NU Online News Service, Sept. 14, 11:13 a.m. EDT

Market conditions in the airline-insurance market are not expected to change as the industry has demonstrated increasing attention to safety, according to Willis Group Holdings.

In its monthly Airline Insight report, Willis' Aerospace division says losses for the first nine months of the year hit a five-year low of $794 million, including $250 million in July.

Willis says the market remains “remarkably stable, with no change from the drivers of capacity and claims.”

The three incidents and two fatalities during the month of July “reflects excellent safety performance of the industry, which has delivered some good fortune for underwriters in the wake of an extremely volatile year for other industries.”

July was the busiest month for placements with 33 renewals, but premium dropped close to 3 percent.

Overall, there have been 104 renewals and a drop in premium of 1 percent as of the end of July.

July witnessed three accidents:

• Asiana B747-400 freight jet that crashed after takeoff as it left Seoul, Korea's Incheon Airport on July 28. The crash killed two members. Loss reserve was put at $127 million.

• An Egyptair B777 suffered a cockpit fire while sitting on the tarmac at Cairo Airport in Egypt on July 29. The fire burned a hole in the aircraft and injured five passengers. Loss reserve was put at $60 million.

• The fuselage of a Caribbean Airlines 737-800 broke in half after it overran the runway at the Georgetown Airport in Guyana on July 30. No injuries were reported. The hull reserve was place at $49 million.

Willis notes that “renewals again witnessed the trend for low single digit premium increases against higher levels of exposure increase. The level of rate relief as a result of this exposure development remains a potential issue for the market.”

However, Willis says the reality is that while the global airline fleets have grown in terms of exposures in hull value and passenger numbers that experience in “recent years is that increased exposures do not directly translate into claims.”

Steve Doyle, business development and sales director for Willis Aerospace notes that individual losses do not have great impact on airline market and the line “needs a shift in overall trading conditions to significantly change” its direction.

Earlier this month, a privately owned aircraft carrying 44 professional hockey players, coaches and crew perished in a crash on take off in Russia.

An insurance industry consultant, Andrew J. Barile, who heads up Andrew Barile Consulting Corp. Inc., says that the loss would not have effected the airline insurance or reinsurance market because the event is deemed not a large enough to have an impact.

Updated 1:26 p.m. EDT with last two paragraphs.

Special Reports /

Airline-Insurance Market Stable as Safety Measures Pay Off in July

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