Airline insurance capacity remains plentiful heading into the year’s busiest renewal period, but underwriters are becoming more selective about where they put it.

That shift is sharpening the divide between risks. WTW’s Q3 Airline Insurance Outlook found competition remains healthy across much of the market, with war coverage continuing to soften even while hull and liability insurers generally seek increases.

The distinction matters because around 65% of annual airline lead hull and liability premium is placed during the fourth quarter, WTW estimates. That leaves a large share of the market exposed to any shift in underwriting sentiment before year-end.

So far, capacity has been sufficient to keep that pressure contained, but the amount available in the market increasingly tells only part of the story.

Gallagher Specialty reached a similar conclusion in its second-quarter airline market update, finding that theoretical limits comfortably exceed demand while actual deployment increasingly depends on an airline’s exposures, loss record and risk profile. Insurers have tightened oversight of flight routes and concentrations at regional hubs, while some have reduced their percentage shares or withdrawn following capacity on risks with challenging US liability exposures.

That creates an important distinction between capacity that exists in the market and capacity that an individual airline can actually attract on competitive terms.

Part of that selectivity comes down to accumulation risk, particularly the possibility that a single event could trigger losses across multiple aircraft and policies.

The seizure of hundreds of leased aircraft in Russia after 2022 demonstrated how one geopolitical event could produce losses across numerous policies and insurers. Underwriters are now paying closer attention to where aircraft are concentrated and how much insured value could be exposed at a single airport.

The changing nature of warfare has added another scenario. WTW said the increased use of drones raises the possibility of an attack damaging several aircraft on the ground at once, potentially turning what might once have been treated as individual aviation risks into a substantial aggregate loss.

Recent geopolitical disruption has already influenced airline insurance pricing, particularly for carriers operating in or around the Middle East. But political risk is only one source of underwriting pressure.

US liability severity is also drawing attention. A survey of 106 aviation insurance and reinsurance professionals conducted by the International Union of Aerospace Insurers, International Underwriting Association and Swiss Re found that geopolitical instability and war ranked as the industry’s leading threat in 2026. At the same time, respondents identified US claims inflation as the biggest challenge facing aviation insurers and reinsurers, ahead of market conditions and rate adequacy.

That helps explain why US-based airlines and carriers with significant US exposure have faced greater scrutiny even while overall industry capacity remains strong. Earlier aviation market analysis found some insurers restricting capacity to manage potential liability losses tied to large US awards.

WTW cautioned that conditions could shift quickly. Claims activity has remained relatively manageable in 2026, but another major aviation loss or geopolitical event could change how much capacity insurers are willing to deploy heading into the year-end renewal rush.