NU Online News Service, June 3, 1:58 p.m. EDT

Top Aircraft Insurers, 2010 The airline insurance sector continues to be competitive as overall rates show a modest decline, and claims for the first half of the year have been impressively small for this period compared to the average, says a report from Aon.

The Chicago-based insurance broker’s quarterly Airline Insurance Market News for June 1 says premiums rates for overall hull and liability insurance to date declined to negative-1 percent after months of steady overall increases.

However, Aon says, the movement is “masked by a single renewal” for two European flag carriers. With a total of 37 renewals for the year, Aon says if the carriers were removed from the data, rates would have shown an increase of around 5 percent.

On the plus side for carriers, 40 percent of those that have placed risk so far this year have seen a decrease in the price of their insurance program for 2011-2012. This compares to 30 percent of renewals that enjoyed decreases on their 2010-2011 program.

From a claims perspective, Aon says current loss figures, excluding minor losses, are “impressive,” standing at $108 million so far this year compared to $457 million at this time last year.

Aon estimates that when minor losses are added in, overall loss stands at $358 million, compared to $687 million last year.

The claims total is estimated to be around 60 percent of the 1996-2010 average, Aon says, with minor losses. Excluding minor losses, claims are around 25 percent of the 1996-2010 average.

However, Aon emphasizes that “a single incident could change the position radically.”

Such a short period of time is unlikely to produce any shift in the market direction, but a continued drop in claims could have some impact later in the year, Aon notes.

The most costly loss event so far this year was a May 7 crash of an MA-60 built by Xain and operated by Indonesia’s Merpati Nusantara Airlines. The crash of the plane on approach to the airport killed 21 passengers and six crew members. The aircraft was valued at $11 million.

Touching on volcano eruptions over Iceland, Aon says unless there is a loss of an aircraft, there is no insurance loss. However, should volcanic ash from a single incident result in the loss of an aircraft, that would be covered. Physical damage from prolonged or cumulative exposure to volcanic ash conditions would not be covered, Aon says.

Special Reports /

Airline Insurance Competitive; Losses Impressively Small

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