Aviation Shows Upward Trend

Aviation insurance showed some upward trend, with lead premium prices rising 13 percent so far this year, according to a report from Aon Aviation.

The report said airline insurance rose 8 percent in May, relief for an underwriting community that witnessed two years of decreases, the report said.

Average fleet value has increased 19 percent, with passenger numbers expected to grow 20 percent, based on programs placed so far this year, Aon continued.

“This suggests that the market is flat or even falling in real terms,” the report said.

Aon Aviation, a unit of Chicago-based insurance broker Aon Corp., said the figures were skewed by significant premium increases at three May renewals. Two had lead hull and liability premium increases of over 40 percent, while the third suffered an increase of more than 70 percent.

The increases resulted from “both significant exposure growth and a loss last year” on one program that led to the premium increase.

Factoring the changes out of the data, the average premium movement would have stood at zero percent, while average fleet value would have risen 8 percent and passenger numbers would have grown 15 percent during May, said Aon.

The high price of fuel, leading to bankruptcies and cutbacks in air traffic, could spell decreases for the 2009-2010 renewals as airlines post reductions in their average fleet values, the report suggested.

“If this proves to be the case, it may become the catalyst for a shakeout in the airline insurance market as the global underwriting operations look at the relative profitability of the aviation industry from an insurance point of view and begin to move their resources elsewhere,” the report said.