Aircraft premiums are continuing to decline, despite an 11 percent increase in average fleet value and an 18 percent rise in passenger traffic, according to the July overview by Aon Aviation, which attributes the declines to the high level of competition among underwriters and the safety record of the world's carriers. It predicted reductions would continue. During the second quarter, the industry experienced a six percent premium decline, compared to the two percent decline in the first quarter.

The company noted that, while hull losses are larger than in 2005, the level remains impressive with only a few small incidents in June. Year to date, the loss total is currently at $237 million compared to $127 million in June 2005, below the five year market average covering a number of the safest years in aviation history.

Aon also pointed to consolidations within the insurance market for the erosion of $110 million in 2005, increasing the average reduction from seven percent in 2004 to 10 percent in 2005. It expects similar savings in 2006, if the consolidation process continues.