System (RPAS) insurance. In addition, Tata AIG’s RPAS insurance is providing a comprehensive product covering both Hull and Third-Party Liability risks faced by drone owners and operators. Tata AIG’s RPAS insurance also provides optional coverage for BVLOS operations, night flying, data loss liability, and others.

Moreover, aviation industry and insurance providers are collaborating are leveraging solutions from technology providers to improve their insurance policy. For instance, in July 2021, Chubb Canada launched hub to develop further its domestic general aviation and non-major aerospace business. The Canadian Aviation hub is part of a new regional focus for the aviation team from Chubb Global Markets (CGM), which comprises Chubb’s London market wholesale and specialty arm, including the company’s Lloyd’s platform. Thus, growing number of such developments across the globe is expected to drive the growth of the market.

Author Name(s) : Pramod Borasi| Monica Chhabra | Onkar Sumant

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Aviation Insurance Market

Global Opportunity Analysis and Industry Forecast, 2021-2030