Aviation Insurance Industry Takes Third Straight Loss
20 Jan 2011
Doug Nancarrow
Aon Aviation numbers indicate that the airline insurance market paid out more than it took in in premiums last year.
Claims for 2010 look like totaling US$2.1 billion, running over the top of estimated premiums of $1.9 billion.
Despite this third consecutive loss year, underwriters appear willing to continue to support the industry because of their need to spread risk.
Aon says that the final loss figure for 2010, excluding minor losses, is US$1.55 billion, compared to US$1.79 billion in 2009.
Adding an estimate for minor losses, we get the $2.10 billion highlighted above; and that compares to $2.34 billion in 2009.
Aon estimates suggest that "claims for last year breached the US$2 billion level for the third time in four years. This includes an estimate for minor claims such as minor hull damage and slips and falls, but even without this claims have been above the long term average in three of the last five years.
"While it is very difficult to claim that this represents the new average level for the sector given that the level of claims in a year can fluctuate significantly, some are suggesting that the underlying conditions in the aviation sector have shifted somewhat.
Also, it looks like the trend is towards fewer but bigger claims.
"Between 1995 and 2009 there were 67 claims on average that meet the criteria for inclusion in the statistics that Aon uses in its analysis.
"Three of the last five years has seen the number of losses fall below this number.
"A potentially more concrete statistic comes from the fatality figures.
"In 2010, there were 601 airline related fatalities, compared to the long term average of 621.
"While this could simply be a statistical anomaly, the fact that fatality rates have been below the average in all of the last five years does at least suggest an improvement."
Aon reckons that these numbers mean that insurance companies will be more focused on individual airlines rather than the industry as a whole.
"It is fundamentally important that airlines keep the insurance markets informed about the measures that are being taken to reduce losses and improve the claims position."
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