NU Online News Service, April 15, 1:03 p.m. EDT
Writers of airline insurance are taking a tough stand on renewals that translates into average premium increases of 5 percent so far this year, according to a report issued by Aon insurance brokerage.
Of 10 renewals placed so far this year, only three saw any reductions. The three that experienced reductions either forecasted major reductions in passenger exposures or considerable changes in risk profile, the firm said.
With those three removed, increases in lead hull and liability premium would have been around 25 percent, Aon reported.
The placements so far this year have been smaller regional carriers where the addition of a single aircraft can result in "a significant percentage increase in fleet value and premium growth," the report noted.
April should see 17 airline programs placed, ending the "quiet opening period of the year," Aon said.
With the April placement of large programs, Aon noted there is a great deal of competition among carriers to "either retain or gain a place on the renewal because participation can guarantee a major proportion of premium income (assuming that claims are limited)."
Losses so far for 2009 are up from $348 million last year to $583 million, not including minor losses. The overall loss total is estimated to be $720 million to date, compared to $477 million last year.
However, fatalities are down so far in 2009, standing at 52 to date, compared to an average of 138 between January and March 1996 to 2008.
Aon said the April renewals will include five airlines with average fleet value of more than $1 billion and one with an average fleet value of more than $20 billion.
The April renewals will give the industry a better idea into the direction of the airline insurance market, allowing the broker "to build a more stable picture of the direction of the market," Aon said.
A true reading of market direction, said the brokerage, won't come until July when a significant number of renewals take place, the second most active month in 2008, representing 13 percent of the market.
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