The aviation insurance market is one of the most volatile in the industry. Rates and available capacity depend on the losses insurers have absorbed, their access to reinsurance, and global factors that are often unpredictable, from extreme weather to geopolitical conflict. For aircraft owners, flight schools and operators across Canada, understanding this cycle is essential to avoiding an unpleasant surprise at renewal time.
Why aviation underwriters' appetite swings so widely
An insurer that absorbs heavy losses naturally becomes more cautious, tightening its criteria, raising rates, or withdrawing from a segment altogether. This mechanism, more than any single year's conditions, explains why aviation can shift quickly from a competitive market to one where it becomes hard to find anyone willing to write a given risk. Aviation is especially exposed to this pattern because claims, when they happen, tend to be severe: high property damage, serious injury, or worse.
A market that hardened, then eased: 2018 to 2025
Starting in 2018, a number of insurers began pulling back from general aviation underwriting, a segment long viewed as historically volatile. Conditions worsened in 2020 and 2021: a run of severe weather events, combined with widespread fleet groundings during the pandemic, pushed payouts well past the premiums collected. According to the International Air Transport Association (IATA), which is headquartered in Montreal, the global airline industry posted a net loss of $47.7 billion in 2021, after an even harder year in 2020. The result was fewer active insurers, higher premiums, and tighter coverage requirements, even for lower risk clients.
That downturn did not last, though. Between 2023 and 2025, meaningful capacity returned to the general aviation insurance market, driven by airlines' financial recovery and by stronger competition among insurers for good risks. By the first quarter of 2026, well-established markets, Canada among them, were still being described by specialty brokers as highly competitive, with rates continuing to soften slightly in several segments.
2026: a new round of turbulence
That relief may prove short-lived. IATA's December 2025 forecast had the global airline industry on track for a record net profit of $41 billion in 2026. But disruptions tied to the Middle East conflict, along with a roughly 70% jump in jet fuel prices, forced a major downward revision: the industry's expected 2026 net profit was cut to about $23 billion, nearly half the 2025 estimate, with the net margin falling from 4.2% to 2.0%. The Middle East region alone is now projected to post a $4.3 billion net loss in 2026.
For aviation insurers, a shock like this has a direct effect: airlines have less financial cushion, more uncertainty surrounds routes and overflown regions, and underwriters price risk more cautiously as a result. It is a reminder that, even after a favourable stretch, volatility remains the norm in this sector rather than the exception.
Stay loyal to your aviation insurer
In this environment, trust and loyalty toward your insurer matter more than ever. Your current insurer knows you, knows your safety record and claims history, and can use that relationship to advocate for continued coverage with underwriters, even in a tougher market. A new insurer does not have that same leverage. A strong relationship, built up year after year, can make a real difference in the premiums you pay and the breadth of coverage you're offered.
That said, loyalty should never mean inaction: review your policy with your broker every year to make sure your limits, exclusions and premiums still match your actual situation.
Focus on prevention to keep your premium in check
A few preventive steps can soften the impact of market volatility on your premium:
- Complete more than the minimum required training hours. The more qualified hours you log, the less risk you're asking your insurer to absorb.
- Keep a clean safety record and document recent training with completion certificates.
- Tell your broker about any change to your flying profile as soon as it happens, rather than waiting until renewal.
Frequently asked questions
Why is the aviation insurance market so volatile in Canada? Because insurers adjust their risk appetite quickly based on losses accumulated worldwide, the availability of reinsurance, and unpredictable events such as extreme weather or geopolitical conflict. Aviation is especially exposed given how severe a single claim can be.
Is the aviation insurance market hard in 2026? After a marked recovery between 2023 and 2025, the market remains broadly competitive across Canada in early 2026, but the Middle East conflict and rising fuel prices have cut expected global airline industry profits roughly in half, which could tighten insurance conditions before the year is out.
Is it risky to switch aviation insurers every year to save money? It isn't prohibited, but it is riskier in a tougher market. An insurer that has known you for several years can advocate for your file with underwriters far more easily than a new insurer with no history with you.
How can I lower my aviation insurance premium despite a volatile market? By completing more training hours than the minimum required, maintaining a strong safety record, and telling your broker about any change as soon as it happens rather than waiting for renewal.
A volatile market, a steady partner
The hardening of the aviation insurance market seen between 2018 and 2022, and now threatening to return in 2026, can make it hard to find and keep the coverage you need. With vigilance, a strong relationship with your broker, and active risk management, you can keep flying with confidence no matter which way the market turns.
Aircraft owner, operator or flight school in Canada? Covalen's aviation-specialized brokers, several of whom are licensed pilots themselves, track market conditions closely to advocate for your file with insurers, including through the COPA aviation insurance program. Get an aviation insurance quote or visit our aviation insurance page to learn more.
This content is provided for informational purposes only and does not constitute legal or financial advice. The figures cited come from public sources available at the time of publication and may change. Consult a Covalen broker for an assessment tailored to your situation.
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