As the latest Willis Aerospace Aviation Products Market Review reveals, the Aerospace market remains a buyers’ market in every sector.
Recent analysis of both the airline and aerospace markets points to continued excellent claims performance and an abundance of underwriting capacity looking to participate. These two driving factors in the market are combining to deliver reduced premiums for buyers despite increases in their exposures.
Our report found that conditions were more favourable for airline insurance buyers in 2011 with premium levels down 2.4%, compared with 1.3% for the aviation manufacturing insurance.
Total airline insurance premium in 2011 was USD1.9bn, against claims of USD1.1bn, giving rise to the first profitable year for the airline insurance sector in five years, according to our latest review of the sector. Total reported 2011 premiums for aviation manufacturing insurance were USD657.9m.
Record Levels of Safety
An analysis of insurance renewals across all aerospace sectors found a rate reduction of 1.8% compared with 2010.
This follows one of the safest years for the aviation industry in recent times. There were 30 total losses of western built aircraft in airline service in 2011, down from 46 in 2010 and the lowest number recorded. Passenger numbers increased 5% from 2010, yet overall passenger fatalities continued a steady ten year decline. There were 184 passenger fatalities last year, compared with 648 in 2010. The five-year average fatality rate per million passengers decreased to below 0.2.
The improvement in the industry’s safety record is attributed to the use of advanced safety avionics, plus improved pilot training standards.
Provided there is no significant change in the industry’s claims performance or in insurance capacity in the sector, it looks set to be a soft market for the foreseeable future. There will need to be a broader economic recovery for capacity to leave the niche aviation insurance market and this recovery will in turn result in good fortune for the aviation industry.