By JONATHAN BERR, who has written for national media outlets for more than 15 years.
When it comes to insurance, there is nothing but blue skies ahead for the nation's airlines.
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American Airlines? parent company AMR Corp.'s recent bankruptcy filing is not affecting rates much. Neither are plans by carriers to update their fleets.
Rates for insurers are depressed and will remain that way for a while, barring any catastrophic losses, which can cost airlines hundreds of millions of dollars.
The total value of airline industry premiums, which topped $4 billion in the wake of the Sept. 11 terrorist attacks, were around $2 billion last year and will probably be down by 5 percent to 6 percent this year, said Stephen E. Alexandris, senior vice president and U.S. airlines practice leader at Aon.
"There is a lot of overcapacity in the market," Alexandris said. "It's definitely a client's market."
William Willer, area president of Gallagher Aviation, agrees. "Raw rates" were down 5 percent to 12 percent in 2011 from the previous year, he said.
"I don't see anything on the horizon saying that would change," said Willer. "The underwriters just don't have the horsepower to force rates up at the moment.
This is a bright spot for an industry which has been under stress since the start of the economic downturn when high fuel prices forced many carriers to charge fees for handling bags or charge for in-flight food.
This year will not be easy either. The International Air Transport Association is predicting that worldwide industry profit will fall 49 percent this year because of high fuel prices and the debt crisis in Europe. Nonetheless, insurance executives are not concerned -- a striking change from years past.
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