Aviation Insurance Market

The valuation of the Global Aviation Insurance Market reached $3,430.20 million in 2022 and is anticipated to achieve $5,759.97 million by 2030, exhibiting a compound annual growth rate (CAGR) of 5.6% from 2023 to 2030.

The aviation industry has experienced a decline in demand due to the unprecedented impact of the COVID-19 pandemic. This decline can be attributed to the fact that a significant portion of aviation insurance premiums is based on the duration of flights, which substantially decreased during the lockdowns implemented by many governments.

Aviation insurance refers to the provision of indemnification against losses resulting from damages, maintenance, or use of aircraft and hangars at airports. It offers coverage for aircraft damage, property damage, and personal injury, and is commonly known as aircraft insurance. The beneficiaries of aircraft insurance include airlines, airports, aircraft product manufacturers, leasing companies, air taxi operators, and corporate aircraft operators. The growth of the aviation insurance market is primarily driven by the increased global trade and the numerous benefits offered by aircraft insurance coverage, leading to a rise in its adoption.

The growth of the aviation insurance market is positively influenced by the rise in air passenger traffic and the implementation of government regulations for passenger safety. However, factors such as expensive aviation insurance premiums and an increase in the frequency and cost of claims hinder market growth. Conversely, the increased expenditure on international airlines presents lucrative opportunities for market expansion during the forecast period.

In terms of insurance type, the passenger liability insurance segment is expected to hold a significant share in the aviation insurance market during the forecast period. This can be attributed to stringent government regulations that make it mandatory to have passenger liability insurance to cover damages to passengers. Additionally, companies are increasingly focused on creating new growth and revenue opportunities, leading to a preference for artificial intelligence (AI) and advanced machine learning algorithms across various industries.

Furthermore, the in-flight insurance segment is expected to witness the highest growth rate during the forecast period, driven by the increasing number of airline accidents caused by factors such as bird collisions, adverse weather conditions, and engine failures.

Asia-Pacific dominated the aviation insurance market in 2022 and is projected to experience the highest growth rate during the forecast period. This can be attributed to the economic growth of countries like China and India, which host manufacturing plants for various industries. Furthermore, increased government investments in airport and runway development in the region are expected to boost market growth.

The report primarily focuses on analyzing the growth prospects, restraints, and trends in the aviation insurance market. It employs Porter's five forces analysis to understand the impact of various factors, including the bargaining power of suppliers, competitive intensity among competitors, the threat of new entrants, the threat of substitutes, and the bargaining power of buyers on the market's share.

Segment review

By INSURANCE TYPE

• Public liability insurance
• Passenger liability insurance
• Combined Single Limit
• In-flight Insurance
• Others

By APPLICATION

• Commercial Aviation Insurance
• General and Business Aviation Insurance
• Others

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

Impact of COVID-19
The COVID-19 outbreak has had a significant impact on the growth of the aviation insurance market, primarily due to substantial and well-documented claims from Original Equipment Manufacturers (OEMs) in the aerospace sector. However, there has been a gradual and notable increase in passenger traffic following the impact of COVID-19, along with the implementation of stricter government rules and regulations for passenger safety.

The process of globalization has also contributed to a growing demand for airline services, as emerging nations seek to expand their existing airport terminals. Nevertheless, the travel industry has been severely affected by the COVID-19 pandemic. For example, in 2022, Spain witnessed a 78% drop in tourist arrivals, with approximately 19.2 million visitors. This has posed challenges to the growth of the aviation insurance market. However, in such circumstances, insurance companies can develop tailored offers for consumers.

Furthermore, the reduced airline activity has had a significant impact on aviation insurance, as premiums are typically assessed based on the number of hours flown. It is estimated that global aviation premiums collected were down by around 25% compared to 2019 figures. Despite these challenges, there have been ongoing claims arising from weather-related incidents and ground collision damages, such as individual cases of hail and wind damage to parked aircraft.

For example, in 2022, airports in five U.S. states were directly hit by tornadoes, causing $125 million in insured damages. These developments, among others around the world, are expected to provide lucrative opportunities for the expansion of the aircraft insurance market.

Top impacting factors
Rise in air passenger traffic
The market has experienced a significant increase in the number of passengers choosing air travel as their preferred mode of transportation. This surge in demand for airline services has led to the development and expansion of airport terminals in emerging nations. The expansion of airports, including the implementation of automated baggage handling and self-check-in systems, has further fueled market growth. Additionally, there has been a rapid growth in national and international business travel, which has contributed to the increasing revenue of the aviation insurance market worldwide.

As tourism continues to rise, the occurrence of uncertainties such as flight cancellations, accidents, natural disasters, and other unforeseen events during travel has also increased. This has led to a growing demand for aviation insurance, thereby driving the growth of the global market. Furthermore, the rapid digitalization in the corporate and tourism sectors, coupled with the widespread adoption of Internet of Things (IoT) in various businesses, has facilitated international travel, making a notable contribution to the expansion of the aircraft insurance market.

Increase in government rules & regulations for passenger safety
The global market is being driven by an increase in global travelers, leading governments to implement new regulations for the aviation industry. Additionally, several countries in Europe require aviation insurance for travel between destinations, which contributes to market growth. Furthermore, countries have implemented aviation insurance policies to fulfill diplomatic requirements, further propelling the growth of the aviation insurance market.

For example, due to strained relations between Cuba and the U.S., both countries have permitted limited travel under specific circumstances. The Cuban government has mandated aviation insurance for individuals traveling to the U.S., which has boosted market growth. Moreover, with the rise of COVID-19 cases, many countries are now requiring business travel insurance, and certain international destinations mandate specific aviation insurance coverage for COVID-19. These factors collectively contribute to the growth of the market in the coming years.

Key Benefits For Stakeholders    

• The report offers a comprehensive analysis of the aviation insurance market, including a detailed forecast, current trends, and future estimations, to highlight lucrative investment opportunities.
• Key drivers, restraints, and opportunities are examined in the report, along with their impact analysis on the global aviation insurance market.
• The report utilizes Porter's five forces analysis to assess the power of buyers and suppliers within the industry.
• A quantitative analysis of the market spanning from 2023 to 2030 is presented, providing insights into the potential of the aviation insurance market.