Aviation has a habit of defying expectations. In my 42 years in this industry, I have watched it absorb terrorist attacks, a global financial crisis, a pandemic that grounded fleets worldwide, and repeated bouts of geopolitical turbulence. Through all of it, the industry has continued to grow at roughly 5% a year, doubling in size every two decades, a record most industries would be proud of. Aviation has achieved it through some of the most testing periods in modern history.

The challenges ahead are real, and past performance is not a guarantee of future stability. The challenges now emerging, both immediate and structural, require the aviation insurance market to reassess how it understands, prices, and manages risk.

The risks the market needs to take seriously

The most immediate pressure facing aviation insurers is one that remains underappreciated outside the market: the US litigation environment. Jury awards in American courts have become unpredictable and, in some cases, extraordinarily large, reflecting broader trends in social inflation. Any airline carrying a US passenger is exposed, which in practice means almost every significant operator in the world. The difficulty is that these awards are hard to model, and therefore hard to price with confidence. That is a problem the market needs to address with more rigour than it has shown to date.

In recent years, the US courts have seen a rise in so-called ‘nuclear verdicts’, with jury awards becoming more common across multiple liability classes. While aviation claims are less frequent, they are certainly not insulated from the same underlying dynamics.

The inevitable knock-on effects of this, are that our clients will need to buy ever increasing limits, leading to questions around affordability, capital costs, capacity and reinsurance limitations. It is a challenge that the clients and insurers have to face together.

Alongside that, repair costs continue to rise in ways the market has been slow to absorb. Most modern aircraft are built from composite materials rather than metal, which brings clear advantages in weight and fuel efficiency but creates very different economics when something goes wrong. Unlike metallic structures, where damage is typically visible and more straightforward to repair, composites often require advanced inspection and highly controlled repair processes, increasing complexity and, in more serious cases, aircraft downtime.

And then there is the broader geopolitical picture, which remains complex for aviation clients and their insurers in ways that are not always straightforward to assess, aggregate, or price. Sanctions, conflict exposure, and supply chain disruption all add layers of uncertainty that require careful consideration.

What comes next

Looking further ahead, the changes coming to aviation are more structural than cyclical. The long-term direction of travel is clear: aircraft design is increasingly focused on efficiency, and we are likely to see more twin-engined aircraft deployed on long-haul routes. Further consolidation among airlines is likely, concentrating exposure in ways the market will need to consider carefully.

With only two major manufacturers dominating commercial aircraft production, and a small number of engine manufacturers driving the development of next-generation propulsion technologies, any sustained difficulties at either level have the potential to create ripple effects across the entire aviation and insurance ecosystem. As manufacturers strive for greater fuel efficiency, engines are operating at higher temperatures and pressures, relying on increasingly advanced materials and more complex designs. While these technologies deliver clear performance gains, they also introduce durability and reliability challenges that continue to be refined as these technologies mature in service, and which are not yet fully reflected in loss experience.

These are not isolated risks, they are systemic. This concentration of both manufacturing and fleet composition also creates aggregation risk for insurers, where a single issue, whether technical or regulatory, can impact multiple insureds simultaneously.

The area I find most interesting is drones. Their use is expanding across surveillance, logistics, inspection, and an increasing range of commercial applications. Over time, that expansion will extend into passenger-carrying capacity, requiring aviation insurers to engage with risks that have little meaningful loss history. That challenge is coming whether the market is ready or not, and the insurers who will handle it best are those investing now in the data, modelling, and technological capabilities needed to understand it.

Trials of urban air mobility platforms and short-haul passenger drones are already underway globally, with active programmes in the US, China, and the Middle East, as well as across parts of Europe and Asia, underlining how quickly this segment is moving from concept to commercial reality.

Building a team for the future, not the past

When I joined TMK four years ago, my starting point was a simple question: what kind of team does aviation need over the next 15 to 20 years, and how do we build it?

The answer was not the same team the industry has traditionally recruited. Aviation underwriting has historically drawn on a relatively narrow range of backgrounds and skill sets. That made sense for a market where experience and established relationships were the primary currency. It makes less sense for a market where data analysis, geopolitical assessment, engineering knowledge and technological fluency are becoming just as important as trading ability.

In practice, that has meant building four specialist teams across airlines, war, manufacturers, and general aviation, and recruiting with the skills the future requires in mind rather than those the past rewarded. The result has been a greater ability to take on more complex, bespoke work for major clients – risks that require depth of expertise rather than a generalist approach.

One area where the market is beginning to evolve is in how we think about client culture as a component of risk. The connection between an organisation’s internal culture and its safety record is now being explored in greater depth and is beginning to shape how some underwriters assess risk. A company where employees are engaged, where concerns are heard, and where the instinct is to prioritise doing things properly is a fundamentally different risk from one where those characteristics are absent.

We have started asking clients directly about employee engagement and organisational culture, leading to more substantive conversations about how risk is managed in practice. For example, organisations with strong reporting cultures, where near misses and operational concerns are consistently raised and acted upon, tend to demonstrate more stable safety outcomes over time, which is highly relevant from an underwriting perspective.

It remains an emerging discipline, but one that is likely to become an increasingly important component of underwriting judgement in the years ahead.

What leadership actually means

TMK has been in aviation for 50 years. I have been in the industry for 42. Looking back across both timelines, the quality that stands out is resilience: staying in the market when conditions are difficult, being there for clients when they need solutions rather than stepping back when the questions become complex, and continuing to transact when the industry is under pressure.

Being a lead insurer in aviation is not just about line size or premium income. It requires an expert wordings capability, a claims team that understands the class, and the supporting infrastructure that allows underwriters to respond with consistency and confidence. It requires knowing clients well enough to structure coverage that fits their circumstances rather than defaulting to standardised assumptions. And it requires the kind of long-term commitment that clients in this industry expect before they will trust you with their most significant risks.

Looking ahead

The industry will continue to change, as it always has. The insurers who will still be here in fifty years are those who build now for what comes next, not those focused solely on managing what already exists.

The biggest shift required is a move from backward-looking underwriting, based primarily on historical data, to a more forward-looking approach that incorporates emerging risks, technological change and broader systemic factors.

In a sector defined by uncertainty, that forward-looking approach is not optional. It is what separates those who endure from those who fall behind.

Aviation has always adapted, but the pace and nature of change now require insurers to adapt more deliberately than ever.