Airline insurance industry’s loss profile is shifting: Aon

Carriers in the airline insurance market paid out approximately $2.1 billion in claims in 2010, compared to an average of $1.5 billion between 1998 and 2009, Aon reported.
In its Airline Insurance Market Outlook 2011, Aon noted that the 2010 claims cost marks a decrease from 2009’s $2.3 billion of claims.
“It appears as though the loss profile of the industry is evolving, given that the last two years have seen a very high level of claims, but the actual number of incidents is well below the long-term average,” an Aon release says.
There were 601 fatalities in 2010 compared to a long-term average of 621.
Insurers paid out more in claims in 2010 than they took in premiums, although the high level of airline insurance market capacity meant that there was enough competition to suppress their premium income aspirations to only 4%, whereas premium rose at least 20% in 2009, the release added.
One key factor in determining the cost of an airline’s insurance premium, other than determining the values of aircraft fleet, is the number of passengers they expect to carry. After an overall decline in passenger numbers forecast for 2009-10 renewals, 2010-11 placements showed a recovery in every region of the world, with a projected 10% global uptick in passenger numbers (North American fleets forecast a 7% increase).