Released on: December 4, 2007, 11:23 pm

Press Release Author: Alexandra Lewis

Industry:

Press Release Summary: The average lead premium in the airline insurance market has
fallen at an accelerated rate over the last quarter of 2006 and it could still have
further to fall according to the findings of Aon's Airline Insurance Market Review
of 2006*. These premium reductions have resulted from additional capacity entering
the market through a number of new aviation underwriters and because the loss record
for the airline industry has continued to be impressive.

Press Release Body: The average lead premium in the airline insurance market has
fallen at an accelerated rate over the last quarter of 2006 and it could still have
further to fall according to the findings of Aon's Airline Insurance Market Review
of 2006*. These premium reductions have resulted from additional capacity entering
the market through a number of new aviation underwriters and because the loss record
for the airline industry has continued to be impressive.

The key findings of the review are:

* the low-cost sector continues to thrive, with an average 6% reduction in lead
hull and liability premium despite fleet growth of 15% and carrying 22% more
passengers;
* the market continues to reward economies of scale, with operations with a
fleet value of more than US$5 billion receiving an average premium reduction of
22%;
* competition has continued to put pressure on the excess third party liability
market, which has delivered US$6 billion of profit to participants since 2001,
despite there being no claims.

The high level of capacity in the market is expected to continue into 2008 and the
anticipated continued decrease in lead premiums could potentially prompt some
capacity to exit the market. This may well be brought forward should any
consolidation among underwriters occur. Meanwhile, the cumulative loss record for
2006 is slightly lower than 2005. While the small number of hull losses in 2005 was
very impressive very impressive, the number of fatalities was the highest since
2000. There have been fewer fatalities in 2006 with a notable reduction in losses
at the smaller end of the market.

Steven Doyle, Aon Global - Aviation, says: "Prior to October, the market had looked
to be on course to deliver another 7% reduction on the total hull and liability
market figures for 2005, continuing a trend that had been in place since 2003. The
introduction of new capacity and the excellent industry loss record, however,
reduced the hull and liability market by 17% compared to 2005. As a result, the
airline insurance market dropped below the US$2 billion level for the first time
since 2000. It seems likely that the benign market conditions, at least from an
insurance buyer's point of view, will continue until at least next October, unless
there is a significant loss or major consolidation in the underwriting community."

Notes to editors:

The review looks in detail at data from across the aviation market, breaking it down
by region, average fleet value (AFV), sector and month, as well as providing a round
up of market and industry activity, a comprehensive loss review and examination of
the geographic changes in industry profile. It examines how the industry's evolution
during 2006 will impact the market during 2007 and beyond.entertainment
and media liability insurance

About Aon Consulting

Aon Consulting is a leading human capital consultancy, helping organisations of
every size to attract and keep the employees they need. We advise on all aspects of
employment, including health-related insurance and risk; employee compensation and
pensions; human resource strategy planning; job design and change management; and
staff assessment and legal issues. Aon Consulting is a division of Aon, one of the
UK's largest insurance brokers and providers of risk management services and a major
force in reinsurance and the UK human capital consulting market. Aon Consulting
Limited is authorised and regulated by the Financial Services Authority.

Aon UK is ranked by A.M. Best as the number one global insurance brokerage based on
brokerage revenues and voted best insurance intermediary, offering classic car
insurance, high
value home contents insurance, entertainment and media insurance and
construction site insurance.


Web Site: http://www.privateclients.aon.co.uk/privateclients/microsites/household/

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