Source: ATW Daily News Author: 02/27/2008
Subject Concerned: Opinion Airlines
Airlines likely will face higher insurance renewals this year compared to 2007, according to Aon Corp.'s "Airline Industry Market Review." The culprit is higher hull and liability claims last year even as premiums were falling. Aon stated that insurers incurred US$1.72 billion in claims for hull, liability and estimated "attritional losses" in 2007 while taking in just US$1.51 billion in premiums, down 11% compared to 2006 and the lowest figure since 2000. Excluding attritional losses, the total loss for 2007 was US$1.23 billion, "well above the US$0.83 billion reported at the end of 2006," according to Aon. That means that 2007 was the third highest value loss year since 1996, "with only 2000 and 1999 witnessing more losses (excluding 9/11)."
"After four years of soft markets, it looks like 2007 may well have seen the cost of airline insurance reach something of an equilibrium," Aviation & Aerospace Group Practice Leader Doug Peterson said. "Despite the relatively high number of hull losses in 2007, there were fewer fatalities compared to the average over the last decade. Capacity continues to be high, but it seems unlikely that providers will continue to offer the high level of reductions witnessed over the last couple of years. As a result, 2008 looks set to be a fascinating year in the airline insurance markets."