Airline Loss Reduction Measures Key

The airline insurance sector appears to have incurred more claims than premium once again in 2010, according to Aon’s January 2011 Airline Insurance Market News.

But the majority of airlines continue to take steps to reduce losses, despite continued upward movement in average claims values.

Aon’s preliminary estimates suggest that total claims in 2010 breached the $2 billion level for the third time in four years.

The market incurred an estimated $2.1 billion in total losses in 2010, while lead premium for 2010 looks to be just above $1.9 billion. This means a significant shortfall for underwriters even before reinsurance and fixed costs.

But while 2010 saw significant claims, the data is not universally negative.

For example, Aon notes that some 601 airline-related fatalities occurred in 2010, compared to the long term average of 621.

While this could simply be a statistical anomaly, the fact that fatality rates have been below the average in all of the last five years does at least suggest an improvement.†

Aon hints at a shift to fewer but more expensive claims, noting that between 1995 and 2009 there were 67 claims on average that met the criteria for inclusion in  its statistical analysis. Three of the last five years has seen the number of losses fall below this number, however.

Aon concludes:

Statistics can be used to justify any position that anyone chooses to take, and while the claims value average figures may continue to point upwards, the majority of airlines continue to take steps to reduce losses and ultimately insurance claims.†

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