Mach 2 CEO Warns of Rising Costs Amid Geopolitical Pressures

After several years of escalating premiums, the US aviation insurance market is finally enjoying a short-lived period of softening rates. Now, however, some say this downward trend is unlikely to last.

“Right now, we’re seeing a downward trend in rates,” claimed Jon Howard, CEO of Mach 2 Underwriters. “But I believe that will be short-lived, maybe 12 to 24 months. Claims costs are rising too fast for a prolonged soft market.”

The primary culprits of this expectation are inflation, rising repair costs, and even tariffs. While recent tariff policy chaos isn’t solely responsible, it certainly isn’t helping.

Parts and maintenance prices were already rising due to labor costs and supply chain disruptions. Adding tariffs into the mix leaves operators paying 10 to 20 percent more than current rates for imported avionics, assemblies, and other components. The lack of purely US-made aircraft on the market means most owners are exposed to the price bump.

“We’ve been seeing costs go up consistently over the last few years…Tariffs just add insult to injury,” Howard added.

As new aircraft values climb, used planes and salvage parts also get more expensive, pushing claims payouts up further. In parallel, liability coverage has become more limited, especially for private pilots, older aircraft, and low-time operators.

Reinsurance adds another complication. When Russia seized hundreds of leased jets in 2022, insurers and their reinsurers took a major hit. That loss triggered a pullback in reinsurance availability and higher prices, with downstream effects on general aviation insurance. As the situation stabilizes, global conflict remains a strong influence on underwriting decisions.

Howard’s advice to aircraft owners is to pick a plane that is easy and cheap to fix, set yourself up with insurers that understand your type, accept higher deductibles if necessary, and stay on top of your flight training.

“Pilot error is the number-one driver of claims,” Howard noted. “That really comes down to training quality and quantity.”

FMI: https://mach2underwriters.com