The first half of 2013 has seen no change in the downward direction of insurance premiums in the airline market, according to the Q2 issue of Airline Insight, from Willis Group Holdings.
While premium levels have declined by 5 percent in the first half of the year, which equates to a $13 million erosion of overall market premium, the loss of the Asiana B777 aircraft reportedly will do little to alter the downward trend.
Rather, the growth in exposures continues to be in the mid-single digits and rating levels continue to decline, resulting in an overall insurance cost per passenger falling by 12 percent.
Losses for the first six months of the calendar year, excluding Asiana, are currently estimated to be $488 million, including anticipated attritional losses, Willis said.
“The low loss levels combined with abundant capacity and growth in exposures continues to provide perfect conditions for buyers and challenges for underwriters,” said Phil Smaje, CEO of Willis Aerospace. “In recent years, the airline insurance market has seen a number of new entrants bringing additional capacity. This, combined with a series of consecutive years of low frequency and low severity losses, has served to further increase competition and drive premium prices down. At this point, it is difficult to see how a single catastrophic event could reverse this prolonged period of rate softening.”
AIG holds the largest market share when it comes to airline insurance, but only two insurers, AIG and Allianz, hold more than 10 percent of the market, which speaks to the growing competition in the space. Starr International, ACE Ltd. and Berkshire Hathaway round out the top five insurers in the space. For a full listing of the top 10 aircraft insurers with financial details, click here.
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