NU Online News Service, April 30, 1:48 p.m. EDT
The airline and aviation insurance markets report a profit for the first time in five years as airline losses and passenger fatalities dropped to all-time lows, says a report from insurance-broker Willis.
In its Willis Aerospace Aviation Products Market Review 2012, the London headquartered insurance broker says the results point to an improving marketplace.
“The aviation industry is returning to good health,” says Mark Wilford, chairman of Willis Aerospace in a statement. “New technologies continue to deliver improved long-term safety records and fleet/passenger numbers are growing.
“However, buyers recently confirmed to us that aviation insurers should be reminded it is the aerospace/manufacturers sector that, by and large, has historically subsidized the overall aviation-insurance market through more difficult times across other sectors,” says Wilford.
The report says premiums levels for airline insurance were down 2.4 percent compared to down 1.3 percent for the aviation-manufacturing insurance, indicating that conditions were more favorable for the airline-insurance buyer.
Insurance renewals across all aerospace sectors saw an average 1.8 percent rate reduction compared to the 2010.
Total airline-insurance premiums last year stood at $1.9 billion against claims of $1.1 billion “giving rise to the first profitable year for the airline insurance sector in five years.”
Total reported 2011 premiums for aviation-manufacturing insurance were $658 million.
Willis notes that the results follow “one of the safest years for the aviation industry in recent times.”
In 2011 there was only one loss in excess of $100 million and 14 losses between $10 million and $99 million. Total fatalities, including passengers and crew, amounted to 230.
By contrast, in 2010 there were 6 losses in excess of $100 million and 14 losses between $10 million and $99 million. It was a bad year in the number of fatalities with a total of 715 in passenger and crew. That year had the highest number of fatalities since 2007.
Willis says there were a total of 30 losses of western-built aircraft in airline service, compared to 46 in 2010.
The low 2011 fatality numbers were even more notable in light of the fact that passenger numbers grew by 5 percent last year.
The year also saw an increase in the total number of western-built aircraft delivered—up 2.48 percent for a total of 4,222. Airline-passenger-jet deliveries increased by 6 percent to 1,104 units in 2011.
The growth was led by Asia with strong passenger growth and airline deliveries, while deliveries in North America were less than half of what they had been just prior to the economic collapse in 2008.
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