LONDON, 24 September 2008 - The airline insurance market is hardening for the first time in five years, with a 5% increase in lead hull and liability premium between January and July in 2008. The vertical price gap between lead and following markets continues to close and underwriters have been taking a tough stance to renewals so far this year, a position that will continue for the rest of the year and probably into 2009.

The hardening is being driven by the loss that underwriters suffered in 2007 as a result of the relatively high level of incidents coupled with the soft market conditions. Lead hull and liability premium prices fell on average by 11% in 2007 and 17% in 2006, so underwriters are increasing prices in 2008 to recoup their losses.

Aon's Airline Insurance Market Indicators Autumn 2008 brings together the data for the first seven months of 2008 and explains how underwriter's attempts to boost their revenues will impact renewals during the final quarter when the majority of airline programmes are placed. The document also features an enhanced losses section that looks at incidents between January and August broken down by region.

The key findings are:

• Between January and July 2008, only 34% of airline renewals received reductions in their lead hull and liability premium. During the same period last year, 72% of renewals received reductions.
• Total lead hull and liability premium for the year is expected to be between US$1.49bn and US$1.6bn. This compares to US$1.51bn in 2007.
• Despite the hardening insurance markets, loss rates in the industry are better than average, although a single major loss could change this position.

"As we suggested at the beginning of the year, the airline insurance market has become a much tougher place for airlines in 2008," observes Doug Peterson, Aon Aviation & Aerospace Practice Leader. "The challenge for the markets is that they are hardening at a point when the aviation industry as a whole faces a number of difficult economic challenges such as high fuel prices and wavering consumer confidence. We expect the final quarter of 2008 to present some interesting dynamics."

Download the report at http://aviationinsight.typepad.com/aviation_insight/.

Ends

For more information contact:
Alexandra Lewis
020 7882 0541
Alexandra.lewis@aon.co.uk
http://aon.mediaroom.com

About Aon
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's best broker by Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

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