Printed from BusinessInsurance.com

Aviation market continues favorable for buyers: Willis

Posted On: Nov. 9, 2011 12:00 AM CST

LONDON—The aviation market is favorable for buyers, but that will inevitably change, says Willis Groups Holdings' aerospace division in a report.

According to the broker's “Airline Insurance Market Overview," which is dated October but was distributed Wednesday, “The industry continues to project a positive picture despite continued global economic challenges.”

The report says average fleet value exposures have grown by 8% so far this year, and passenger numbers have grown by 16%, while premium levels are down by 1%.

In addition, “There continues to be abundant capacity, and loss levels are at a six-year low,” says the report. “This backdrop would suggest that there is little to halt the slide in premium levels. The market has progressed the level of rating discount provided for exposure growth to the point where it is impacting total premium volumes.”

“Market conditions had changed little over the past 24 months,” the report says, although equilibrium has “never been maintained in the market for long, and therefore at some point one of the major market drivers had to give to create a change of direction.”

Commenting on the report, Steve Doyle, Willis Aerospace business development and sales director, said in a statement, “The increased desire for return on capital is prompting” the greater deployment of capacity, “resulting in heightened market competition.”

“The niche and nature of aviation insurance means that it continues to offer diversification to insurers’ overall portfolios and therefore market withdrawals are unlikely to come in response to declining results in the airline sector of the market,” Mr. Doyle said.

The report is available at marketing.willis.com.

Willis announced in September that aviation losses for the first seven months of 2011 fell to a five-year low, despite three losses in July.