Airline-Insurance Market Remains ‘Remarkably Stable’ Through July

ricing conditions in the airline-insurance market are not expected to change as the industry has demonstrated increasing attention to safety, according to Willis Group Holdings.

In its monthly “Airline Insight” report, Willis' Aerospace division says losses for the first nine months of the year hit a five-year low of $794 million, including $250 million in July.

Willis says the market remains “remarkably stable, with no change from the drivers of capacity and claims.”

July was the busiest month for placements with 33 renewals, but premium dropped close to 3 percent. Overall, there have been 104 renewals and a drop in premium of 1 percent as of the end of July.

Willis notes that “renewals again witnessed the trend for low-single-digit premium increases against higher levels of exposure increase. The level of rate relief as a result of this exposure development remains a potential issue for the market.”

July witnessed three accidents:

• An Asiana B747-400 freight jet crashed after takeoff as it left Seoul, Korea's Incheon Airport on July 28. The crash killed two crew members. Loss reserve was put at $127 million.
• An Egyptair B777 suffered a cockpit fire while sitting on the tarmac at Cairo Airport in Egypt on July 29. The fire burned a hole in the aircraft and injured five passengers. Loss reserve was put at $60 million.
• The fuselage of a Caribbean Airlines 737-800 broke in half after it overran the runway at the Georgetown Airport in Guyana on July 30. No injuries were reported. The hull reserve was placed at $49 million.

These incidents “reflect the excellent safety performance of the industry, which has delivered some good fortune for underwriters in the wake of an extremely volatile year for other industries,” Willis says.