NU Online News Service, Dec. 16, 12:24 p.m. EST
Claims for the airline insurance market are expected to outpace premiums for 2010 exceeding $2 billion, for only the third time since 1996, according to a report from Aon Analytics.
Aon Analytics, a subsidiary of Chicago-based insurance broker Aon Corp., said if the current trend continues in premium pricing, the airline insurance market liability premium could reach slightly more than $1.95 billion. However, the loss estimate for the market is expected to exceed $2 billion. It is the consecutive year that claims have breached that level, Aon said.
With data collected so far this month, premiums are on course to rise by 4 percent for the month based on 24 renewals. The projected increase for the year is 8 percent.
Aon noted that while market trends influence prices, "the major factor in setting price appears to be the unique risk that an individual program presents. As a result, loss history and exposure changes are a stronger factor at this stage" than the soft market conditions.
If 2011 has a low level of incidents, the market may prove to be soft for the year. However, should claims once again outweigh premium, "underwriters' priority will be getting a return in 2011," Aon said.
Aon noted that for its report, loss information covers only western-built equipment and the data covers total incurred losses with a value over $1 million.
"The bottom line, however, is that 2010 has once again been an expensive year form a claims point of view," Aon concluded.
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