The US aviation insurance market is currently experiencing a rare window of relief, with rates softening after years of pressure. However, this respite is likely to be short-lived, one underwriter has told Insurance Business.
Climbing repair and replacement costs, driven in part by tariffs and global supply chain shifts, could soon bring this temporary dip in pricing to a halt, according to Jon Howard (pictured), a licensed pilot and CEO of Mach 2 Underwriters.
“Right now, we’re seeing a downward trend in rates,” Howard said. “But I believe that will be short-lived, maybe 12 to 24 months. Claims costs are rising too fast for a prolonged soft market.”
The biggest concern for underwriters like Howard isn’t just tariffs alone, it’s how they amplify existing inflationary pressures on parts, labor, and claims payouts. Aviation insurance, particularly for smaller operators such as flight schools, seaplanes, helicopters, and aerial mapping businesses, already operates on tight margins and complex risk profiles.
“We’ve been seeing costs go up consistently over the last few years. Even without tariffs, prices would be going up,” Howard said. “Tariffs just add insult to injury. They’re not the main driver, but they pile 10 to 20% more on top of already rising costs.”
Aircraft maintenance depends heavily on global supply chains. While many planes are assembled in the US, most rely on imported avionics and subassemblies. This dependency leaves aircraft owners and operators exposed to volatile international trade dynamics.
The ripple effects don’t stop at maintenance. As the value of new aircraft increases, the cost of used planes and salvaged parts also rises, creating a “snowball effect,” according to Howard.
“There’s no such thing as a 100% US-built aircraft,” he said. “Many key components are made overseas. So, when tariffs rise, acquisition costs and replacement costs go up.”
At the same time, aircraft owners are grappling with a tightening liability landscape. High-net-worth clients and private pilots increasingly struggle to secure the coverage limits they need.
As a result, aviation insurance clients’ two biggest concerns are premium prices and the ability to get the coverage they need.
“Some insurers won’t offer hull coverage at all. Others won’t provide high enough liability limits,” Howard said. “It’s especially tough for low-time or older pilots.”
Another factor undermining the soft market is reinsurance.
In early 2022, Russia seized hundreds of leased commercial aircraft valued at tens of billions of dollars, triggering one of the largest potential losses in the history of aviation insurance.
These aircraft were covered by policies written primarily through global insurers and backed by a network of reinsurers, who were suddenly on the hook for massive claims. This has led to a sharp contraction in available reinsurance capacity for aviation risks, Howard said.
“We’re heavily reinsured, and those events led to a decrease in reinsurance capacity and an increase in cost. That translated to tighter terms and higher prices for our clients,” he said.
Though that pressure has started to ease, the shockwaves of global conflicts continue to influence underwriting behavior. Any resurgence in geopolitical instability could push the market back into a hard cycle quickly.
With so many variables at play, Howard emphasized proactive strategies for aircraft owners and operators looking to control costs.
His biggest advice? Choose your aircraft carefully. “Pick an aircraft that’s relatively easy and inexpensive to repair. That’s where you’ll find the best insurance deals,” he said.
Equally important is aligning with the right insurer. Different carriers have different appetites for certain aircraft types, based on past claims experience. Morever, higher deductibles, additional training programs, and open dialogue with brokers and underwriters can all help lower premiums.
Finally, risk management also plays a pivotal role. “Pilot error is the number-one driver of claims,” Howard said. “That really comes down to training quality and quantity. Make sure your flight instructor is experienced with your specific aircraft type.”
