Here's why airline rates are going up next year

A year of catastrophic airline accidents is driving premiums up, but not as high as expected.

Late last year, the airline insurance market was seeing massive downturns in premiums, partially due to increased safety of airline travel. However, the litany of airline accidents that happened this past year have caused an unexpected increase in airline premiums for 2015, despite earlier reports at the beginning of this year that said otherwise.

At the end of 2013, buyers of aviation insurance saw a benefit to a soft market with increased competition between several insurers. Rates were going down by 10%, and it was expected that $150 million would have been eroded away from the premium market, establishing a premium volume lower than what it was before Sept. 11, according to market overviews released by both Willis and Marsh & McLellan. “It remains unlikely that a single catastrophe or even a number of significant losses will do anything to halt the downward trend,” the Willis report stated.