Rates in the airline insurance market continue to decline, despite rising exposures (average fleet values and passenger number forecasts), according to Aon’s Q3 2012 market update.
Aon reports that a high level of capacity continues to drive the soft market conditions, with healthy competition for attractive risks.
The low level of claims in 2011 and so far in 2012 is another key factor.
Including an estimate for minor losses, Aon says total claims for 2012 so far are 40 percent lower than the 1995-2011 average and 60 percent lower than the five year average.
By the numbers this puts the current overall loss figure so far this year at $426.6 million, compared to $466.7 million at the same point in 2011.
Last yearÃ¢â‚¬â„¢s loss figures at this point in the year were also at a historic low, meaning that overall claims figures so far for 2012 are extremely positive.”
It should be pointed out that the airline industry will always represent a considerable risk and that a single claim or string of claims can instantly change these statistics.”
Despite the soft market conditions, Aon says aviation underwriters remain highly selective of the risks they support.
Check out I.I.I. facts and stats on aviation.
Spare a thought for the tens of thousands of passengers (including I.I.I. president Dr. Robert Hartwig) stranded at airports across Europe as the continued eruption of a volcano beneath IcelandÃ¢â‚¬â„¢s Eyjafjallajokull glacier grounded thousands of flights for the second consecutive day. According to an Associated Press report, Eurocontrol, the European air traffic agency, said half a dozen European nations have closed their airspaces and 60 percent of European flights would not operate with delays continuing into Saturday. Only 11,000 of the 28,000 flights on an average day were expected to take place Friday in European airspace, while about 100 trans-Atlantic flights arrived of the 300 typically expected. As for insurance implications, in a Reuters report via InsuranceJournal.com, several European reinsurers noted that the airlines typically are not insuredÃ‚ against cancellations. In an article atÃ‚ BusinessWeek.comÃ‚ several insurersÃ‚ state thatÃ‚ business interruption policies for airlines and airports would be triggered only if there is physical damage to equipment. An online article at National Underwriter quotes Gordon Woo at Risk Management Solutions saying that payouts from IcelandÃ¢â‚¬â„¢s national natural catastrophe fund could follow if there is property damage. Aside from the significant travel disruption, the event highlights the point that even though many volcanoes with the potential to erupt are located where they can cause major damage and losses, the volcanic threat appears to attract little attention relative to other natural hazards. According to the 2009 Hazard and Risk Science Review from Aon Benfield and Partner Re research on the impacts of volcanic eruptions continues to grow. ItÃ¢â‚¬â„¢s worth noting that here in the United States volcanic eruption is a covered cause of loss under homeowners and business insurance policies. Check out State FarmÃ¢â‚¬â„¢s info on insurance and volcano damage on what is and isnÃ¢â‚¬â„¢t covered. Check out I.I.I. facts and stats on volcanoes.