Aerospace insurance “levels out” on renewals

The aerospace insurance market is showing signs of stabilising as the first renewals for 2009 take effect. According to Aon’s first Aerospace Insurance Market News of the year, lead premiums decreased on half of renewals agreed so far against 70% at the same point last year “suggesting that the market is close to levelling out”. The report includes renewals for half of the total expected in the first quarter of 2009. “Given the harder position recorded in November and December in 2008 and the overall economic position, it seems likely that the aerospace insurance market will be harder than 2008 in the short to medium term,” Aon said, adding that: “The current position could harden considerably if there were a major loss or string of losses, particularly in the current climate.” Aon said the shift is being driven by two interlinked factors, the global economic challenges faced by all industries and the situation in the aviation insurance markets as a whole. The soft market conditions in the aviation, or specifically airline, insurance markets in 2006 and 2007 have meant that there have been limited or even no profits for underwriters over the last two years in the sector, despite the harder markets in 2008, particularly when fixed or reinsurance costs are taken into account,” Aon said, adding that aerospace underwriters are likely to be under significant pressure to generate profits for the industry.