NU Online News Service, April 16, 11:10 a.m.EDT

The airline industry paid about 20 percent more on average forlead hull and liability prices in 2009, but those increases areexpected to slow, thanks to an improved economic picture for theinsurance industry, according to a report from Aon.

Chicago-based insurance broker Aon Corp. released its airlineinsurance market outlook report for 2010, saying that while theindustry experienced double digit increases, those increases werenot enough to cover the "significant claims that occurred duringthe year."

Because of the improved economic conditions for the insuranceindustry, and a loss history that has been "relatively good" forthe past five years, the industry should experience a slow down inthe increases, the report said.

Lead hull and liability premium reached $1.9 billion in 2009, animprovement from $1.6 billion in 2008. There were, however, $2.3billion in claims last year, compared to an average of $1.8 billionbetween 1998 and 2008.

Aon noted that on a positive note, there were only 58 majorlosses compared to a long term average of 68. Total fatalities forthe year were 423 compared to an average of 635.

Fleet values in 2009 grew by 3 percent on a year to year basis,while average passenger number fell by 2 percent.

Premium growth was the highest in the Middle East, which alsohad the highest levels of exposure growth. Operations in NorthAmerica are forecasted to experience reductions in both fleet valueand passenger numbers, Aon said.

The report noted while others are seeing downward pressures, theMiddle East continues to see growth in its airline industry.Average fleet values are expected to grow by 12 percent during the2009-2010 policy period and passenger numbers are expected toincrease by the same rate. Policy premiums rose by 32 percent forthe same period.

Capacity is expected to increase as more insurers are enticedinto the marketplace. Aon warned, however, that there could be aquick pull back if claims in 2010 look to be above the longterm.

A copy of the full report can be found at www.aon.com.