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Aviation all-risk claims hit $1.6bn in 2018

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Claims absorbed by airline aviation all-risk insurance market outstripped the premium pot for the class of business by 23 percent in 2018, according to an estimate by JLT.

In its fourth-quarter ‘Plane Talking’ newsletter, the broker said all-risk claims hit around $1.6bn for the year, compared to premium income of $1.3bn for the market segment.

The figures make 2018 the sixth consecutive year where airline claims exceeded premiums, increasing the likelihood of commercial aviation insurers reporting an underwriting loss.

Analysing fourth-quarter aviation renewals, the broker said pressure on rates had increased as underwriters pushed back in response to significant claims and a contraction in market capacity.

“Underwriters have been quick to underline their aspirations for further rate improvements in 2019 as they continue in their pursuit of sustainable pricing,” the broker said.

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In addition to the withdrawal of multiple carriers from the business over the course of the year, the market has witnessed insurer consolidation.

High-profile carriers including Hiscox, WR Berkley, Aspen, Allied World Europe, MS Amlin and Brit have withdrawn aviation capacity throughout 2018.

Lead markets Axa and XL Catlin have also combined forces following the French insurer’s acquisition of XL in March.

On 1 November AIG merged its aerospace team with Talbot’s aviation operation.

JLT Specialty aerospace global chairman Nigel Weyman said underwriting job losses across the market had helped strengthen resolve over pricing.

“This threat has served to give the ‘survivors’ added determination to strive for higher rates with an eye on survival,” the executive mentioned in the report.

Weyman said JLT had experienced the early stages of pricing change back in 2016, and that this had developed with further hardening throughout 2017.

Rate movement in the first half of 2018 reflected a trend of modest increases at the end of 2017, he said.

“However, in the last quarter of 2018, the combined impact of reduced capacity and job losses helped to shift leverage in favour of underwriters and this led to acceleration in the rate increases demanded,” he added.

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Looking ahead to 2019, JLT predicted that renewals over the 12 months would mirror the final quarter of 2018. Accounts renewing early in the year could receive some “catch-up” increases after relatively conservative treatment at the beginning of 2018, the broker said.

JLT’s report also highlighted a number of senior hires across the aviation (re)insurance markets, including the appointment of Stephanie Deml as head of aviation direct at Munich Re.

Antoine Lamy has joined Elseco to support the expansion of the MGA’s global aviation portfolio and Matt Langmead has moved to Travelers from Brit.

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