The airline-insurance market continues a soft-market dip, supported by healthy market capacity and a low level of claims, according to insurance broker Aon.
In its fourth-quarter market update, Aon says lead hull and liability premium figures have continued to fall through 2012, with the average airline-insurance program enjoying rate reductions of around 10 percent in November.
The decrease comes despite a 5 percent increase in average fleet values and 4 percent increase in passenger numbers.
“Healthy market capacity is driving competition between underwriters,” Aon says in its market update. “Lead insurers are clearly performing for their clients as, to a great extent, few accounts are making changes.”
Aon says that only 32 of the airline-insurance programs placed in 2012 endured increases in their lead-hull liability, continuing an annual downward trend that has been in place since 2010.
Through November renewals, premium rates are down 9 percent for the year, compared to being down 3 percent for all of last year.
At the beginning of this year, it appeared the airline-insurance industry was poised for a hard-market rise, recording a 29 percent increase in rates in the first quarter. However, the remainder of the year has seen a steady decrease.
As far as loss trend, the current year, excluding minor losses, stands at $158 million in losses, compared to $486 million for the same time last year.
Including minor losses, overall total is $708 million in losses compared to just over $1.035 billion last year.
“Including an estimate for minor loss, claims for 2012 so far are 50 percent lower than the 1995-2011 average and 58 percent lower than the five year average,” says Aon.
The broker credits the low loss trends to a combination of improvements in “training and technology.”
Aon did cast doubt on the continuation of the soft-market trend, saying that the last stretch of declining rates came after sharp increases after 9/11 and “it seems unlikely that the current soft-market conditions will continue.”
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