NU Online News Service, Jan. 26, 12:06 p.m.EST

Airline insurance claims dropped 66 percent below 2010's lossnumbers, and pricing in the marketplace exhibited stability throughthe 2011-2012 renewal period, says insurance broker Aon.

In its Airline Insurance Market News report for the 2012 firstquarter, the Chicago-based insurance broker says final loss figuresfor 2011, excluding minor losses, came in at $530 million comparedto more than $1.5 billion in 2010.

With an estimate of minor losses added in, overall losstotaled $1.13 billion, 46 percent less than the $2.1 billion in2010.

Fatalities were at their lowest since 1984 and it was also thelowest number of aviation claims since 1995, Aon says.

In December, Aon said there were a total of 175fatalities under standard liability policies. The long-term averageis 582 fatalities.

“The low level of claims in 2011 has meant that the market isestimated to have enjoyed healthy returns overall,” says Aon.

However, Aon went on to say, this is only the second time infive years that the industry has enjoyed such a low level of claimscompared to premium.

Airline-insurance pricing will still depend on individual risks,with those airlines that have had a notable number of losses seeingincreases, while those with “well-understood risks” experiencingstable to possible soft renewals.

Aon warns that a “single major incident could harden the marketquickly” especially in light of the high level of claims prior to2011.

“It is relatively easy for an underwriter to maintain a presencein the airline insurance market without committing capacity,” saysAon. “As a result, in the event of a major loss, any markethardening is likely to be short lived because the reintroduction oflatent capacity will increase competition and reduce prices.”

Aon notes that one major driver of change in the airlineindustry is the consolidation of the airlines, many of which haveconsolidated inEurope.

The broker says the number of airlines dropping below the fleetvalue of $150 million—which is the threshold for inclusion in Aon'sdata—has been greater than the number entering the market. Overall,the number remains not “significantly higher than average.”