The final quarter renewal season is now in full swing. There have not actually been many renewals thus far but there has been much activity, as many programmes are seeking early negotiation in a bid to capitalize on the current soft market conditions.

The airline insurance market will continue to be driven by the relativity between the levels of capacity and claims, both of which are currently creating a market situation that is very favorable for buyers.

The industry continues to project a positive picture despite continued global economic challenges. The year so far has seen average fleet value exposures grow by 8%, and passenger numbers have grown by 16%, while premium levels are down by 1%. There continues to be abundant capacity, and loss levels are at a 6 year low. This backdrop would suggest that there is little to halt the slide in premium levels.

Market conditions had changed little over the past 24 months with premium volumes being maintained. Equilibrium has however never been maintained in the market for long.

With claims levels being so benign it was clear that the level of capacity was going to place increasing downward pressure on premiums volumes so despite the increasing exposures this has started to translate into reducing premiums.

Source: Willis (to be continued)