The airline insurance market continues to soften and insurersmay start to consider leaving the sector or limiting involvement,which eventually could affect capacity, an insurance brokeragesaid.

In its July report on the airline insurance market, Aon inLondon said the June premium renewal rates were down minus-15percent, slightly off from this year's average of minus-19 percent.But Aon said the number was deceptive because one carrier inEastern Europe experienced a 150 percent increase in premium.Without that increase, the month would have equaled minus-19percent.

All signs point to continued premium reductions at least throughJuly. Any upward changes may not take place until October, whichmarks the one-year anniversary of the current cycle, the brokeragereported.

Aon said two insurers have decided to decease involvement inairline hull and liability coverage--Doha-based Qatar InsuranceCompany and Korea's LIG Insurance Company. Qatar Insurance, thereport said, pulled out as of July 1, and LIG Insurance issuspending international renewals pending re-evaluation of itsprogram.

The two insurers account for a limited percentage of the market,and capacity currently sits at 190 percent. However, this is anindicator that others are evaluating their position, Aon said.