Asia Pacific aerospace lead premiums fell about 6% in 2010, according to Aon’s latest aerospace market outlook.

The reduction in premium renewals have been across the region with only 16% placed at increased price compared to an industry average of 23%.

Aon says those businesses that faced increased premiums were due to claims although the region is favourably looked on by the insurance industry due to its low level of litigation.

Another factor for lower premiums in Asia-Pacific is the smaller aerospace manufacturing industry, accounting for only 60% of the region’s activity.

Globally, manufacturing accounts for about 80% of the aerospace industry.

Aon says underwriters generally dislike manufacturing due to the complexity of the claims.

The total aerospace premium for the Asia-Pacific region in 2010 was $US44.5 million ($41.8 million), down 3% in dollar terms on the previous year.

Aerospace service providers in the Asia-Pacific region saw lead premiums fall by 8% during 2010.

Aon Risk Solutions Head of Aerospace Danny Green says the sector is now in its fifth year of falling premium prices, with early indications showing this trend will continue.

“The ongoing soft market is being driven by a variety of factors, with changing insurance strategies, falling exposure as a result of the global economic downturn and the industry’s evolving risk profile, all playing a role,” he said.

“The insurance programs placed for the aerospace sector so far in 2011 suggest a fifth consecutive year of the soft market.

“Over-capacity attracted by the sector’s relatively good loss history and the long-term improvements in safety that are being made by organisations across the sector are a major factor,” he said.

“As a result, there will continue to be pressure on insurance prices.”