While most of the insurance industry is experiencing rate increases, airline-industry risks are seeing rates drop thanks primarily to improved safety, says Aon.
In its mid-December 2012 airline-insurance market update, Aon says that with 40 renewals to go this year, lead insurer airline hull and liability premium has fallen around 10 percent on average from expiring premium.
“Competition between insurers has been particularly strong, with following markets offering additional savings,” says Aon.
Aon says insurers are working to meet broad “plans for forecast targets in what is a profitable market as a result of the low level of claims in the industry over the last two years. The industry is to be congratulated for the improved safety conditions.”
Of the 22 renewals on record for this month only three have increased lead hull and liability premium. This was primarily because of increased hull value. Overall, risk exposures on average have increased by 5 percent from the global recession of 2008.
Aon says if the market trend holds, the airline insurance line stands to collect $1.6 billion in premium for the period 2012-2013.
The broker says five years ago, airline insurers sought to collect $2 billion in lead insurer hull and liability premium, which was assumed to be the break-even point. The closest the industry got to that point was 2010 when total premium reached $1.96 billion.
Loss figures for 2012, excluding minor losses, stands at $232 million compared to $531 million last year. Combining an estimate for minor losses, the overall loss is $832 million so far this year, compared to more than $1.13 billion last year.