Fatal accident and passenger fatality rates were the lowest on record last year, according to Ascend (www.ascendworldwide.com) the aerospace experts.
In addition, it was a good year for insurers: with no major catastrophes in the sky or on the ground. The estimated cost of incurred hull and liability losses in 2011 is not much more than half that recorded in 2010 – the lowest for seven years.
Ascend’s Director of Safety Paul Hayes says, “It’s the safest year ever. Airlines are getting safer – and more quickly than they’re expanding. On average, overall airline operations are now twice as safe as they were 15 years ago.”
Hayes adds, “For insurers, passenger safety doesn’t necessarily equate to low claims; however, in 2011 it did. The cost of incurred airline hull and legal liability losses for 2011 is about US$1.18 billion – some US$966 million less than in 2010.
“We see the low level of incurred loss in 2011 as very much a mixed blessing. Most insurers will probably have made money this year, but that only begins to make up for a number of bad years they’ve had recently and it is sure to increase the pressure for insurance rate reductions.”
In Ascend’s special bulletin: Performance and Safety Review Year End 2011, Hayes says that, “with estimated claims costs exceeding written premium over the last five years and current interest rates limiting investment income, there would seem to be little chance that the class as a whole is profitable, especially after the deduction of operating costs. Increasing costs, falling premiums and the ever-present risk of a catastrophic loss occurring do not suggest a healthy outlook for airline insurers in 2012. But it is likely that 2011’s good result will increase pressure for further rate reductions in 2012.”