Beyond geopolitical dynamics, challenges the aviation insurance broking industry in the Middle East is facing include the series of air crashes at the end of 2024, which unfortunately continued into 2025, said Malakut aviation executive director Victoria Eremina.
In an interview with Middle East Insurance Review, Ms Eremina also pointed out that the escalation of conflict in the Middle East inevitably had a significant impact on the industry, which is already undergoing substantial turmoil.
“These major events, coupled with the accumulation of attritional losses, have once again raised the issue of profitability for aviation underwriters all over the world,” she said.
“As a consequence, the market, which is already quite hard, will most probably continue to harden with underwriters being more cautious, rates increasing and negotiations becoming tougher.”
A hard market
“We see that (re)insurers are becoming quite conservative even on loss-free accounts, and are applying significant rate increases on the others, or withdrawing their lines, especially from high-risk operations,” said Ms Eremina.
Though it is still clear that a significant amount of market capacity still remains available, selectiveness on the part of insurers may potentially lead to some reduction in traditional (London and European) markets. “Their share may, in turn, be replaced by other markets, primarily those in the Middle East,” she said.
Rising costs
Additionally, the continuous trend of rising repair costs, parts prices and legal costs make underwriters impose more restrictions, together with increasing rates, Ms Eremina highlighted. Some restrictions she listed include adding exclusions, lowering limits and increasing deductibles.
As a result, there are less ‘easy’ and ‘straightforward’ renewals and more and more complicated ones where brokers have to provide creative and pro-active solutions, adapting to new standards and the new environment, she said.