A strong and stable market prepares
to address “advanced air mobility”
By Joseph S. Harrington, CPCU
When it comes to aviation risk, today’s insurance agents and brokers may be facing what their predecessors dealt with 100 years ago at the dawn of the automobile age.
Self-powered (“auto-mobile”) cars and trucks didn’t simply replace horses and wagons; they transformed land transportation. Autos quickly became less costly to acquire and maintain than draught animals, while paved roads made for fast, reliable transit in most conditions.
Given these benefits, vehicles became a common feature of households and businesses, and auto insurance developed in response. Agents and brokers would come to inquire about vehicles owned and/or used by their accounts as a matter of course.
Are we at a similar crossroads when it comes to aviation?
For decades, aviation has been exclusively a specialized function requiring specialized vehicles, training, equipment, and infrastructure owned and operated only by organizations devoted to aviation. Up until recently, property and liability insurance for aviation has been sold exclusively to accounts in the aviation business.
“Advanced air mobility”
Welcome to the age of “advanced air mobility” (AAM), sometimes referred to as “urban air mobility” (UAM)—terms that refer to advances in aviation that allow for cargo and passengers to be transported by air in spaces previously inaccessible by aircraft.
The principal advance is the development of “electric vertical takeoff and landing” (eVTOL) capabilities that allow aircraft to operate without the need for runways in open spaces.
[O]ne can anticipate that new “airways” and new protocols
for using them will be as consequential as the creation
of roadways and “rules of the road” were in the early 20th century.
While the benefit of vertical takeoff and landing in an urban setting is obvious, aviation experts say the technology will also expand air service to remote areas.
In the words of an October 2025 Fortune Business Insights report: “AAM is poised to revolutionize transportation by integrating novel aircraft designs, propulsion systems, and air traffic management technologies into existing airspace.”
The National Business Aviation Association, a trade group for companies that use aircraft in their operations, says on its website that AAM craft “will range in size from single-passenger aircraft to large shuttles [and] bring accessibility to cities, underserved communities and geographically distant regions.”
Market research and consulting firm Grand View Research projects that the size of the global AAM market will increase more than tenfold in the next decade, from an estimated $12 billion in 2024 to $137 billion in 2035, an average annual growth rate of 25%.
Growth of the AAM market is facilitated by regulatory modernization in the United States and Europe.
In May 2024, the European Union’s Aviation Safety Administration released comprehensive new regulations designed to enable “future integration of manned aircraft with a vertical take-off and landing capability into the transportation systems of the Member States.” In October, the U.S. Federal Aviation Administration finalized its new rule addressing the integration of “powered lift” aircraft into the National Airspace System (NAS).
Aircraft for all?
Governments are working to create a safe and secure operating environment for a wide range of new aircraft, from “air taxis” designed to carry commuters to small drones capable of carrying individual packages—an application already in use by leading distributors.
Emerging regulations governing airspace will also affect households and small- to medium-sized businesses, who have begun to use “unmanned aerial vehicles” (UAVs, aka “drones”) principally for surveillance of premises, but also for small deliveries.
In sum, one can anticipate that new “airways” and new protocols for using them will be as consequential as the creation of roadways and “rules of the road” were in the early 20th century. For insurance agents and brokers, this means that their “non-aviation” clients may soon be as likely as not to own, operate, or use some type of aircraft that will need to be insured.
We’re not there yet, however, and most aviation exposure and insurance coverage is still focused on firms devoted to aviation as a specialty.
Market conditions
After several years of a hard market, aviation insurance providers report that rates have begun to stabilize, thanks largely to a substantial influx of new capital.
“There is a new aviation insurance presence, promoting new appetite, market share, and market capacity,” according to the State of the Insurance Market Report: 2025 Outlook on aviation, produced by Risk Strategies, an insurance brokerage recently acquired by Brown & Brown. “Existing markets are also increasing market share and appetite or at least working to preserve it.”
According to Risk Strategies, the aviation insurance market has managed to remain profitable despite facing the same headwinds as commercial auto, commercial property, and general liability insurance. These include struggles to attract and retain skilled technicians, inflation in the cost of replacement parts, and step increases in liability judgments.
Regarding the challenge of talent recruitment, aviation insurance broker BWI Fly notes that “fewer highly experienced pilots are entering the market, prompting stricter training and qualification requirements.”
Climate change concerns are also adding to claims costs and operational expenses, according to Aeris Insurance, which also specializes in aviation insurance. “Weather-related losses are becoming an increasing concern,” the firm writes. “The world is also pushing the aviation industry to prioritize sustainability. From adopting sustainable aviation fuels to implementing eco-friendly practices, the pressure to reduce environmental impact is mounting.”
Governments are working to create a safe and secure
operating environment for a wide range of new aircraft, from “air taxis”
designed to carry commuters to small drones capable of carrying individual packages … .
Insurance product challenges
Like almost any new departure in insurance, providing coverage for AAM craft will be hindered for at least a short time by a lack of historical loss data for homogenous risks.
In regard to loss frequency analysis, aviation researcher David Ison notes in an April 2025 Advanced Mobility Research Group article, titled “Insuring eVTOL Operators: Navigating High Costs, Market Trends, and Regulatory Challenges,” that insurance underwriters have to evaluate a very diverse range of AAM design features.
Existing aviation loss data for helicopters and fixed-wing aircraft is of limited use in underwriting or rating coverage. For example, many eVTOLs rely on lithium-ion batteries, a known fire hazard, for their power supply.
In the event a malfunction on an AAM craft causes an accident, underwriters have to contemplate the possibility of an extremely severe loss to people and property in a crowded area. After all, the entire purpose of AAM is to bring flight closer to communities.
Risk professionals know, however, that almost anything can be insured—at the right price.
Ison writes that “[AAM] risks will clarify as eVTOLs accumulate flight hours,” and reminds people that, as loss data for drones has been accumulated, premiums for drone coverage have fallen from $500–$2,000 per unit to $200–$500 per unit.
Accumulation of reliable loss data may take longer for AAM craft than it did for drones, Ison says, as AAM risks extend to high-stakes flights with pilots and passengers. Still, he reminds his readers that commercial airlines faced high rates for insurance coverage in their early years, until the data was available to allow for stable rates.
The author
Joseph S. Harrington, CPCU, is an independent business writer specializing in property and casualty insurance coverages and operations. For 21 years, Joe was the communications director for the American Association of Insurance Services (AAIS), a P&C advisory organization. Prior to that, Joe worked in journalism and as a reporter and editor in financial services.
