Airline insurance market quiet on back of exceptionally low claims year

The latest industry report from insurance giant Aon suggests that the airline industry in again moving in a positive direction, despite the global uncertainty.

“We are a long way from the confidence of the middle to end of the last decade,” the report says, “but some airlines in some regions are at last seeing reasons to be cheerful.

“The issue is that the recovery is not universal at this stage. Some regions are performing better than others and even within the regions airlines based in some countries are doing well while others continue to flounder.

“The results from the insurance markets reflect this, with a great deal of diversity in pricing and the cost of insurance very closely aligned to the level of risk being presented.

“The airline book of business at this stage has not been impacted by the string of natural disasters that have punctuated 2011 and as a result will continue to represent something of a safe haven for underwriters, particularly given that claims have been exceptionally low. This could attract capacity and prices could begin to fall quickly as a result…

“We expect that the market will continue to be relatively flat into 2012…”

The thing that stands out at this point in the year is that 2011 has been an exceptionally low claims year. There have been 125 fatalities compared to an average of 350 for the same stage of the year. And major claims have only reached US$469 million compared to an average of $862 million over the last 16 years.

In Asia Pacific there have been “no fatalities covered by standard airline liability programmes” (which we guess allows for the loss of the crew of that Asiana freighter a while back). However Asia Pacific still accounts for 40 per cent of the claims so far in 2011, way up on the 25 per cent it usually represents.

The fleet value of the Asia Pacific airlines is booked at US$47.3 billion compared with $48.5 billion for North America and Europe at $74.7 billion.

Total pax carried in Asia Pacific were 217 million, compared with 176 million in North America and 324 million in Europe.