NU Online News Service, Jan. 19, 11:20 a.m. EST

The airline insurance market is in line for another $2 billion-plus in claims in 2010, the third time in four years, according to an insurance broker's report.

In its January 2011 report, Chicago-based insurance broker Aon said while final figures are yet to be tallied, according to its figures, overall losses for 2010, including minor losses, come to $2.1 billion—high, but not as high as 2009 when losses came in at $2.34 billion.

Excluding minor losses, the 2010 loss figure was $1.55 billion, compared to $1.79 billion in 2009.

"Aon estimates suggest that claims for last year breached the [$2 billion] level for the third time in four years," Aon said.

"While it is very difficult to claim that this represents the new average level for the sector given that the level of claims in a year can fluctuate significantly, some are suggesting that the underlying conditions in the aviation sector have shifted somewhat," Aon noted.

What may be of even more importance to the sector is that the business incurred more claims than premium in 2010, "raising the prospect of more challenging conditions as negotiations begin for 2011/12 airline insurance programs," the report said.

Lead premium in 2010 is anticipated to amount to just above $1.9 billion, while annual claims of $2.1 billion "means a significant shortfall for underwriters even before reinsurance and fixed costs."

There are still less than 20 renewals to be added to the data. That represents approximately $150 million in lead hull and liability premium, said Aon. This could have "a slight impact" on the final figures for 2010, but Aon said it believes the data is correct "in terms of direction."

There were 203 renewals Aon examined for its report, a total premium of $1.78 billion. Premiums increased an average of 4 percent for the year, with the first quarter of the 2010 renewal season showing an increase of 13 percent.

Aon noted that fatalities in 2010 stood at 601 compared to the long-term average of 621.

"While this could simply be a statistical anomaly, the fact that fatality rates have been below the average in all of the last five years does at least suggest an improvement," Aon said.

The broker said it expects to produce its final report for 2011 soon and interested parties can receive copies of it by signing up at the firm's subscription page.

Special Reports /

2010 Airline Insurance On Track For Another $2B-Plus Year In Claims

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