Last year marked another year of relatively soft rates in the general aviation insurance market, according to aviation insurance broker NationAir’s annual market analysis, released yesterday. “While the market conditions have remained the same for several years, the reasons for that soft market are changing,” noted company president Jeff Bauer.
Initially, increased market competition pushed rates down, he said. “Now, however, rates are being held down by the more long-term forces of structural overcapacity and, thankfully, favorable loss history.”
Insurers have been able to stay profitable even at lower premium rate levels, he said, bucking conventional thinking that falling rates would push aviation insurers into the red and thus drive rate increases. “Insurers have stayed in the black primarily because of the absence of significant general aviation fatal accidents,” Bauer said. “As long as this continues, we do not anticipate any real pressure on rate increases.” The world’s reinsurers are also “quite profitable,” he added, and are not exerting any “significant pressure” on insurers through the premiums for reinsurance.