Losses amounted to $1.5 billion in 2013, while premium reached $1.4 billion, but Aon believes that the improving safety record of the airline industry is making the line an attractive one, which is helping to drive down rates in spite of the loss to premium ratio apparent in 2013.
Aon says that competition for 2014-2015 is likely to remain strong, but warned that there may yet be some headwinds for the sector.
Commenting on the report’s findings Mike Smith, Aon Risk Solution’s aviation and space practice leader says, “While it may seem like a contradiction that exposures are rising at the same time as insurance prices are falling, the introduction of the new generation aircraft a couple of years ago means that airlines of all sizes now have access to relatively modern fleet replacement options.”
“These aircraft are more expensive but represent a risk reduction because they are safer, and prices in the insurance market reflect this. At the same time, the aviation industry continues to improve technology and working practices, again driving down the price of risk.”
“As recent events have shown however, the aviation industry still represents a considerable risk, and Aon’s team of aviation experts work closely with underwriters around the world to ensure that clients have efficient and comprehensive risk management and insurance programmes that provide support in the event of an incident.”