LONDON, 19 March 2009 After five years of competitive market conditions, airlines around the world saw their lead hull and liability premium increase on average by 7% in 2008, according to Aon's Airline Insurance Market Outlook 2009. Following the 11% decline in 2007, this means that the market swung by 18% in the last two years and the tougher conditions are likely to continue in 2009.

Total lead hull and liability premium rose from US$1.51bn in 2007 to US$1.60bn in 2008, while insurers are estimated to have paid out US$1.45bn in claims. Many underwriters are likely to have made a loss in 2008 however, as a result of a variety of factors including fixed and reinsurance costs, and will be under further pressure in 2009 as capital providers scrutinise their current level of investment.

The report brings together the data for the whole of 2008, offering insights into how the market will evolve in 2009.

Among the key findings are:
· In 2008, 63% of airlines received an increase in their lead hull and liability premium, compared to 28% in 2007;
· Fatalities related to airline incidents in 2008 were at their lowest since 2004 and the third lowest since 1995;
· Total hull and liability claims were fractionally below the long term average and around 25% below the 2007 total;
· Average fleet values in Asia became the largest in the world in 2008, while North American fleet values shrunk.

“The market appears to have passed the low ebb it reached in 2007 when total lead hull and liability premium fell to around US$1.5bn, down from over US$2bn two years before. Underwriters are now driving to sustain the premium increases in order to ensure profitability,” says Simon Knechtli, Aon Global UK Aviation & Aerospace Practice Leader. “The challenge for airlines in 2009 is going to be ensuring efficient and cost effective insurance and risk management programmes against a backdrop of falling consumer confidence and revenues.”

To read the full report, please follow this link http://aviationinsight.typepad.com/aviation_insight/

Ends

 
For more information contact:

Alexandra Lewis
+44 (0)20 7882 0541
Alexandra.lewis@aon.co.uk
http://aon.mediaroom.com

Notes to editors: All figures detailed in the report include all known information at time of production on the lead London terms of airlines renewing with fleet values in excess of US$150million. Loss information covers western built equipment only and the data only includes losses with a total incurred value of over US$1million.

About Aon
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 37,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007 and 2008, and Aon 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 www.aon.com

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