$2.3bn of claims in 2009 lead to higher premiums
Average lead hull and liability premium in the airline insurance market rose by 20% during 2009, taking total lead hull and liability to US$1.9bn, according to Aon's Airline Insurance Market Outlook 2010.
Total estimated claims for the year however, totalled US$2.3bn, meaning that airline underwriters are likely to have suffered a third consecutive year of losses overall, the broker said.
It added that hull and liability premium prices are likely to continue to rise in 2010, although the rate of increase could slow as a result of the high level of capacity that is still available.
According to the report, airlines forecast passenger numbers to fall by 2% on average as a result of the global economic difficulties, and while average fleet values are forecast to grow by 3% during the course of 2009/10 insurance policies, this is well down on the 9% growth forecast in 2007.
The report's key findings include:
- 2009 was one of the most expensive years in the recent history of the aviation industry, with US$2.3bn of claims (including an estimate for minor losses). This compares to an average of US$1.8bn between 1998 and 2008 (including 9/11);
- Only 58 major losses globally, compared a long term average of 68;
- Total fatalities for the year were 423, compared to an average of 635;
- Lead hull and liability premium grew by the highest rate in the Middle East, which also forecast the highest levels of passenger and fleet growth, both 12%;
- Operations in North America forecast reductions in both fleet value, -3%, and passenger numbers, -5%. European operations forecast fleet increases of 2% and passenger reductions of 1%.
"The airline industry endured a very difficult year in 2009 from an insurance point of view, with the high level of claims adding to an already challenging position as a result of rising insurance costs," says Magnus Allan, an aviation analyst in Aon Global Aviation Group.
"The signs are that the position should improve in 2010 as a result of exposure reductions and the slightly improved economic conditions meaning that there is less pressure on global insurers. Prices in the airline insurance market are still likely to increase as a result of the 2009 losses, but the rate of increase should slow unless there are catastrophic losses."