The soft market in airline insurance is likely to continue to the end of the year, says a report from Aon.

The broker's pre-renewals review of the airline insurance market indicates average hull and liability premiums were down by 15% in the first nine months of the year, despite fleet values increasing by 11% and passenger numbers by 12%.

Aon expects 60% of total annual lead hull and liability premiums to renew during the last quarter.

While the broker believes insurers will be readdressing their commitment to airline insurance in the light of the soft market, any reduction in capacity leading to a hardening of the market is not likely to happen until the 2008/09 renewal period.

If the current market conditions continue, Aon predicts total hull and liability premiums for the year will reach $US1.38 billion ($1.56 billion), compared with $US1.67 billion ($1.88 billion) last year and $US2.15 billion ($2.43 billion) in 2005.