Despite historically low levels of airline insurance claims last year, continuing high risk in the industry means prices are likely to remain stable for most airline insurance programmes, according to Aon Risk Solutions.
30 MAR 2012 | THE ACTUARY NEWSDESK: NICK MANN
The risk management business's Airline insurance market outlook 2012 brought together insurance data for 2011 and the likely market direction for 2012 to conclude that the underlying cost of insurance is continuing to fall.
Exposures - represented by average fleet value and passenger forecasts - are increasing, which Aon Risk Solutions said meant that the real cost of insurance is falling.
The total lead hull and liability premium for 2011 was around $1.8bn, but claims - excluding minor losses - were only $516m. As a result, many underwriters experienced a positive return on their airline books last year.
Aon noted, however, that this would only go 'a short way' towards helping them to recoup the losses associated with the very high level of claims seen over the past five years.
While market capacity is strong, risk is 'selective, sympathetic and buyer-friendly for those with the brand and profile to leverage capacity', Aon said.
Aon Risk Solution's head of aviation, Simon Knechtli, said: '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 airline's 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.'