The airline-insurance market continues a soft-market dip,supported by healthy market capacity and a low level of claims,according to insurance broker Aon.

In its fourth-quarter market update, Aon says lead hull andliability premium figures have continued to fall through 2012, withthe average airline-insurance program enjoying rate reductions ofaround 10 percent in November.

The decrease comes despite a 5 percent increase in averagefleet values and 4 percent increase in passenger numbers.

“Healthy market capacity is driving competition betweenunderwriters,” Aon says in its market update. “Lead insurers areclearly performing for their clients as, to a great extent, fewaccounts are making changes.”

Aon says that only 32 of the airline-insurance programs placedin 2012 endured increases in their lead-hull liability, continuingan annual downward trend that has been in place since 2010.

Through November renewals, premium rates are down 9 percent forthe year, compared to being down 3 percent for all of lastyear.

At the beginning of this year, it appeared the airline-insuranceindustry was poised for a hard-market rise, recording a 29 percentincrease in rates in the first quarter. However, the remainder ofthe year has seen a steady decrease.

As far as loss trend, the current year, excluding minor losses,stands at $158 million in losses, compared to $486 million for thesame time last year.

Including minor losses, overall total is $708 million in lossescompared to just over $1.035 billion last year.

“Including an estimate for minor loss, claims for 2012 so farare 50 percent lower than the 1995-2011 average and 58 percentlower than the five year average,” says Aon.

The broker credits the low loss trends to a combination ofimprovements in “training and technology.”

Aon did cast doubt on the continuation of the soft-market trend,saying that the last stretch of declining rates came after sharpincreases after 9/11 and “it seems unlikely that the currentsoft-market conditions will continue.”