Fifth year of falling insurance premium pricing in aerospace sector: Aon

The aerospace sector is in its fifth consecutive year of falling insurance premium pricing, with the trend expected to continue based on preliminary data for the 2011-2012 renewals, according to Aon Risk Solutions.
“While the long term declines in premium levels would suggest that insurers will begin raising premium at some point in order to maintain profitability, there are several reasons why this may not happen in the short term,” said Danny Green, head of Aon Risk Solutions’ aerospace team in London.
“Over capacity attracted by the sector’s relatively good loss history, as well as reductions in exposure, or the actual volume of risks being insured, driven by the global economic conditions have meant that there is lower exposure to be covered.
The long-term improvements in safety that are being made by organizations across the sector are also a major factor. As a result, there will continue to be pressure on insurance prices.”
The aerospace sector weathered the global financial crisis relatively well, but confidence is still in short supply, with passenger and revenue forecasts still relatively conservative, according to Aon’s report, Aon Aerospace Insurance Market Outlook, 2011.
“The ongoing soft market is being driven by a variety of factors, with changing insurance strategies, falling exposure as a result of the global economic downturn and the industry’s evolving risk profile, all playing a role,” the report says.