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Market Update
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International - Aviation
Printable Version
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It looks inevitable that 2009 will be the third consecutive loss-generating year in
the airline insurance industry. Worldwide, major losses in 2009 currently total an
estimated $1.4 billion, which have stemmed from a number of major incidents.
Major Losses
| Date of Incident |
Airline |
Aircraft |
| January 15, 2009 |
US Airways |
A320 |
| February 12, 2009 |
Colgan Air |
Bombardier Q400 |
| June 1, 2009 |
Air France |
A330 |
| June 30, 2009 |
Yemania Airways |
A310 |
| July 15, 2009 |
Caspian Airlines |
Tupolev 154M |
| August 4, 2009 |
Bangkok Airlines |
ATR-92 |
If the attritional losses are prorated into the year, the losses to date are an
estimated $1.7 billion. These loss levels have prompted increased hull and liability
premiums in the global marketplace.
With all July’s programs placed, the average increase in premium for airlines seen
since January is approximately 15 percent.
Most airline insurance contracts are renewed in the second half of the year, and
buyers are nervous about the prospect of higher premiums. We still have slightly
more than 50 percent of the world’s airlines to renew, but at this current average
increase in the global airline premiums for the year should reach $1.725 billion.
As a direct result of the global recession, we have seen passenger numbers drop by an average of 10 percent; however, fleet values
have remained relatively unchanged.
Other lines:
- General Aviation—The market remains extremely competitive with underwriters competing fiercely for accounts.
Consequently we have seen a reduction within both the hull and liability rates.
- Airports (Including Air Traffic Control)—With passenger numbers reduced by an average of 10 percent and aircraft
movements slightly down, airport lead premium is seeing average reductions of 2.5 percent to 5 percent.
- Manufacturers (Including Maintenance, Repair and Overhaul)—A slight variance has developed in 2009 with most
manufacturers’ renewals remaining static; however, the MRO operations have seen an average increase in premium of
approximately 7.5 percent.
Certainly it is an interesting time to be in the aviation insurance business. According to the Lloyd’s of London Web site, “June 2009
alone was the most expensive month ever for aviation claims under standard hull and liability classes, excluding September 2001.”
In its interim results report, Lloyd’s aviation insurer Amlin notes that the class has not been “attractive to us” for an extended
period. But Amlin also confirms that the recent heavy losses are providing impetus for “much needed rate increases” that it
anticipates will come through this year.
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Please contact your Lockton Representative for further information regarding any information contained in this
market update.
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