Aon's aerospace insurance market review has revealed that the aerospace insurance market has softened in 2007, responding to the high level of capacity and low level of losses in the aviation industry over the last five years.
The findings of the review showed that the average lead premium reduction for 2007 was 6%, compared to a 3% growth in 2006. Meanwhile the Asian operations received the best average reduction at 8%, closely followed by Europe and the Americas with 7% and 6% reductions, respectively.
Service providers had the largest reductions in 2007, with lead premium falling by 11% on an average compared to a 4% increase in 2006. Airport lead premium fell by 8% on average in 2007 compared to a 2% increase in 2006. The manufacturers sector fell by 3%, compared to a 5% average growth in 2006.
The review found that the number and value of claims have been limited in the aviation sector generally, although the high level of airline hull losses in 2007 may translate into an increased number of claims on the aerospace market as accident investigators assign responsibility.
Doug Peterson, practice leader at Aon Aviation & Aerospace Group, said: The aerospace insurance market saw modest reductions in the price of lead premium throughout 2007, but there were differences in the way that the different sectors within the market were treated.
This suggests that the markets are pricing insurance programs according to their actual level of risk, rather than simply applying an industry average year-on-year price change.