Aon Risk Solutions, the risk management business of Aon Corporation, has released the Airline Insurance Market Outlook 2012. This is the eighth year that Aon has published its market leading report, which is intended to help clients understand how the airline insurance markets are evolving.
Bringing together insurance data for 2011 and extrapolating the likely market direction for this year, the Aon Airline Insurance Market Outlook 2012 suggests that while airline claims were historically low last year, the risk that the aviation industry represents remains high and as such insurance prices are likely to remain stable for the majority of airline programmes.
The report confirms that the underlying cost of insurance continues to fall. Exposures, represented by average fleet value and passenger forecasts, are growing, meaning that the real cost of insurance is falling.
Total lead hull and liability premium for 2011 was around $1.8bn, but incurred claims were only $516m (excluding minor losses). This means that many underwriters enjoyed a positive return on their airline books of business in 2011, although this will only go a short way to helping the sector recoup some of the costs associated with the very high level of claims that have been made over the last five years.
The report describes a market where capacity remains buoyant but risk selective, sympathetic and buyer friendly for those with the brand and profile to leverage capacity.
There is also a focus on the continued growth of the aviation industry in the Asia Pacific region, which has now taken global primacy in terms of fleet value and passenger forecasts.
Commenting on the report’s findings, Simon Knechtli, Aon Risk Solution’s head of aviation said “The report shows that 2011 was a good year for airline safety and insurers’ results are likely to have been positive as a result. The high level of insurance capacity is keeping a lid on insurers’ aspirations for improved risk pricing and their search to replace premium which is steadily leaking to other aviation market sectors. This is good news for clients. While insurance remains good value and is only a small part of an airlines’ fixed costs, it is encouraging that prices continue to be negotiable. In the end, the airline insurance market is complex but we continue to succeed in delivering constant appetite for our clients’ business.”
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