Claims exceeded premiums in 2013, broker report finds
Average airline hull and liability rates fell by 10% in 2013/14, according to broking group Aon.
This followed an 11% drop in rates for 2012/13.
In a new report on the airline insurance market, Aon said that 80% of airlines enjoyed a reduction in their hull and liability premium – the highest proportion of reductions since 2001.
The broker attributed the rate declines to “strong” underwriting competition, a relatively small number of claims and a record low number of deaths.
Aon also noted, however, that while the number of claims was small in 2013, the $1.5bn paid out by insurers exceeded the $1.4bn premium they brought in. Aon said this was “the first time that has happened since 2010”.
The report said: “The difference between premium and claims was minimal, and the fact that it was driven by a relatively low number of large losses means that not all underwriters will have a negative result on their books. This means that while there is unlikely to be an instant hardening, there is likely to be increased scrutiny.”
Aon also pointed out that although rates are falling, exposures are rising. The broker said average fleet values grew by 9% and forecast passenger numbers grew by 7%.
It added that the missing Malaysia Airlines flight MH370 carried more passengers than the total number of global airline fatalities in 2013, but that it is unlikely that the incident will cause a shift in market conditions.