Aviation Losses Outweigh Premiums in 2009

Despite a relatively safe year for the airline industry, aviation insurers paid out an estimated $2.3 billion in total losses in 2009 – making  it the second most costly year on record. According to Aon’s January 2010 Airline Insurance Market News, the total lead hull and liability premium for 2009 was around $1.9 billion, up from $1.6 billion in 2008, but still far short of the $2.3 billion in total claims. This means 2009 is the third consecutive loss making year for aviation underwriters. However, Aon cautions readers to look beneath the headlines for the real story. With average lead hull and liability price increases of around 20 percent during 2009, the airline book of business began to look attractive again despite the high level of claims, it notes. This means that prices are likely to continue to rise in 2010, but, unless there is a major loss, the increases should slow somewhat. “Looking ahead is difficult, but the direction of the market is likely to be set by the level of claims in the early stages of 2010. If claims are average, then the level of competition in the airline insurance market should keep price increases at a manageable level. If there are major losses, capacity could hold back and the price of airline insurance could continue rising at the current rate or higher,† Aon adds. Check out I.I.I. aviation facts and stats.

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