Lockton | Market Update

Aviation - International

Printable Version

The renewal rates of the major airlines are stable but where there has been significant growth in fleet value and/or passenger numbers there has been compensatory rate reductions. However, market capacity for second- and third-tier airlines has continued to contract.

This reduction in capacity has strengthened the upward pressure on rates, although some hull rates have been lowered in cases of significant fleet growth. The reduced insurance capacity has also been partly caused by increasing liability awards for non United States/European airlines which are now at levels far in excess of previous estimates.

In 2008, the market has had in excess of US$275 million of hull losses. Although there have been twelve hull losses, the British Airways loss of $124 million makes up 45 percent of the total. However, only one substantial liability reserve has been set which is the TACA loss of May 30. A reserve of $45 million has been advised for the loss which had five fatalities.

Other areas of aviation have seen continued softening with products/airports dropping by 5 to 10 percent on renewal. The general aviation market remains competitive due to significant over capacity.

Please contact your Lockton Representative for further information regarding any information contained in this market update.

William Simpson
Executive Director,
London, U.K.

Tel: 011 44.20.7933.2009
E-mail: wsimpson@uk.lockton.com