NU Online News Service, Dec. 16, 2:58 p.m. EST
So many insurance-airline programs are now pushed to the fourth quarter that it is becoming increasingly difficult for brokers to manage the renewals effectively, according to a report from insurance broker Willis.
In its “Willis Airline Insight” report the broker notes there are more than 50 major renewals in December, “approaching 50 percent of the annual premium expected to renew” for the year.
This concentration of renewals “has created an unprecedented concentration of activity and premium volume,” making it a challenge for individual brokers to adequately differentiate risks to insurers and argue why each risk is “better than average.”
“The concentration is now so great that it could now be perceived as providing buyers and the market with a level of activity and a pace of change that is increasingly unmanageable,” the report says.
The vast majority of renewals will be North American airlines. While this has not been an issue to date, the report suggests that there is a threat of a capacity reduction so late in the year.
There is also a “huge number of Asian airline” risks renewing at this time. The largest is Chinese CAAC with an average fleet value of more than $63 billion. It is demonstrating “significant year on year growth” which shows the “different industry experiences taking place across the globe.”
Despite this concentration of renewals, Willis says there is “little that is likely to change in market conditions. The level of activity in the first quarter will fall dramatically with between 15 and 20 renewals.
With losses at their best in seven years, the advantage at renewal is to the buyer. Willis cautions that brokers have the unenviable task of managing “the expectations of buyers when it comes to what can be achieved within the current market conditions and strive to achieve a result that is at the boundary of market tolerance.”
With 181 renewals up to the fourth quarter of this year, Willis says hull and liability premiums are down $3.55 million or 1 percent.