Aon Risk solutions has released it latest edition of its aviation data report : Airline Insurance Market Indicators 2011/12. As the frenetic renewal season in the aviation insurance market starts, the report states that premium volumes are so far holding steady despite significant increases in forecast risk exposures.
Aon reports that as a result, the underlying cost of insurance continues to slide, most significantly for carriers that are growing allied to a strong brand and track record with the market as a whole. Capacity remains buoyant but to a degree, risk selective, considering that pricing is at a 10 year low-point, the report says. The market remains sympathetic and buyer friendly for those with the brand and profile to leverage capacity.
Airlines have forecast that fleet values will increase by around 10% on average during the course of their 2011/12 insurance programmes, with passenger numbers due to rise by 14% during the same period. Conversely, premium has grown by only 1% on a year to date basis. Although exposure growth may slow a little as many of the world’s major programmes are negotiated and placed in November and December, there is little to suggest the underlying trend will change.
The report reveals that following two years of exceptionally high claims, 2011 has so far been very low in comparison. Estimates suggest that that there has been around US$469 million of airline hull and liability claims between January and October, compared to an average of US$862 million for the same period between 1995 and 2010. Fatalities are similarly well below average.
Commenting on the report’s findings Simon Knechtli, Aon Risk Solution’s aviation leader said, “The divergence of the airline insurance market can be seen very clearly when examining renewals by region. African and Asia Pacific exposure has leapt forward, bringing increased premium to the market but the value of this to insurers comes at a cost of needing to swallow reduced rates. European carriers are growing more steadily but the rates have equally fallen to the point where less premium has been generated compared to last year.
“The renewal season continues to heat up and as it does so the market’s players are increasingly vocal about the direction of pricing,” Knechtli continues. “Today the position is clear, but it is the individual strategies of influential insurers that may be just as telling as the mere balance of capacity supply and demand and the level of airline losses. Our clients will be keen to see the detail and our Airline Insurance Market Indicators report helps with an overview and focus on the statistics.”
Source : Aon Risk Solutions
