After two months of increases on renewals, airline hull and liability insurance has taken a soft market turn, but that is not universal for all customers, according to a report issued by Aon.
The insurance brokerage firm's report on the airline insurance market in October showed a decline to negative-10 percent, following two months of increases, the Chicago-based insurance brokerage firm said.
Aon said the results might indicate a slight firming in the marketplace, but when a 25 percent increase at one large airline carrier is factored out, the figure would have stood at negative-14 percent. That result would have coincided with the general 2007 trend the industry has seen in that line.
November numbers point to further decreases with the majority of renewals seeing declines, many in the double-digit range, Aon said
If the trends continue, total premium for 2007-2008 renewals could fall $1.5 million, or $640 million in two years, the brokerage predicted.
Taking into account the industry's improved safety record and reduced cost of participation in the airline insurance market, the rate of decline is not sustainable for the long term, said Aon.
While rates are going down, losses are increasing. The continued disparity between rates and losses could produce a capacity crunch in the future, possibly sometime in 2008, the firm estimated.
The complete report is available at aviation@aon.com.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.