“Insurers breathed easier as every month passed without catastrophic loss and certainly, at the end of the year, they appeared somewhat surprised, if relieved, to be reporting profitable airline trading at least in the pure terms of premium versus claims,” says the report.

The report notes that with the industry's safety record, if there is a single major loss, there will be a price reaction, “but with all the capacity chasing airlines, it will be very short-lived.”

On the reinsurance side, average rates fell 7.5 percent on most sublines while rates on general aviation coverage was more in line with claims experience, says the report. Reinsures' appear headed to their best loss record in 25 years with virtually no major losses and no individual losses above $100 million.

Overall, for 2013, airlines can expect “very favorable renewal results” if claims remain exceptionally low. Insurers will seek to grow premium income and are beginning 2013 by offering greater capacity. The Lloyd's market may also reassert itself on risks it declined in 2012, as pressure builds to improve rate performance.

Aon says rates will shift to hard-market conditions when losses begin to significantly outstrip premium income. Given the current claim reality, “it will take a series of losses, or one very large loss in 2013, to create a change in current market trends.”