The fall in aviation insurance premiums is set to slow in the upcoming renewal season, according to a new report from Aon.
The report said that the aviation sector have seen limited direct damage from the devastating hurricane season in the southern states of America, but the knock-on effect is that underwriters will try to end this year's run of premium reductions, which have averaged at 7% for liability and hull insurance combined.
Instead the report said, there is likely to be a decline in premium reductions, with certain aviation insurers already claiming that their aviation reinsurance costs have increased.
Year-to-date hull and liability premiums stand at over $530m, a reduction of 15% for hull and 13% for liability rates, in comparison to nearly $575m for January to September 2004. With the bulk of renewals taking place in the last quarter plus increased fleet values and thus exposure, premium volumes are expected to edge closer to $2bn.
The expected reduction of over 15%, from $2.4bn in 2004, is partly the result of consolidation between airlines such as Sterling Airways and Maersk Air, US Airways and America West Airlines, Swiss and Lufthansa, as well as changes such as ABX Air being included in the DHL-led cargo airline pool.
Hull losses for the first eight months of 2005 totalled $430.5m, decreasing 14% from $503m for August 2004 which went on to become one of the industry's safest years. This strong safety record meant that there is little evidence that the five major airline crashes in August will have a significant impact on renewal premiums. While the safety record has not had an impact, however, the hurricane season has.
