Aon Risk Solutions, the risk management business of Aon Corporation, has released its Aerospace Insurance Market Outlook 2014.
The report shows that insurance prices for the aerospace sector have continued their almost decade long decline, with the annual lead premium value of the market declining from nearly $970 million in 2005 to a little over $650 million in 2013.
While a decline in global annual lead premium of nearly a third over eight years might suggest a hardening of prices is just around the corner, in reality this seems unlikely unless there is a string of major incidents.
The last decade has seen continued improvements in the safety of the aviation industry, with measures in place to ensure that the lessons learnt in one incident are quickly disseminated around the globe. Technology has also enabled more rigorous testing of parts and massively improved diagnosis systems isolate issues before they become a problem.
With relatively few aerospace claims, the sector has also become very attractive to underwriters worldwide, with the resulting competition having a strong influence on price.
The report looks at each sector globally and by geography, enabling clients to get an insight into how their insurance programme is performing against peers.
Commenting on the report’s findings Mike Smith, Aon Risk Solution’s aviation & space practice leader says, “The aerospace sector encompasses airports and airport authorities, manufacturers of engines and aircraft, and service providers, making it exceptionally diverse. There have been consistent improvements in technology and working practices as well as risk models over the last decade, and this is reflected in the price of insurance.”
According to the Aon research, service providers saw the price of insurance fall by 16 percent on average and airports by around 7 percent. Reflecting the complexity of claims and the perceived level of risk, average prices in the manufacturing sector were flat, with increases tending to follow projected turnover growth at more than 30 percent of operations worldwide.
Smith concludes, “We believe in ensuring that our clients understand what is happening in the aerospace sector and this report underscores Aon’s long term commitment to transparency.”
Aon, aerospace, insurance, premiums, risk management