Aviation Insight

Aon Airline Insurance Market Outlook 2009

After five years of competitive market conditions, airlines around the world saw their lead hull and liability premium increase on average by 7% in 2008, according to Aon's Airline Insurance Market Outlook 2009. Following the 11% decline in 2007, this means that the market swung by 18% in the last two years and the tougher conditions are likely to continue in 2009.

Total lead hull and liability premium rose from US$1.51bn in 2007 to US$1.60bn in 2008, while insurers are estimated to have paid out US$1.45bn in claims. Many underwriters are likely to have made a loss in 2008 however, as a result of a variety of factors including fixed and reinsurance costs, and will be under further pressure in 2009 as capital providers scrutinise their current level of investment.

Please follow this link to read Aon's Airline Insurance Market Outlook 2009.

 

 

If you would like a member of our team to contact you about the 2009 Airline Outlook report, please contact aviation@aon.com.

 

 

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Airline Insurance Market Indicators, Autumn 2008

After the longest soft market period in living memory, the airline insurance market is beginning to harden, shows Aon's Airline Insurance Market Indicators, Autumn 2008.

With the November-December renewal season approaching, the report examines activity during the first seven months, when only around 30% of airline renewals enjoyed a reduction in the their lead hull and liability premium price, compared to over 70% during the same period last year.

The report looks in depth at the airline insurance market between January and July 2008, examining the changing position by fleet value, region and operation type, as well as looking at the losses that have occurred so far this year by region.

Follow this link to read Aon's Airline Insurance Market Indicators, Autumn 2008.

Airline Insurance Market Review, 2007

The high level of hull and liability claims, at US$1.7bn, coupled with the lowest amount of lead hull and liability premium since 2000, US$1.5bn, means that the airline insurance market was broadly unprofitable in 2007. The negotiating process is likely to be tougher in 2008 as a result, Aon’s Airline Insurance Market Review of 2007 suggests.

The review’s findings include:

• Total recorded lead hull and liability premium for 2007 was US$1.5bn, a reduction of -30% since 2005
• Total incurred claims, including hull, liability and an estimate for attritional losses, amounted to US$1.7bn
• North American fleet values, at US$192bn, fell below those of Europe and Asia, both at US$193bn, for the first time in 2007. North American passenger numbers, however, were still higher than the other two major aviation regions
• The proportion of passengers travelling with flag carriers fell from 66% in 2005 to 48% in 2007

To read the fully searchable, web optimised version, please follow this link.

Airline Insurance Market Review, Pre-Renewal Season 2007

Aon's Airline Insurance Market Review, Pre-Renewal Season 2007 brings together all of the information and analysis that Aon's airline division has collected during the first three quarters of the year.

While there has been a decline in the impact of the renewal season over the last couple of years, we expect around 60% of the total annual lead hull and liability premium to renew during the last quarter. This review is intended to ensure that the airline industry, the insurance market, and other interested parties have a clear understanding of what the current position is and how it may evolve into 2008.

The review breaks down the airline industry by region, fleet value and sector, ensuring clarity around how the insurance market is approaching different types of business. It also provides overviews of both the market and the industry so far this year and discusses some of the wider offering that Aon has for its clients.

Click here to read Aon's Airline Insurance Market Review, Pre-Renewal Season 2007

Airline Insurance Market Review, 2006

Aon’s Airline Insurance Market Review of 2006 highlights the significant acceleration in average lead premium reductions during the final quarter of 2006. Bringing together all of the data for 2006, the Airline Insurance Market Review examines the market from a regional, sector and fleet value perspective to ensure that the market is as transparent as possible for everyone involved.

The key findings of the review are:

• The low-cost sector continues to thrive, with an average -6% reduction in lead hull and liability premium despite fleet value growth of +15% and carrying +22% more passengers
• The market continues to reward economies of scale, with operations with a fleet value of more than US$5bn receiving an average reduction of -22%
• Competition has continued to put pressure on the Excess Third Party Liability market, which has delivered US$6bn of profit to participants since 2001 despite there being no claims during that period

The merger and consolidation activity witnessed in 2005 abated slightly in 2006, although it has been a significant factor in the -7% premium erosion in the market year–to–date. There continues to be an expectation in the airline industry that there will be more mergers announced as the year progresses.

Click here to read the review.

Airline Insurance Market Review, Pre-Renewal Season 2006

This review covers the first eight months of 2006, providing a view of the airline insurance market as it gears up to the busy renewal season between October and December. While market activity is concentrated on the final quarter, the first eight months of the year provide a number of useful indicators about market direction and developments.

So far, 2006 has shown a continuation of the impressive industry loss results witnessed over the last couple of years, with the number of significant incidents falling well below the five–year average. The relatively high level of fatalities in 2005 caused concern and has unfortunately continued so far this year as a result of significant incidents in Eastern Europe. Aviation is a catastrophe business, and as shown in August 2005, no matter how safe working practices and technology make the industry, losses are inevitable and the need for sufficient insurance coverage remains vital to the smooth running of the industry.

Click here to read the review.

Airline Insurance Market Review, 2005

Despite the spate of major incidents later on in the year, 2005 was once again impressive in terms of safety results for the aviation industry. This is now the third year in a row that has been below the five-year loss average, suggesting that the safety measures put in place over the last decade are delivering significant improvements.

Naturally, this comes with a significant caveat: aviation insurance is a catastrophe business and no matter how many safety measures are put in place, incidents are always a possibility, as proven repeatedly in the last third of the year.

The insurance cost does not relate to the human cost, equally, and unfortunately the number of fatalities in 2005 was the highest since 2000 and the second highest since 1996 (excluding 9/11). As a result of the high levels of fatalities, a number of governments are looking at ways of banning the use of older aircraft and creating blacklists of operators that cannot use sovereign airspace.

The direct implications of the losses for the insurance market were minimal but the string of incidents added to a general expectation that the level of premium reductions would decline as the year drew to a close.

Click here to read the review.