Hurricanes’ slow decline of aviation insurance rates

The aviation insurance market’s renewal season October to December will see a slow down of the recent decline in rates as a result of the hurricanes that struck the US, however recent aviation losses are not expected to effect rates significantly, according to a report by Aon Corp.
Aviation hull losses for the first quarter of 2005 totaled US$125 million while liability losses reached US$2.7 million compared to a combined figure of US$264 million hull and liability losses for the same period in 2004, according to Aon.
Total year to date aviation losses for 2005 have however seen a dramatic increase to US$331 million due to six aviation catastrophes – including Air France Airbus A340 crash at Toronto’s Pearson International Airport. The liability losses for these air incidents have yet to be quantified although the losses are expected to minimally impact aviation insurance rates.
For the year to date, rates for aviation hull insurance have, year to date, fallen by an average of 15% and liability rates have fallen by an average of 13%. This decline will, Aon reports, likely be slowed by recent hurricanes.
Although the hurricanes did not directly impact the aviation insurance market to a large degree, the report does note that, “the internal competition for capital within underwriting unitswill undoubtedly bring pressure onto the aviation community to halt the slide in premium and provide comparable returns to those being achieved in other markets.”