Premiums slump 10% for airline insurers, but still profitable in safest ever year

2012 saw airline insurance premiums tumble, with double digit reductions in premium levels and the decline accelerating towards year end, to Nov-2012's 16% year on year fall, according to major aviation insurer brokers, Willis Group.

The impact on total insurer revenues in the market has been to remove USD100 million in premiums from the global markets, "and the downward path looks set to continue".

Yet the insurers are still smiling amid this good news for (most) airlines.

First, airlines are still expanding their fleets, especially in Asia and secondly, aircraft losses have dropped steeply. So there are more aircraft to insure and less payouts on loss claims. The consequence is that many insurers are in the black, despite the slowdown.

With a neo-poetry not typically associated with insurers, Willis observes that "the airline insurance market is a catastrophe market with an absence of catastrophes and a new normal is developing".