NU Online News Service, Dec. 19, 12:12 p.m. EST

The airline-insurance industry should be profitable this year if there are no major losses. Additionally, soft-market pricing and ample capacity should continue into 2012, according to Aon Risk Solutions.

Aon's report, released Friday, follows a Willis report released late last week on the airline-insurance market that said the high number of renewals in the fourth quarter is putting a strain on brokers' abilities to represent all risks effectively.

In its report, Aon says “the final shape of the airline insurance market for 2011-12 renewals is becoming clear.”

Total lead hull and liability premium for 2011 should fall around $1.9 billion. However, with a low level of claims this year, the results should be comfortable “enough to ensure that capacity in 2012 remains consistent.”

Aon says rates are still in decline, overall. However, Dec. 1 “saw four renewals with significant increases” in lead hull and liability premium because of “worsening loss records.”

When the renewals with the poor loss records are removed, premiums fell 9 percent.

With 167 renewals this year as of the release of the report Friday, 49 percent have seen reductions in lead hull and liability premium for their 2011-2012 insurance programs. Aon says this is the highest level of reduction since 2007, when about 70 percent of placements saw costs fall.

Aon says there are still 50 airline programs that have yet to renew before the end of this year, but the broker did not indicate that the 50 would have an impact on the overall trend.

Earlier this month, Aon issued a report saying that the low number of claims and fatalities was leading to soft-market conditions for the airline market segment.

Overall losses in 2011 stood at $1.03 billion compared to $1.96 billion in 2010. Fatalities were below the average of 582, standing at less than 300.

Special Reports /

Aon: Airline-Insurance Market Still Soft, but Performing Well

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