Aviation Losses Drive Market Hardening

The high value of losses and fatalities in the aviation sector has driven the airline insurance market into a far harder position so far this year, according to Aon’s Airline Insurance Market Indicators 2009/10 report.

Lead hull and liability premium rose on average by nearly 20 percent between January and July 2009, and there is little sign that the position will improve during the final quarter when the majority of airline premium is placed.

Despite the market hardening, as a result of the high level of claims, 2009 is likely to be the third consecutive year with little or no profit for underwriters. This means there will be significant pressure to increase prices further, Aon notes. It estimates that the cost of premium is likely to rise by at least a fifth for the rest of the year and into 2010.  From a claims point of view  2009 is set to be the most expensive year in recent airline history due to the very high number of fatalities and value of losses. Aon projects that total claims for the year could reach as high as $2.2 billion, even if there are only an average amount of claims for the rest of the year. Check out I.I.I. aviation facts and stats.

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