Aerospace insurance prices declined last year, but not assignificantly as coverage for airlines, according to a report fromAon Limited in London, a unit of Aon Corp. insurance brokerage inChicago.

In its Aerospace Insurance Market Review of 2007, the brokeragesaid the sector witnessed an average 6 percent reduction in leadinsurance premium, but the drop was not as sharp as for airlineinsurance, which has fallen 30 percent since 2005.

The reductions were consistent across the manufacturer, serviceprovider and airport sectors that comprise the aerospace insurancemarket.

The key findings of the review are:

o Average lead premium reduction for 2007 was 6 percent,compared to a 3 percent growth in 2006.

o Asian operations received the best average reduction at 8percent, and were closely followed by Europe and the Americas with7 percent and 6 percent reductions, respectively.

o Service providers had the largest reductions in 2007, withlead premium falling by 11 percent on average compared to a 4percent increase in 2006.

Airport lead premium fell by 8 percent on average in 2007,compared to a 2 percent increase in 2006. The manufacturers sectorfell by 3 percent, compared to a 5 percent average growth in2006.

o The number and value of claims have been limited in theaviation sector generally, although the high level of airline hulllosses in 2007 may translate into an increased number of claims onthe aerospace market as accident investigators assignresponsibility.

Doug Peterson, Aon Aviation & Aerospace Group practiceleader, said while overall reductions were modest, pricing differedby sector.

“This suggests that the markets are pricing insurance programsaccording to their actual level of risk, rather than simplyapplying an industry average year-on-year price change,” hesaid.

He said these were signs of a “healthy and functioning market,”but some argue that certain sectors do not receive the same “levelof reductions as a result of historical loss perceptions that donot take recent improvements into account.”

A copy of the report is available at www.aon.com.