Willis Group Holdings said it expects aviation insurance pricesto rise and the market to harden further through the end of 2008into 2009, according to a report from its global aviationpractice.

The latest Airline Insurance Insight report from Willis,headquartered in London, indicates that lead premiums in Novemberincreased 16 percent, while overall program premiums are increasingat an even faster rate.

“As we approach the end of the year, all signs point to acontinuing hardening of the market,” Steve Doyle, executivedirector of Willis Aviation, said in a statement. “The lack of anysignificant losses recently would appear not to have tempered achange in underwriter attitudes. Insurers undoubtedly feel thatthey have gained momentum.”

The market saw 18 renewals in November, including some of theworld's largest programs. Despite having four more renewals thanOctober, November generated nearly four times the premium due tothe size of the programs.

November is now the third busiest month in terms ofrenewals–after December and July–but ranks second to December interms of premium volume.

Among the 18 renewals in November were five pure cargo carrierprograms. Because of a number of major losses in this sector overthe past 12 months premiums spiked up 40 percent, much higher thanpassenger airlines.

The report notes insurers are seeking and achieving rateincreases in an environment of relatively benign loss levels andovercapacity, which would normally be expected to favor ratereductions.

The principle factors leading to the hardening market, thereport said, are insurers controlling the deployment of capacity aspart of their strategy to manage the market cycle and capitalproviders increasing their demands for better returns against thebackdrop of the global financial crisis.

The report observed that international insurers are taking aharder attitude toward pricing than those in the U.S. and areattempting to achieve higher percentage increases in premium.

The report noted that the total premium generated in 2008,including known December renewals, is $1.23 billion, an increase of9 percent, or $101 million, over 2007, despite the fact that growthslowed because some carriers ceased operations in 2008.

In a previous report, Willis said gross premium for 2008 couldexceed $2 billion if premiums continue to firm through December. Bycomparison, gross premium last year was $1.83 billion.

December is the busiest month for aviation renewals, both inrenewal numbers and premium volume. Last year, December renewalsgenerated about 50 percent of the year's premium, and thatpercentage is expected to increase in 2008, amplifying the effectof the hardening market and setting the benchmark for renewals in2009.

The 55 risks scheduled to renew in December include many of theworld's larger carriers, Willis said. At this time, known Decemberrenewals total $350 million in premium, up 8 percent over lastyear, while average fleet value (AFV) is up 7 percent and passengernumbers are up 4 percent.

However, this does not include many renewals of major NorthAmerican carriers, the majority of whom renew in the second half ofthe month and last year accounted for 43 percent of December'spremium. As more information becomes available, exposure percentagechange figures (AFV and passenger counts) are expected to bereduced, reflecting the impact of the economic downturn.

For the year, claims activity remained low, the report said.Airline claims currently total $1.29 billion, including a pro ratafigure of $390 million with respect to attritional losses. Claimstotaled $1.8 billion at this point last year.