NU Online News Service, Jan. 13, 11:25 a.m. EST
The airline insurance industry saw claims outstrip premium by $400 million in 2009, marking the third consecutive year of loss for the industry in this sector, according to Aon insurance brokerage.
In its January 2010 report on airline insurance results, Aon said total lead hull and liability premium for 2009 was around $1.9 billion, but claims for the year were more than $2.3 billion, thanks to a few major losses.
Aon said that while three straight years of loss could affect capacity, the fact that premiums rose around 20 percent in 2009 could "encourage some reticent underwriters back into the airline market."
Although prices are expected to continue rising in 2010, those increases should slow unless there is a major loss during the year.
Eighty percent of renewals saw their lead hull and liability premium increase last year, compared to just more than 60 percent in 2008 and 30 percent in 2007, Aon said.
Last year was the second most expensive year for the airline insurance market except for 2001, but the loss value was driven by two major incidents. Without those losses, 2009 would have been closer to the long-term average, the broker noted.
Looking ahead, premiums are expected to remain on the increase, and that level of increase is expected to be set by the early stages of 2010 in the industry.
As for renewals, Aon said, the first three months are expected to be the quietest with few expected renewals. In 2009, the bulk of renewals took place in December, and that pattern is expected to be repeated.
Among incidents impacting the airline industry, Aon noted, were a major terror incident on Christmas day and the bankruptcy announcement of Mesa Air lines on Jan. 5.
On a positive note, Boeing held its first test flight of its 787 Dreamliner at the end of the year.
"It seems that the airline industry has come into the new year with as much to be nervous about as look forward to, although the situation at this stage is markedly better than the uncertainties that greeted the early months of 2009," Aon said.
Copies of the full report are available at www.aon.com/aviationinsight.
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