Aviation rates stabilize: Gallagher
Aviation rates continue to stabilize, with conditions “more positive” for buyers this year than they have been for some time, according to A.J. Gallagher & Co.
The broker expects further deceleration in general aviation rates, barring any major loss event.
In the latest edition of its Plane Talking risk bulletin, Gallagher said rates started to stabilize for airlines in the first quarter of this year, and the trend continued into the second quarter.
“Rate increases are now moving from double-digit territory closer to high single digits,” said Nigel Weyman, global executive for Gallagher Aerospace. He added that the “right” risks are seeing the lowest rate increases, while reduced exposures are winning some airlines premium reductions below the stated policy minimum.
“With the airline industry’s recovery proving slower than anticipated, insurers recognize the need to continue to apply a tailored response in terms of both requests for premium relief and renewal pricing,” Mr. Weyman said. He stressed that renewals are still very much case by case.
Capacity for airline risks was up in the second quarter, with several new entrants and dormant capacity encouraged back to the market by more sustainable pricing and low loss levels during the past year, Mr. Weyman said.
“Increased capacity is a key factor in the recent deceleration of rate increases,” although the proof will come toward the end of the year as airline renewals pick up, he added.
Gallagher said new capacity in general aviation via Helvetia and Blenheim has been coupled with greater appetite from existing insurers, although insurers have maintained strict risk selection with capacity lower for larger hull values and higher liability limits.
“For the perceived ‘right’ risk, however, there is a ‘fight for quality,’ and many insurers will now look to deploy larger shares at competitive terms,” said Matthew Trundle, divisional director at Gallagher Aerospace.
“There is continued optimism that the general aviation market is now over the worst and subject to no major losses; we would expect this trend to continue throughout the coming months,” Mr. Trundle said.
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