NU Online News Service, April 21, 2:00 p.m. EDT

First quarter renewals are no indicator of the direction the airline insurance market will take in 2011 due to the limited number of airlines renewing their insurance programs, an insurance broker's report says.

In its first quarter outlook on the airline insurance market, Chicago-based insurance broker Aon says just seven airlines renewed programs during the 2011 first quarter compared to 11 in 2010. The drop was the result of airlines going out of business.

Through April, only 39 percent of the placements saw decreases in their lead hull and liability premium, indicating an upward trend in pricing.

However, first quarter premium dollars rose by an average of 11 percent, but through April, the overall trend stood at negative 3 percent.

The reason for the decline is a new combination of two European placements that drove the premium dollars downward. Without that placement, Aon says that premium dollars would stand at positive 7 percent.

The premium increases, Aon says, are being fueled by the increase in the number of passengers and investments in airline fleets. Last year, insurance premium rose by 4 percent for the industry, and Aon says it expects that trend to continue.

Commenting on the market, Simon Knechtli, Aon's head of aviation in the UK says, “It is very difficult to sum up the position of the airline insurance markets in a simple statement because the conditions are exceptionally complicated with market players deploying a variety of tactics to try to achieve their desired portfolio performance.”

Special Reports /

Market Direction Unclear For Airline Insurance

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