Airline insurance is a shrinking market as air travel heads to its safest year on record
Improved technology has decreased the number of plan crashes drastically over the years, and there’s one industry stakeholder that’s disappointed to see that number decline.
Airline insurance claims for plane accidents will drop below $1 billion this year for the first time since 1991 as passenger fatalities and aircraft destroyed hit record lows, advisory firm Ascend estimates.
Claims for aircraft losses and legal liabilities this year will total about $980 million, or $300 million less than last year, Ascend said in a report. Claims are almost half the $1.8 billion in premiums written in the period, it said.
The International Air Transport Association said earlier this month that western-built jets suffered 0.19 “hull loss” accidents per million flights this year through November as the industry headed to its safest year on record. IATA’s figures didn’t reflect the Dec. 25 crash of an Air Bagan Fokker 100 jet in Myanmar in which one person on-board died and the out-of- production aircraft was destroyed.
“Airline fatal accident rates have been steadily improving and, on average, operations are now twice as safe as they were 15 years ago,” Paul Hayes, head of safety at Ascend said in a statement. “With such a benign insurance claims year and increasing capacity in the market, we believe that premium income will continue to fall in 2013.”
There is concern premium levels are “too low to be able to maintain the market in the longer term,” Hayes said. Premiums have declined for three years and for 2012 were more than $800 million below the 2003 level when they reached $2.7 billion, the highest in the last 10 years.
In the first 11 months of this year, North Asian and North American carriers had the lowest accident rates and African carriers had the highest, according to IATA.
Measures being introduced in Africa to improve pilot training and enhance safety audits are designed to help bring airline safety in the region in line with current global standards by 2015, Guenther Matschnigg, IATA’s senior vice president for safety, said on Dec. 13.
The June 3 crash of a Dana Air MD-80 in Nigeria was the deadliest accident this year, killing 153 people on-board and 10 on the ground, Ascend said. Of the four deadliest accidents in 2012, in which almost 90 percent of all fatalities occurred, two were in Africa, it said.
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