Aviation Insurance Market by Type of Insurance (Public Liability Insurance, Passenger Liability Insurance, Ground Risk Hull Insurance not in Motion, Ground Risk Hull Insurance in Motion, and In-flight Insurance), Application (Commercial Aviation, Business & General Aviation, and Others), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Aviation Insurance Market Insight

The global aviation insurance market is anticipated to garner $6,326.30 million in the 2021–2028 timeframe, growing from $4,282.90 million in 2020, at a healthy CAGR 5.20%.

Market Synopsis

The aviation insurance market is expected to grow due to product advancements, acquisitions, and business expansion by key market players and also the increasing adoption of the aviation insurance for the easy use of financial services.

However, the main impediment is the high airplane insurance cost of the premium.

According to the regional analysis of the market, the Asia-Pacific aviation insurance market is anticipated to grow at a CAGR of 6.10%, by generating a revenue of $1,983.90 million during the review period.

Aviation Insurance Overview

The aviation industry is prone to a range of risks and threats, specifically with respect to aircraft technical operations and the resulting dangers. Aviation insurance is a type of specialized insurance designed to cover the specific operations of an aircraft as well as other potential risks in aviation. Aviation insurance covers losses caused by risks such as property damage, cargo loss, or personal injury. Additionally, protects against losses caused by aviation risks such as aircraft preservation & use, property destruction, cargo forfeiture, or personal injury. It protects both aircraft owners and operators from unexpected losses. Many countries require aircraft owners and operators to purchase third-party aviation liability insurance under standard laws. The development in the aviation industry in the developing region is creating the opportunities for the aviation insurance market growth.

COVID-19 Impact on Aviation Insurance Market

The pandemic has had a negative impact on the aviation insurance market. The travel industry has been paralyzed by Covid-19. For example, tourist arrivals in Spain fell by 78% in 2020, with approximately 19.2 million visitors. This stifles the expansion of the aviation insurance market. However, in such circumstances, insurance companies may be able to develop new tailor-made offers for consumers. However, the high cost of aviation insurance is impeding market growth. The COVID-19 pandemic has had a devastating impact on the world. The coronavirus pandemic has decimated the aviation industry, with many airlines effectively grounded due to severe restrictions on air travel and significantly reduced demand. This upheaval had lasted into the first quarter of 2021. Airlines in the Asia-Pacific region recorded the largest revenue drop of USD 113 billion in 2020 compared to 2019.

Increasing Numbers of Airports and the Thriving Aviation Industry are the Main Driving Forces behind the Growth of the Aviation Industry around the World

The primary factor driving the market growth is the thriving aviation industry as well as a growing number of airports worldwide. In recent years, there has been a substantial growth in the number of passengers choosing to take flight. To meet this increased demand, both emerging and developing countries are modernizing and expanding existing airport terminals, as well as constructing new ones. Furthermore, the growing investment in technology and expansion of smart airports that use various automated solutions is also helping to drive market growth. Furthermore, as the demand for aviation fueling and group handling grows, aviation product liabilities are likely to rise, driving request for insurance services. In addition, increased space exploration activities using drones, spaceships, and aircraft are driving market growth. Insurance buyers safeguard themselves and their equipment from accidents and destruction caused by climate change, equipment failure, and collisions. Furthermore, lower insurance premium rates ensure an increase in the number of policyholders, which positively impacts market growth.

To know more about global aviation insurance market drivers, get in touch with our analysts here.

The Costly Aviation Insurance Claims and Limited Service Providers can Hinder the Growth of the Market

The aviation insurance market is constrained by a number of factors, including low levels of awareness and a proclivity to delay in providing services to clients, which can lead to disinterest and a lack of adequate trust in selecting insurance coverage for their aircraft. As insurance claims pass through various public insurance products, they are processed at a leisurely pace.

Increasing Number of Individuals Opting to Travel by Aircraft is the Major Factor Contributing to the Growth of the Market.

In recent years, an increasing number of people has chosen to travel by plane, which has accelerated the growth of this market. Over the last few years, the number of people flying around the world has increased. Global air passenger traffic has increased as a result of increased economic activity, demand for travel and tourism, urbanization, and ease of travel. As a result, the increase in global air passenger traffic has resulted in an increase in global fleet size. Line maintenance will be in high demand in the coming years as a result of this. According to the IATA (International Air Transport Association), China will overtake the United States as the world's largest passenger carrier by the end of 2024. China is expected to add 817 million passengers, bringing the total number of air passengers to 1.3 billion. This will aid the growth of the aviation insurance market during the forecast period. The growth of the aviation insurance is expected to be driven by an increase in passenger air traffic and air freight volume, a positive outlook for the commercial aviation industry, and a growing demand for the number of low-cost carriers (LCCs).

Source: Research Dive Analysis

The public liability insurance sub-segment of the global aviation insurance market share is anticipated to have the dominating market share and surpass $2,162.80 million by 2028, with an increase from $1,485.80 million in 2020, with the CAGR of 5.00%. In many places, this type of coverage is required by law. It provides coverage for third-party entities and property damage. Most places require you to show that you have the financial means to pay for any damages you cause while flying a plane. Aviation liability exposure is one of the most significant risks to any aviation-related business, including non-owned aviation companies like fly-in fishing lodges. Losses in the millions of dollars and higher have been reported, and third-party aviation liability losses are typically excluded from standard liability policies.

The passenger liability insurance sub-segment of the global aviation insurance market is anticipated to have fastest growing market share and surpass $1,632.20 million by 2028, with an increase from $1,057.80 million in 2020. Passenger liability insurance safeguards passengers who are injured in an accident while travelling in an airplane. Many countries around the world require this type of insurance. It is typically sold on a 'per seat' basis and is included with the ticket. Passengers on a plane are not covered by public liability insurance; instead, passenger liability insurance protects those aboard. According to the European Union's Civil Aviation Authority, aircraft operators' insurance must cover passengers, baggage, third-party coverage, cargo, and risks of war and terrorism. There are many people booking tickets in advance on travel portals like MakeMyTrip, Cleartrip, and Ixigo than last-minute emergency travels. Passenger liability is expected to be the largest sub-segment in the aviation insurance market during the forecast period as a result of supporting legislation and mandatory travel insurance requirements.

Source: Research Dive Analysis

The commercial aviation sub-segment is anticipated to have the dominant market share and generate a revenue of $3,196.50 million by 2028, growing from $2,121.40 million in 2020. The sub-segment dominated the global aircraft insurance market due to the increasing development of commercial aircraft to cater to the growing air passenger traffic. Additionally, increasing infrastructure investments, initiatives to connect secondary cities with prime aviation hubs across a number of countries, and rising affluence of air travel, particularly among emerging middle-class populations are expected to drive the sub-segment’s growth.

The business & general aviation sub-segment is anticipated to have the fastest growth and generate a revenue of $2,315.90 million by 2028, growing from $1,503.40 million in 2020, with the healthy CAGR of 5.70%. The rising adoption of business aircraft by private companies to reduce travel time and offer enhanced comfort to executives is expected to drive the growth of the sub-segment. An increase in the number of high-net-worth individuals and ultra-high-net-worth individuals around the world has led to an increase in demand for private travel, which has resulted in the procurement of helicopters and business jets, which has boosted demand for the aviation insurance market.

Source: Research Dive Analysis

The Market for Aviation Insurance in North America was the Largest Share Holder in 2020

The North America aviation insurance market accounted $1,693.90 million in 2020 and is projected to register a revenue of $2,312.30 million by 2028. The North America regional segment's dominance is due to the increasing number of aircraft procurements that takes place there. Furthermore, the recent increase in air passenger traffic is helping to fuel the market's development. North America's aviation industry is mature, with several aircraft OEMs present. This has primarily benefited the defense sector, owing to increased government investment in R&D and the procurement of advanced fighter jets, helicopters, transport, and trainer aircraft from regional players.

The Market for Aviation Insurance in Asia-Pacific to be the Most Lucrative

The Asia-Pacific aviation insurance market accounted $1,248.90 million in 2020 and is projected to register a revenue of $1,983.90 million by 2028. The Asia-Pacific aviation insurance market forecast is expected to grow at a significant CAGR of 6.10%. Evolving nations such as India and China are experiencing massive changes in their domestic air traffic culture, which is contributing to the overall development of the Asia-Pacific aviation insurance market. Furthermore, the introduction of next-generation aircraft and the launch of new air routes are helping to fuel the market growth.

Competitive Scenario in the Global Aviation Insurance Market

Product advancements, innovations, and business expansion are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading aviation insurance market players are AXA Xl, Starr Aviation Insurance, American International Group Inc, Avion insurance, Allianz, Marsh LLC, ARTHUR J. GALLAGHER & CO., Great American Insurance Company (American Financial Group), USAIG, and London Aviation Underwriters, Inc.   

Porter’s Five Forces Analysis for the Global Aviation Insurance Market:

• Bargaining Power of Suppliers: Global aviation insurance suppliers are numerous and increasingly globalized. As a result, suppliers of aviation insurance lose bargaining power. As a result, the supplier's bargaining power is limited.
  Thus, the bargaining power suppliers is low.
• Bargaining Power of Buyers: Buyers have strong bargaining power, owing to rising demand for aviation insurance with additional benefits. As a result, multiple insurance providers are offering all types of aviation insurances but at low-cost premiums. As a result, buyers have a wide range of options at various price points to choose from. 
  The bargaining power of the buyer is high.
• Threat of New Entrants: The companies entering aviation insurance market have to deal with high cost of insurance claims and adhere to the government regulations as well. 
  Thus, the threat of the new entrants is low.
• Threat of Substitutes: There are few, if any, substitutes available in the market. There is still a high demand for aviation insurance services all over the world.
  Thus, the threat of substitutes is low.
• Competitive Rivalry in the Market: The ventures operating in the aviation insurance industry are opting for multiple business development strategies to stronghold their market position in the industry. 
  Therefore, competitive rivalry in the market is high.