2025 Aviation Insurance Market Shows Divergence: All-Risk Rates Rise, War Risk Rates Fall

Aviation Insurance in 2025: A Market of Two Realities

The aviation insurance sector is closing out 2025 on an intriguing note. It’s a market of contrasts, where some segments are feeling the squeeze while others are basking in renewed competitiveness. On one hand, all-risk insurance rates are edging upward. On the other, war risk coverage is enjoying a period of relief, with premiums moving in the opposite direction.

Two Paths Diverging in the Sky

Industry analysts at Willis Towers Watson (WTW) report that all-risk coverage is under pressure from higher loss activity and limited fresh capital entering the market. The result? Expect single-digit rate increases as insurers shore up their books to maintain profitability and stability.

Meanwhile, war risk insurance tells a different story. Since October, new market entrants have injected much-needed capacity, fueling aggressive competition and triggering double-digit rate reductions across many programs.

“The influx of capacity has flipped the dynamic in war risk. For the first time in several cycles, we’re seeing real downward pressure on rates.”
— Willis Towers Watson

The Push for Higher Limits

Clients, especially airlines and fleet operators, are pushing for expanded coverage limits as global risk perceptions shift. In response, several insurers have added between $200 million and $300 million to their programs. While coverage terms have mostly held steady, some war risk insurers have explored tightening exclusion clauses. However, WTW notes that the broader market isn’t yet in a position to enforce such restrictions universally.

The Global Picture

Geopolitical tension continues to loom large. Conflicts and uncertain flashpoints across various regions are keeping underwriters on alert. While predicting specific developments is nearly impossible, the industry remains agile and prepared to respond to emerging crises that could reshape risk exposures.

A few key forces are shaping underwriting sentiment going into 2026:

• Limited new insurance capacity in the all-risk sector

• Heightened loss experience in commercial aviation

• Competitive war risk pricing driven by new entrants

• Increased demand for higher coverage limits

Preparing for a Busy Renewal Season

WTW forecasts an active renewal period in Q4 2025 as major airline programs come up for negotiation. The balance between capacity and loss experience will be the defining factor in where rates settle—both in aviation and in the adjacent space insurance market.

“It’s a complex market, but opportunity exists for insurers who can align pricing discipline with the evolving needs of their clients.”
— Aviation Market Specialist, WTW

The Takeaway

For insurers and brokers, the coming months will demand precision, agility, and communication. The ability to navigate fluctuating capacity while maintaining client confidence will distinguish leaders from laggards in this nuanced aviation insurance landscape. The skies may be turbulent, but for those charting their course wisely, there’s clear air ahead.