Aon aviation deputy chairman says costs to airlines will continue to decrease despite spate of crashes in August
The cost of insurance for airlines is likely to continue to decrease despite the five hull losses that have made August the second most expensive month in terms of losses since January 2002, says insurance broker Aon’s deputy chairman of aviation Bill Smith.
Smith estimates that it would take “a very significant loss” between now and the end of the year [when most airlines renew their insurance policies] to move 2005’s overall loss profile outside the average for the past three years. “The insurance market is a reactive one and these losses won’t reverse the trend of premium and rate reductions, assuming there are no significant losses between now and the end of the year,” Smith says.
Despite the losses in August – of the Air France Airbus A340 in a runway overrun in Toronto, the Tuninter ATR 72 off the coast of Sicily, the Helios Airways Boeing 737-300 in Greece, the West Caribbean Airways Boeing MD-82 in Venezuela, and the latest, a TANS 737-200 in Peru – 2005 is within the average for the past three years, both in terms of incidents with a value of loss of over $50 million and with more than 50 fatalities, according to Aon.
The accidents have “served as a reason to remember that aircraft can crash. The air safety track record is consistently improving,” Smith says. Steven Doyle, aviation and aerospace global practice manager for Aon UK, adds: “Accidents are inevitable, but the safety measures implemented are likely to continue to improve safety across the industry.”