Aviation Market Hardens Amid Pandemic Turbulence

As the aviation industry rebounds from a massive pandemic-induced downturn, aviation insurance rates are rising as insurers seek to address prior-year losses and the industry’s evolving risks. Interest in private jet purchases and rentals have surged as more business fliers and individuals avoid public carriers for health reasons. The pandemic has also provided an extra boost to the rapidly growing unmanned aerial vehicle industry since camera-equipped drones can perform many tasks at lower risk and without personal contact.


Aviation insurance is required for more than just aircraft. Aviation-related services and products are generally excluded from standard property and casualty policies, which can lead to gaps in coverage. Those exclusions include manufactured components that are used in aviation, as well as services, such as aircraft maintenance and detailing, hangar operations, aerial surveys, and agriculture spraying. Aviation-specific workers' compensation should be considered as well.

Since aviation insurance is a niche market with a limited number of carriers, it’s crucial to work with an experienced aviation broker. Carrier appetites change often, and insurers are taking a stricter stance on underwriting, particularly on issues such as training. A knowledgeable broker with the right market access and good relationships with underwriters can help navigate the complexities of this unique market.


Rising insurance prices in the aviation industry come amid historic losses for commercial aviation. The COVID-19 pandemic made 2020 the worst year in history for air travel demand, according to the International Air Transport Association.1 The IATA expects net airline industry losses of $47.7 billion in 2021, which marks a massive improvement from estimated net losses of $126.4 billion in 2020.2

As the aviation industry recovers, it faces an insurance market that has been hardening for several years. The rise in rates for aviation coverage has followed big losses such as the disappearance of Malaysia Airlines Flight 370 with 239 people aboard in March 2014. Five years later, two crashes of Boeing’s recently introduced 737 Max within five months added impetus to the insurance market hardening: An Indonesia Lion Air Boeing 737 Max crashed in October 2018, killing 189 people, and in March 2019 an Ethiopian Airlines Boeing 737 Max crashed shortly after takeoff with 157 people aboard. The losses extended beyond the crashes as hundreds of Boeing 737 Max airliners were grounded around the world, resulting in significant grounding liability claims in addition to liability and hull loss claims.

Boeing lost more than $11.9B in 2020 as it struggled to overcome the crisis surrounding the 737 Max jet.5

While those losses were handled by the major players of the aviation insurance industry, the effects have spread throughout the entire sector, leading to increases in premiums, lowering of liability limits, and more stringent training requirements, among other effects. Insureds should expect increases from 15 to 20 percent, although that may reach 100 percent in certain cases. In addition, insurers have non-renewed risks that no longer fit their appetites, added more stringent training requirements, or reduced limits while increasing premiums.


The pandemic has spurred a shift to private travel. The number of businesses and individuals considering the purchase of a private jet for the first time doubled at the end of 2020 from recent years, while repeat buyers rose 50 percent, according to The Private Jet Company, a jet broker and consultancy.3 That means that many insureds may be considering or purchasing aviation insurance for the first time. For those clients, it’s critical to note that standard property and casualty forms typically exclude aviation-related coverage, which requires a specific policy form tailored for aircraft risk.

As demand for private jets rise, insurers are taking a more stringent approach to underwriting. For higher value jets, insurers are requiring very qualified pilots who have experience in those specific jets along with simulator-based training in the aircraft model, in addition to in-aircraft training. That stems from the fact that simulators can safely provide a wider variety of critical training scenarios. For turboprop aircraft, carriers are now requiring training every year rather than every other year.

While some higher-end jets may be flown by a single pilot, insurers generally prefer dual crews. Where single-pilot coverage is available, insurers are likely to provide lower limits. Insurers are also cautious about the age of pilots flying retractable gear aircraft and may be unwilling to provide coverage for pilots 70 and older. Companies are often non-renewing such risks, requiring older pilots to be accompanied at all times by another pilot or instituting significant premium increases.

For higher-end aircraft, coverage usually provides a smooth limit, for instance a $50 million per occurrence limit with no sub-limits and no deductible. For smaller aircraft, such as four-seaters, policies may provide a $1 million per-occurrence limit but sub-limits of $100,000 per passenger.

Corporations or individuals that are renting aircraft should consider a non-owned aviation policy to provide secondary coverage in excess of any primary coverage available to the rental aircraft. The person renting an aircraft should be listed as an additional insured on the primary policy.


The smallest aircrafts are really taking off. Drones represent the fastest-growing segment of the transportation sector, with more than 1.7 million drone registrations and more than 203,000 FAA-certified pilots at year-end 2020, according to the FAA.4 The pandemic has added impetus to the growth of commercial drones for operations such as inspections or post-storm damage adjustments that previously required someone to be physically present.

In June of 2016, the FAA implemented operational rules for drones that would be used commercially. These rules are known as the Part 107 rules and require all commercial drone operators to obtain their remote pilot license and be knowledgeable about rules such as restricted airspace. In April 2021, the Part 107 rules were amended to allow these drones to fly over people, moving vehicles, and at night under certain conditions. However, the new amendments also require these drones to have a Remote Identification that will contain information to identify the drone.7 Most losses with drones involve the loss of the aircraft or the failure of the drone’s return-to-home function.

The number of commercial drones in the US is expected to double by 2024.6


Companies who make products used in aviation should be aware that traditional general liability policies typically exclude aviation components. A few carriers can endorse policies to include coverage for their aviation products. However, it might be the best option to obtain an aviation-manufactured products policy to complement the general liability policy. This policy will protect the manufacturer from third-party legal liability arising from physical damage or bodily injury because of an alleged aviation product failure or defect. Aviation product coverage also provides grounding liability, which can protect the manufacturer in the event against claims regarding the cause of loss of use caused by grounding.

Coverage for services such as mobile aircraft maintenance or detailing operations can also present challenges. Carriers are more reluctant to provide coverage for mobile operations as they create more exposures than for operations at a fixed location since workers are less familiar with the environment.


Aviation insurance is a market where expertise really matters. Because of the unique risks and potential for large losses, aviation insurance uses specific policy forms that differ significantly from the standard markets. Clients and their retail agents should work closely with a knowledgeable wholesale broker who can explain the risks and potential coverage gaps and provide the best strategy options. To obtain the best terms, clients should be willing to provide as much information about their operations. Since a small number of carriers are actively writing aviation coverage, it’s best to work with one wholesale broker that has relationships with the pertinent markets. An experienced broker can help successfully navigate the complexities of this unique market and help clients find the most appropriate coverage. Contact your CRC Group producer for more information.


  • Camille Knight is a Senior Broker with our CRC Indianapolis team, located in Kentucky. She has extensive experience and specializes in aviation relation risks.


  1. 2020 worst year in history for air travel demand, International Air Transport Association, Press release, Feb. 3, 2021.
  2. Reduced losses but continued pain in 2021, International Air Transport Association, press release, April 21, 2021.
  3. Twice as many first-time buyers looked for private jets Q4 2020 vs. 2019, The Private Jet Company, press release, Feb. 17, 2021.
  4. U.S. Department of Transportation Issues two much-anticipated drone rules to advance safety and innovation in the United States, FAA, Dec. 28, 2020.
  5. Boeing reports a record $11.9 billion annual loss; New York Times, January 27, 2021.,caused%20by%20the%20coronavirus%20pandemic.
  6. Ultimate List of Drone Stats for 2021; Philly by Air, January 15, 2021
  7. Federal Aviation Administration, Operations Over People General Overview;