Aon Airline Insurance Market Outlook 2016

Claims higher than income for the third year in a row in airline insurance market

After a string of major claims in 2014, the price of airline insurance rose. The amount of capacity available in the market meant that this was not sustainable however and prices began to fall again in 2015.

The report, offers insight on the most pressing thematic issues of the day: loss causation, cyber threats and the risk drones pose to the aviation industry. It also examines the airline industry by region, fleet size and sector has a number of key findings for the airline industry including:

  • Total premium of USD1.25 billion was outweighed by total claims of USD1.6 billion, the third consecutive year where claims have been higher than premium
  • There is the potential for a two tier market developing, with larger airlines having a less positive reception from the insurance markets than smaller airlines because of evolving risk profiles
  • Highlighting the industry’s continued improvement safety, in 2015, the five year average loss value was USD0.8 billion, in 2005 it was USD1.3 billion
  • Average aircraft value in the Middle East is now nearly USD85 million, the highest of any region

In addition to this the document compares current conditions with 10 years ago and finds some stark changes. Over the last ten years in the Middle East, passenger numbers and fleet values have more than doubled while premium have stayed virtually static. At the same time, in North America where the industry is more mature, fleet values and passenger numbers have stayed level while premium has halved. Mike Smith, Aviation and Space Business Leader at Aon Risk Solutions, said: "The Airline Insurance Market Outlook 2016 has shown some fascinating changes in the market and the industry. Overall the level of claims continues to fall, but the price of insurance is falling more quickly because there is a lot of capacity available. The market will reach a point where sustained price reductions are no longer viable however, and we would recommend that our clients in the airline industry work closely with us to help underwriters understand the measures that are being put in place to reduce risk."

Click here to download the report

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