November 11, 2013 by Canadian Underwriter
Downward pressure on premiums in the airline insurance market is expected to increase, benefiting insurance buyers renewing terms in the last quarter of the year, according to the latest update report from Willis.
That’s due to “abundant capacity, high levels of competition, limited loss activity and an aggressive broking community,” Willis says in its latest Airline Insight report.
The last six weeks of this year will also have a concentration of renewal activity because of consolidation in the airline industry, and the migration of renewal dates to alter in the year, the firm added.
“Insurers’ desire to participate on the world’s blue chip airlines will continue to keep competition in this area high,” Phil Smaje, CEO of Willis Aerospace commented in a statement.
“The consolidation that has taken place in recent years has created a smaller number of very large programmes of significant interest to the market.”
A good safety record, despite some losses, is also expected to have a downward impact on premiums, Willis notes.
Total hull losses in the airline industry to October totaled around $615 million, while liability losses in the same period were about $226 million. Overall insurance losses in the airline sector in 2013 will be around $1.2 billion, including a pro-rata estimate of “attritional losses,” according to Willis.
“Despite many believing the market couldn’t go any lower than it has in recent years, the low loss levels, plentiful capacity and growth in exposures will continue to provide ideal conditions for buyers and challenges for underwriters,” Smaje added.