NU Online News Service, Nov. 10, 3:11 p.m. EST
Insurance broker Willis put its aviation premium reductions well below the industry average, according to a recent report.
In its Airline Insurance Market Overview, the firm says in its large aviation program, the Willis 50 programs, renewals so far in 2011 achieved premium reductions of 7 percent against increases of 7 percent for hull value and liability exposure increase of 13 percent.
However, Willis notes that only 14 of the 50 programs have renewed so far this year, which is also an indication of “the level of activity still to come.”
For the aviation industry as a whole, average fleet value has grown by 8 percent and passenger numbers have increased by 16 percent, but premiums are down by 1 percent.
The findings are similar to those in a report released earlier this week by Aon that also says premium rates are down by 1 percent.
Willis says the declines can be contributed to “abundant capacity” and loss levels being at a six year low.
“This backdrop would suggest that there is little to halt the slide in premium levels,” says Willis.
The firm also noted that the current state of premium direction “is creating a market situation that is very favorable for buyers.”
Taking advantage of the soft market, a few airlines have renewed early, says Willis. Air India purchased a 15-month policy in 2010 that was to expire on Dec. 31. The airline renewed the program Oct. 1.
China Airlines, Mandarin Airlines and Transasia Airways, had 14-month policies due to end in December. They canceled the programs and renewed them Oct. 15.
Touching on war-hull coverage, which was instituted after the attacks of 9/11, Willis says rate reductions are continuing at 10 to 20 percent. Premium volume “remains well below the long since forgotten benchmark of the volume of a wide-bodied aircraft and is now estimated be below $100 million.”
The excess war hull third party liability market (also known as AVN52E) has incurred no claims since 9/11. Premium levels have fallen to be in the range of $200 million, says Willis.