Willis: Airline Industry Losses Hit 5-Year Low
London, UK, September 13, 2011 – The airline industry had a relatively turbulent free start to the
third quarter, with losses hitting a five-year low of US$794 million, according to the latest report from the Aerospace division of Willis Group Holdings (NYSE:WSH), the global insurance broker.
The company’s monthly Airline Insurance Insight report indicates that the insurance market has remained remarkably stable, with
no change from the drivers of capacity and claims. The lack of fatalities in the three
major losses that did occur in July reflects excellent safety performance of the industry, which has
delivered some good fortune for underwriters in the wake of an extremely volatile year for other
Despite the healthy climate, July was one of the busiest periods of the year in the airline
insurance market, according to Willis. The renewals again witnessed the trend for low single digit premium
increases against higher levels of exposure sectors.
One positive result is that increased exposures do not directly translate into claims, though Willis observes that
the flip side from an insurer’s perspective is the market has been unable to translate that
growth into comparable premium volumes. The most influential market factor remains the level of capacity, which
does not look set to diminish any time in the near future.
The three major losses that occurred in July represent a continuation of the trend for high valued
hull losses. While this type of loss is a direct drain on the cash reserves of
underwriters, it also provides some certainty on liability.
Commenting on the report, Steve Doyle, Business Development and Sales Director for Willis Aerospace, said: "With the
current neutral market situation there appears to be a repeated clamour to understand the ramifications whenever
a loss occurs. It must be remembered that responding to losses is the function of the
market. The market is there to service the needs of an increasingly exceptionally safe industry and,
therefore, needs a shift in overall trading conditions to significantly change."
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers
professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public
entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries,
with a global team of approximately 17,000 employees serving clients in virtually every part of the
world. Additional information on Willis may be found at www.willis.com.