NU Online News Service, Nov. 9, 12:34 p.m. EST
Experts say the overall insurance-aviation market is expected to remain flat for the rest of this year and begin 2012 at the same level, with pricing driven primarily by individual risk assessment, according to a recent report from Aon.
"Despite rising exposure as a result of airlines increasing fleet investments and passenger forecasts in response to recovering economic confidence in some parts of the world, lead hull and liability premium has remained fairly stable in 2011," Aon says in its report "Airline Insurance Market Indicators 2011/12."
If losses remain around the average for the final quarter of this year, premiums going forward are expected to remain what they have been throughout the year. However, capacity remains high and with the low level of losses there is the possibility the market could soften "unless underwriters take a strong stance."
The report adds that premiums are being less affected by market trends and are set by "loss history and fleet changes."
Aon adds that after a string of natural disasters through 2011, aviation "will continue to represent something of a safe haven for underwriters, particularly given that claims have been exceptionally low. This could attract capacity and prices could begin to fall quickly as a result."
Compared to the same time last year, average lead hull and liability premium has risen 1 percent. In contrast, average fleet value is up 10 percent and passenger numbers are forecast to grow by 14 percent.
For 2011 airline hull and liability claims are estimated to be at $469 million to October, the report says. This compares with the average of $862 million between 1995 and 2010.
There have been 125 deaths under standard insurance programs so far this year, compared to the average of 350 as of October.
Size matters on renewal, Aon notes. Airlines with an average fleet value of more than $5 billion experienced premium decrease of 8 percent. At the other extreme, airlines of average fleet value between $150 million and $500 million experienced premium increase of 16 percent.
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