NU Online News Service, Sept. 2, 11:59 a.m. EDT
Premium rates for airline insurance rose 22 percent during August, primarily because of increases in the average fleet value of three airlines.
Additionally, overall indicators point to a stable market, according to a report from Aon Risk Solutions.
In its September market news report, the Chicago-based broker says premiums saw a dramatic spike because three airlines paid more for insurance as they increased their fleet value. Two airlines increased the size of their fleet value by close to half while a third increased its value by around 40 percent.
“Over a quarter of the 92 airline insurance programs that have been placed in the market so far this year have been placed within the [minus-5 percent to plus-5 percent] range, a far higher level of stability than has been witnessed at any point over the last year,” Aon says.
Aon warns that the placements so far this year are not a guarantee of stability during the last quarter of this year as the overwhelming majority insurance placement is made during this period.
If losses remain “below the long term average” for the remainder of this year, the pressure on the price of insurance should remain “fairly even” for the rest of the year.
However, individual airlines that have experienced losses over the course of the year can expect increases “unless they take proactive steps to reduce the risk that they represent.”
Excluding minor losses, the loss figure stands at $367 million so far this year, compared to $1.05 billion at the same point last year. Adding minor losses, the total stands at $767 million, compared to $1.4 billion last year.
“After two years of very high claims, 2011 has so far been very positive from a claims point of view,” says Aon. “As a result, claims are unlikely to be a source of price pressure from underwriters for airlines with a good loss history.”