29696045 project on aviavtion insurance

8/12/2019 29696045 Project on Aviavtion Insurance

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SAFE SKIES WITH AVIATION INSURANCE

INTRODUCTION OF INDIAN AVIATION

SECTOR

Aviation Industry in India is one of the fastest growing aviation industries

in the world. With the liberalization of the Indian aviation sector, aviation industry

in India has undergone a rapid transformation. From being primarily a government-

owned industry, the Indian aviation industry is now dominated by privately ownedfull service airlines and low cost carriers. Private airlines account for around !"

share of the domestic aviation mar#et. $arlier air travel was a privilege only a few

could afford, but today air travel has become much cheaper and can be afforded by

a large number of people.

%

A proud Air India Flying


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&he origin of Indian civil aviation industry can be traced bac# to %'%(, when

the first air flight between )arachi and *elhi was started by the Indian +tate Air

+ervices in collaboration with the ) based Imperial Airways. It was an etension

of ondon-)arachi flight of the Imperial Airways. In %'/(, 01* &ata founded &ata

Airline, the first Indian airline. At the time of independence, nine air transport

companies were carrying both air cargo and passengers. &hese were &ata Airlines,

Indian 2ational Airways, Air service of India, *eccan Airways, Ambica Airways,

3harat Airways, 4rient Airways and 5istry Airways. After partition 4rient

Airways shifted to Pa#istan.

In early %'67, 8overnment of India established a 9oint sector company, Air

India International td in collaboration with Air India :earlier &ata Airline; with a

capital of 1s ( crore and a fleet of three oc#heed constellation aircraft. &he

inaugural flight of Air India International td too# off on 0une 7, %'67 on the

5umbai-ondon air route. &he 8overnment nationalized nine airline companies

vide the Air


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HISTORY OF AVIATION INSURANCE

Aviation Insurance was

first introduced in the

early years of the (=th

s of

ondon in %'%%. &he

company stopped writingaviation policies in %'%(

after bad weather and the

resulting crashes at an air

meet caused losses on

many of those first policies.

It is believed that the first aviation polices were underwritten by the marine

insurance nderwritingcommunity.

In %'(' the Warsaw convention was signed. &he convention was an

agreement to establish terms, conditions and limitations of liability for carriage by

air, this was the first recognition of the airline industry as we #now it today.

3y %'// realising that there should be a specialist industry sector theInternational nion of 5arine Insurance set up an aviation committee, and by %'/6

eight $uropean aviation insurance companies and pools were formally established

and the International nion of Aviation Insurers was born.

/

A light flight of 1911
http://en.wikipedia.org/wiki/Aviationhttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Warsaw_conventionhttp://en.wikipedia.org/wiki/Aviationhttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Warsaw_convention


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&he ondon insurance mar#et is still the largest single centre for aviation

insurance. &he mar#et is made up of the traditional loyds of ondonsyndicates

and numerous other traditional insurance mar#ets. &hroughout the rest of the world

there are national mar#ets established in various countries, this is dependent on the

aviation activity within each country, the + has a large percentage of the world>s

general aviation fleet and has a large established mar#et.

2o single insurer has the resources to retain a ris# the size of a ma9or airline,

or even a substantial proportion of such a ris#. &he


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LIABILITIE

S

NORMAL RISKS


RISK COVERED IN AVIATION INSURANCE

&here are different types of ris# which ta#es place in aviation insurance and

those ris#s are covered in aviation insurance they are as follows@

&he

above diagram suggests that there are mainly two #inds of ris#s which an aviation

insurance company will cover which has been divided into two parts. &hey are@

%. 2ormal 1is#s

(. iabilities

&hese two ris#s are further divided into various parts which involve various

ris#s and liabilities they are which is eplained in detail later on.

!

AVIATION INSURANCE


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NORMAL RISKS

&hese ris#s are those ris#s which every aviation company in this industry

carries it on its bac# when it enters into the business. &hese ris#s may differ from

time to time and situation to situation. &hese are

%. ull 1is#s

(. ull War 1is#s

/. +pares All 1is#sB War 1is#s

6. ull total oss 4nly cover

&hese ris#s are those ris#s which ta#es place when these ta#es place when

any of these factors comes into action. 3ecause all the above ris#s mentioned

above are unpredictable and may occur at any time

C


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HULL RISKS

&he hull ?All 1is#s? policy will usually refer to something li#e ?all ris#s of

physical loss or damage to the aircraft from any cause ecept as hereinafter

ecluded?.

Airline hull ?All 1is#s? policies are sub9ect to a standard level of deductible

:that is an uninsured amount borne by the Insured; applicable in the event of partial

:non-total; loss.


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&hat order in effect said until certain things had been established and

chec#ed out those aircraft could not fly. &he operators of those aircraft were unable

to fly them and as a conseEuence of that they ?lost? the use of them. 3ut the

aircraft were not ?lost? - it was #nown precisely where they were but they could

not be used to carry passengers. +uch an eventuality would not be covered by an

?all ris#s? policy because in such circumstances there is no P+I


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&he hull ris#s does not cover some ris#s whish are as follows

%. Wear, tear and gradual deterioration - in common with most non-marine

policies :which includes aviation insurance; these perils are thought to be

a trading epense and not a peril to be insured.

(. Ingestion damage - caused by stones, grit, dust, sand, ice, etc., which

result in progressive engine deterioration is also regarded as ?wear and

tear and gradual deterioration?, and as such is ecluded. Ingestion

damage caused by a single recorded incident :such as ingestion of a floc#

of birds; where the engine or engines concerned have to shut down is not

'

Concorde plane disaster in France, 25 July 2000


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regarded as wear and tear and is covered sub9ect to the applicable policy

deductible.

/. 5echanical 3rea#down - li#ewise is thought by aviation insurers to be an

operating epense, but subseEuent damage outside the unit concerned is

usually covered. owever, it is possible to obtain insurance coverage

against mechanical brea#down of engines by way of a separate policy.

&his coverage has a high degree of eposure and as a result is relatively

epensive. &he ma9ority of airlines do not purchase it probably viewing

such eposure as a part of the ?engineering?

%=


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HULL WAR RISKS

&he hull ?All 1is#s? policy will contain the eclusion of ?War and Allied

Perils?. 8enerally spea#ing, throughout the aviation insurance world, ?War andAllied Perils? have a defined meaning. In the ondon Aviation Insurance 5ar#et

the standard eclusion is called the War, i-9ac#ing and 4ther Perils $clusion


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%(

The brutal second plane crash in orld Trade Center, !e" #or$, %nited &tates of A'eica,

11 &epte'ber,2001


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&he ma9ority of the ecluded ?War and Allied Perils?, other than the

detonation of a nuclear weapon and a war between the 8reat Powers :the aviation

insurance world identifies these as the .+.A., the 1ussian Federation,


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SPARES ALL RISKS

First of all we must identify what we mean by a ?spare? or perhaps - ?when

is a spare not a spare? to which a simple answer is ?when it is attached?. ndermost ?ull? policies the word ?Aircraft? means ulls, machinery, instruments and

the entire eEuipment of the aircraft :including parts removed but not replaced;.

4nce a part is replaced it is no longer, from an insurance viewpoint, part of the

aircraft.


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+pares installed on any aircraft are not covered by the +pares Insurance.

&hey become, from an insurance standpoint, a part of the aircraft upon which they

are installed and a part of the Agreed Galue for which it is insured. &his becomes

particularly important if the parts are loaned to another airline.

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A flight coc$pit "ith its spare parts An engine "ith its spare parts "or$inginside
http://i227.photobucket.com/albums/dd319/BladeBV/random/air_engine.jpg


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HULL TOTAL LOSS ONLY COVER

&his is similar to ull All 1is#s cover given above but will respond only to total

losses of aircraft, whether actual, constructive or arranged. &his is particularly

given for old aircraft since the old aircraft are heavily depreciated and insured for

low sums and premium on such low sums would result in low premium, which

would be inadeEuate for the partial losses. &he ratio of partial losses to total losses

in such old aircraft is distorted.

%C

The Aerocor (Aerolineas Cordeillra) *C+ used in -0.s and /0.s


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LIABILITIES

iabilities are those ris#s which may arise due to some conseEuences or

some LreasonsM the company has to face. &hose LreasonsM are as follows

%. Aircraft iability

(. $cess iability

/. Aerospace 5anufacturers products and 8rounding iability

6. Airport 4wners and 4perations iability

!. Product iability

A liability is a present obligation of the enterprise arising from past events,

the settlement of which is epected to result in an outflow from the enterprise of

resources embodying economic benefits.

&he eplanations of all the liabilities are given below

%


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AIRCRAFT LIABILITY

ere in aircraft liability there are many other liabilities involved which are

further divided into four parts. &hey are

&hese are the #inds of liabilities which are covered in aviation insurance the

eplanation in detail is given below

BAGGAG

E

CARGO

AND

MAIL

%7

AIRCRAFT

3RD

PARTY

PASSENG


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PASSENGER LIABILITY


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A Passenger iability policy covers incidents resulting from the transportation of

passengers by land, sea or air and can often be included as part of a aviation

insurance policy.

owever care must be ta#en to chec# that the motor policy wording does not

eclude fare-paying passengers, which is often the case. It is unli#ely that an

underwriter will be prepared to cancel or amend the wording of a standard motor

vehicle policy.

For this reason *aily


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Insurance showing that coverage is in place, access to more flying sites are

accessible for the operation of your aircraft

When one engages in recreational activities reEuiring the use of a vehicle - whether

it be land, water, or air sports related - there are inherent factors that could result inliability issues. 2o one wants to en9oy an activity and then have the pleasure of it

clouded with possible situations that would result in liability claims against their

hard earned savings. &his &hird Party liability insurance for +A members can

help relieve the worry of possible claims against the pilot should this type of

(%

Concorde crash on a hotel near aris Airport ust fe" 'inutes after the ta$e off "hich

resulted in destruction of th hotel it fell on, 25 July, 2000


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situation occur. Additionally, access to airports, flight par#s, and flying events

often reEuire liability coverage. 5any states reEuire insurance of this nature 9ust to

operate an airplane of any description. &hird party liability coverage is also less

epensive than full coverage, and therefore allows the members :insurance

holders; the opportunity to en9oy the thrill of aviation without the worry of liability

concerns or the epense of high-priced insurance.

&he people can be only eligible who are a registered, certificated or licensed pilot

are eligible. +port Pilot +tudents who are endorsed to solo are also eligible. Pilot

registration can be with any recognized organization.

((


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BAGGAGE LIABILITY

&his #ind of liability may include various reasons in the happening. &hey are as

follows@

%. D!"#$

If your bags are delayed, try not to panic. &he airlines typically have ways

to trac# them, and about '7 percent of all misplaced luggage is returned

eventually. If your bags are on the net flight, you could have them within a

few hours. If they>ve been sent to the wrong airport, it could ta#e a couple of

days. 5a#e sure to file your claim immediately at the airport and to give the

attendant a hotel or home phone number and address.

&he airlines will typically bring you your luggage when it is foundH you will

(/

assengers hit by baggage delay


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rarely need to return to the airport to pic# it up. Additionally, many airlines will

reimburse any unepected epenses caused by the loss or delay :#eep your

receiptsN;. 3ut be careful here -- the airline sometimes has the option to deduct

any reimbursement or stipend from any subseEuent awards.

3efore you leave the airport, be sure you #now how to chec# on your bag>s

statusH someairlines have an online system while others will provide you with a

phone number to call for updates.

(. L%$& B"''"'If the airline loses your bags, ma#e sure you get a written claim for damages.

&his may reEuire a different form than the original ?missing luggage? form.

&his can be done at the airport or by mail.

4n domestic flights, the airline baggage liability is capped at D/,/== per person.

4n international trips, the liability limit may vary, as it is governed by various

international treaties, including the 5ontreal and Warsaw


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reimbursed for the depreciated value of your items -- so the airline won>t give you

the full D%,=== you paid for that suit you purchased two years ago.; ou can

purchase ?ecess valuation? protection if your chec#ed baggage is worth more than

these limits :but before doing so, ma#e sure the items aren>t already covered by

your homeowner>s or travel insurance policy;.

&he airlines typically have a long list of items for which they will not be

heldresponsibleH these include 9ewelry, money, heirlooms and other valuables.

&hese sorts of items should always be pac#ed in your carry-on bag.

/. S&%!( B"''"'

ead directly to

the baggage carousel

when you get off your

flight. 5any airlines scan

bags when they>re loaded

into the baggage claim

area and #eep records,

especially at larger

airports. 4nce you>ve left the baggage claim area, your claim is no longer with

the airline, but with the police.

(!

%nclai'ed baggage ready to be stolen


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6. D")"'* B"''"'

4nce you>ve gotten your bags off the carousel, immediately chec# them for

damage or othersigns of tampering or mishandling. 1eport any damage before

leaving the airportH airline customer service will often want to inspect the bag.

)eep in mind that most airlines won>t cover minor wear and tear.

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A da'aged bag due to hush 'ade by the airport "or$ers

in the green belt


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!.C"+'% "(* M",! D")"'

According to,

(

Consign'ent da'aged "hile cargo or 'ail fro' one place to another


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Although Martinair Cargo will give its best efforts to deliver your shipment at its final

destination in good order and condition, sometimes damage / depreciation, delay or

(partial) loss unfortunately occurs. n case such an irregularity should affect your

shipment, a claim can be filed with Martinair Cargo Claims. n order to facilitate and

speed up the claim handling process, we !indly would li!e to draw your attention to the

following"

#hat to do in case you receive your shipment with damage

$ Ma!e sure that the damage of the shipment is noted on the release

form/delivery receipt of the warehouse.

$ f possible, please ta!e (digital) pictures of the damaged shipment upon

receipt of your cargo at the final destination, as recorded on the Airway %ill.

$ &o strengthen your case, you can appoint an independent and ob'ective

surveyor. owever !indly be advised that the decision to appoint a surveyor is up

to the claimant as the claimant always has to provide independent evidence in

order to prove the etent of the damage as claimed for.

% *end a written preliminary claim to Martinair Cargo Claims within $+ days

from the date of delivery at the final destination.

$ Measure the temperature of the shipment upon release and measure the

boes on the outside of the pallets in case of complete pallet delivery. lease

record the temperature on the release form/delivery receipt of the warehouse.

(7


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&o strengthen your case, you can appoint an independent and ob'ective surveyor to

chec! the condition of your perishable shipment. lease ma!e sure that your shipment

will be surveyed as soon as possible but not later than - hours after arrival at your

premises" perishables are time sensitive and/or temperature sensitive commodities,

therefore only a survey done shortly after arrival of the cargo will be considered as an

ob'ective survey.

('


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#hat to do in case of (partial) loss/pilferage of your shipment

oss"

.

$ efinition" loss is defined as all pieces (mentioned on the Master Air

#aybill) reported missing

0

/ *end a preliminary claim to Martinair Cargo Claims within $01 days from

the date of issue of the Master Air #aybill.

artial loss / pilferage"

% artial loss is defined as one or more pieces of the total shipment

(mentioned on the Master Air #aybill) are reported missing

( ilferage is defined as the loss of one or more items out of one or more

pieces

% *end a preliminary claim to Martinair Cargo Claims within $+ days fromthe date of delivery (both partial loss and pilferage are considered as damage).

$ Ma!e sure, that partial loss and/or pilferage is noted on the warehouse

release form/delivery receipt of the warehouse or on the &ruc!ing document in

case of direct deliveries. n case of pilferage, please also establish the weight

discrepancy.

ow to file a priced claim

/=


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#henever a priced claim is filed, the necessary information must be gathered. #e

strongly re2uest you to enclose the relevant documentation and information as

mentioned below, in the 3nglish language"

% 4endor5s / shipper5s invoice covering the complete shipment. lease

eplicitly indicate the items / pieces claimed for. lease note that Martinair Cargo

cannot offer full compensation based on the commercial / sales invoice as a refund

for loss of profit is not part of our contractual liability.

( ac!ing list. lease indicate the items / pieces claimed for Cession of

6ights, if re2uired, from the party (shipper / consignee as mentioned of the Master

Air #aybill) entitled to claim, which states that your company is authori7ed to act

on their behalf.

8

6 Copy of the Martinair Master Air #aybill (and if possible a copy of the

relevant ouse Air #aybill).

9

A specification of the amount claimed for (by means of a shipper5s invoice,

an independent survey report, a bill of sale or a bill of repair).

% Copy of the delivery receipt.

( (digital) ictures, if available.

/ :our ban!ing details, including swift code.

n case your claim concerns damage / depreciation, please enable us to verify the etent

/ direct conse2uences of the irregularity by also enclosing"

% ndependent and ob'ective survey report, if issued. n case the amount of the

damage / depreciation is epected to be below the costs involved in employing a

surveyor, a survey report obviously is not re2uired. lease note that the decision

/%


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whether or not to involve a surveyor is entirely yours. &he presence of an ob'ective

survey report, however, will never reduce the strength of your case.

( estruction report, in case the shipment was no longer fit for sale.

8

6 %ill (s) of sale, in case the shipment was still fit for sale.

9

C %ill (s) of repair (if applicable).

;nly upon receipt of the information as re2uested above, your claim can be ta!en into

consideration. f any of these documents are not available, please eplicitly state so.

lease be informed that an ade2uate and sufficient provision of all relevant documents

enables a swift and efficient claim handling procedure.

4 Claims handling information

$ Claims will be handled in accordance with the applicable Conventions

and /or


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loss (all pieces reported missing) a (preliminary) notice of claim must be filed

within $01 days from the date of issue of the Mawb.

$ &he maimum liability of Martinair Cargo is limited. #e refer to the

relevant provisions of the #arsaw / Montreal Convention, as well as to our


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$ #henever our liability for a claim eceeds our policy deductible, Martinair

Cargo will be forced to hand over the file to the liability claims ad'usters

appointed by our insurers. &he claim will then be dealt with directly by these

claims ad'usters and the claimants will be contacted accordingly.

$ n case we accept liability we re2uest the claimant to sign and to stamp a

=inal 6elease =orm before being able to settle, hence relieving Martinair Cargo

from any further future liability. After receipt of the duly signed and stamped =inal

6elease =orm and if necessary the Cession of 6ights, settlement will be effected.

;ur financial department will transfer the amount to your ban! account, for which

we of course need your ban!ing details, including swift code.>

$

/6


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E-CESS LIABILITY

$cess liability is all about the refueling and the defueling of the aircraft. $cess liability is also

#nown as THIRD PARTY WAR RISKS.

/!

3efueling done by one aircraft to another in air

3efueling done on ground


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AEROSPACE MANUFACTURERS PRODUCTS AND

GROUNDING LIABILITY

MANUFACTURERS PRODUCTS LIABILITIES

&his type of insurance is essential for the manufacturer of aircrafts, its

components and related eEuipment. In addition, it is also necessary for those

engaged in selling airplanes, its parts or fuel, and for individuals who repair

andBor maintain the aircrafts.

&here are different laws, federal regulations and considerations for

commercial airliners versus small planes.

8eneral aviation refers to aircraft such as small planes that seat less than (=

passengers and were not engaged at the time of the flight in scheduled

passenger-carrying operations. It includes helicopters, as well. )nowledgeable

bro#ers can assist in the process of identifying what type of coverage is

necessary on a case by case basis.

/C


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C%+"'

&his policy protects parties from claims arising from in9ury or damage

caused by defects in the products sold or manufactured or from improperly

completed operations. 5anufacturers, distributors and sellers can be open to

liability even if it is proven that the product was used improperly. Insurance

/

ings of the plane 'ade of Alu'inu'

4ifeline of an aircraft+ ig 165 storey si7e engines


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coverage will cover their legal fees needed for defense against claims and class

action suits

&hree times big tyres of a plane

S&"&,$&,/$

&hough air traffic is considered to be a safe means of transportation,

accidents do occur. +ome of the more common causes of many of these

incidents are faulty eEuipment and structural or design problems. Aviation

products can cause catastrophic accidents as the result of relatively minor

failures.

/7


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GROUNDING LIABILITIES

&his may include liabilities as follows

PREMISES0LIABILITY

&his basic part of the policy will protect the liability of the operation for the

employees while performing their duties. &his would be the fueling operation, and

any part of the business associated with the office and ramp areas. &he facility will

add to this policy additional parts to cover the specific needs of each operation.

/'

8round staff at its "or$


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HANGARKEEPERS

&he larger operations, you #now, li#e a 3ell service center with 7 to %= beautiful

ships in various stages of maintenance with full pilot training facilities for instance,

is almost always going to have eceptional policies covering their business

operations that include what you do. &heir policy will cover any person acting on

behalf of the operation in the carrying out of their duties. &his policy will protect

you if you should do something unintentional that causes damage. An eample

might be in the process of moving a helo in or out of the hangar with a power tug.

If you are watching one side and start the turn too soon and catch the tail boom or

rotor on the hangar door or another helicopter sitting net to the one you aremoving, the damage you cause will be covered by the coverage.2ow letOs say you

wor# for a maintenance only shop with 9ust %or ( ships being wor#ed on at any one

time. In these difficult economic times, it is not unheard of for some operations to

trim epenses and not purchase the angar#eepers option of the policy. If you are

unsure, wor# up the courage to as# your boss if you are covered under this part of

the policy. +eeing a copy of the declarations page with the policy effective dates

will help reassure you and will operations angar#eepers also tell you if the

coverage has been purchased.

6=

eople "or$ing as hangar $eepers


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TRAINING

A pilot getting trained in a coc#pit

It is the hope of the insurance underwriters that if you are as#ed to do

something new that you will have received training ahead of time. If you usually

move a 1obinson 1(( or +chweizer /== and are now as#ed to move a multi-

million dollar +i#ors#y +-C%, please be sure you as# for training or assistance. &his

same training will apply to any part of the operation you perform. $ven something

that seems as simple as fueling or de-fueling must be part of your training before

you perform it by yourself. nderwriters would prefer the operation participate in

2A&AOs +afety

6%


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IN0FLIGHT0HANGARKEEPERS

&his coverage is important if you are operating the helicopter in flight. It is not

uncommon for an operation to do a test flight after maintenance has been

performed or if avionics have been installed or changed. +ometimes a problem

reported by the owner can only be replicated while in flight. If you are the one who

flies it, be sure you meet all of the pilot reEuirements of both the operatorsO policy

and the helicopter ownersO policy.

In almost every case, an owner will have an aircraft policy that has as part of their

pilot warranty a paragraph that states what Eualifications a pilot needs to meet

before he can fly as part of a maintenance flight. &here are some operators who

believe that the

ownersO policy

will cover any

damage that

results from a

loss to the

aircraft while

flying under this

provision.

1emember that

the owner has a

policy to protect

themH not you.

6(

ligible pilots


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AIRPORTS OWNERS AND OPERATIONS LIABILITY

AIRPORT OWNERS LIABILITY

&he wor# done by airport employees is considered to involve the greatest level of

professional responsibility. $ven smallest errors by airport personnel can result in

enormous casualties and material losses. &herefore it is important for airport

owners to insure not only their property but also third-party liability.

Insurance ob9ects@

&he InsuredOs liability as an airport owners andBor airport structures that may

include@

o - airport terminal, airfield and other infrastructureH

o

o - fuelling stationH

o

o - air traffic control center.

Insurance ris#s@

- liability for causing material damage to third partiesH

- liability for causing damage to life and health of third

parties.

6/


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I($+"(/ +,%*

Period specified in the insurance policy normally one year.

&he cost of insurance is influenced by@

- number of ta#eoff and landing operationsH

- types of aircraft based at the airportH

66

3eautifully built 1iyadh Airport


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- passenger and freight flow volumesH

- structures comprising the airportH

- security measuresH

- wor#ing conditions of air traffic control center.

E/!$,%($

+tandard@ military ris#sH ris#s related to nuclear eplosion effects and

radiation hazard.

S/,,/@

o - liability to the InsuredOs personnelH

o

o - liability for property owned or temporarily possessed by the InsuredH

o

o - liability for in9uries to persons and property resulting unless such

activities have been agreed on with the Insurer.

Also to mention that airport ownerOs liability also includes operations

liabilties

6!


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PRODUCT LIABILITY

Product liability is the area of law in which manufacturers, distributors,

suppliers, retailers, and others who ma#e products available to the public are held

responsible for the in9uries those products cause.

T%+,$ % !,",!,

In the nited +tates, the claims most commonly associated with product liability

are negligence, strict liability,breach of warranty, and various consumer protection

claims. &he ma9ority of product liability laws are determined at the state level and

vary widely from state to state. $ach type of product liability claim reEuires

different elements to be proven to present a successful claim.

6C

Plane crash due to manufactures and other members related with the airlines
http://en.wikipedia.org/wiki/Negligencehttp://en.wikipedia.org/wiki/Strict_liabilityhttp://en.wikipedia.org/wiki/Breach_of_warrantyhttp://en.wikipedia.org/wiki/Consumer_protectionhttp://en.wikipedia.org/wiki/Negligencehttp://en.wikipedia.org/wiki/Strict_liabilityhttp://en.wikipedia.org/wiki/Breach_of_warrantyhttp://en.wikipedia.org/wiki/Consumer_protection


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T#$ % !,",!,

+ection ( of the6estatement (&hird) of &orts" roducts iabilitydistinguishes

between three ma9or types of product liability claims@

manufacturing defect,

design defect,

a failure to warn :also #nown as mar#eting defects;.

5anufacturing defects are those that occur in the manufacturing process and

usually involve poor-Euality materials or shoddy wor#manship. *esign defectsoccur where the product design is inherently dangerous or useless :and hence

defective; no matter how carefully manufactured. Failure-to-warn defects arise in

products that carry inherent nonobvious dangers which could be mitigated through

adeEuate warnings to the user, and these dangers are present regardless of how well

the product is manufactured and designed for its intended purpose.

6
http://en.wikipedia.org/wiki/Skillhttp://en.wikipedia.org/wiki/Skill


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FUTURE OF AVIATION INSURANCE

*uring the past century, man has realized his dream to fly. &he aircraft has

been developed and partially perfected. &he aviation industry, as it is #nown today,

has grown into a set of definable sub-industries based upon usage. 5odern-day

aircraft range from military to commercial airlines to the most diverse group,

general aviation. As with any technology-based industry, aviation continues to

grow and develop. 2ew uses for aircraft are identified, better aircraft and avionics

are created, and problems are recognized and solved.

Although aviation has come a long way in the last %== years, it is still a

developing industry. With growth and development come problems that must be

solved before an industry can graduate to the net level. In the nited +tates,

aviation is now being confronted with a series of problems that may ta#e as long to

solve as the act of flight itself. As aviation enters the new millennium, it is these

problems with which the aviation insurance industry must deal. +ome are simply

growing pains. 4thers are outside influences for which no simple solution may

eist.

LEGAL CONCERNS

In many cases, changes in other areas of our society have a great influence

over aviation. &his is the case with our court system. &he trend toward

unreasonable verdicts and ridiculous awards has forced many aircraft owners to

create shell corporations to ?front? as the registered owner of their aircraft. 4wners

today are uncertain as to how much liability insurance is adeEuate protection, a

situation made far worse by the growing reluctance of insurance underwriters to

offer higher limits of liability protection at any price. &he underwriters eplain that

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it is impossible for any aviation insurance company to predict an adeEuate liability

premium rating structure when the court decisions are so volatile and erratic. All

aviation insurance companies are heavily reinsured by companies in ondon and

other foreign mar#ets, and those foreign insurers usually charge passenger liability

premiums for aircraft operated in the nited +tates that are three to five times as

much as those paid by non-.+. operators.

And so it goes for the owner of general aviation and commercial aviation aircraft in

the nited +tates. Aircraft owners seem to be trapped between inadeEuate coverage

limits, high-priced liability insurance premiums, and the perils of the .+. court

system.

CAN SMALL AVAITION BUSINESSES SURVIVE 8

In the future, some sectors of the aviation community may simply cease to

eist as a result of the threat of financial devastation due to lawsuit. We>ve had a

glimpse of this already when the escalating cost of products liability insurance

practically stopped the production of light aircraft in the mid-%'7=s. It was only

after a change in legislation limiting the time an aircraft manufacturer could be

held responsible for products liability that our industry resumed production of new

light aircraft.

In the future, such sectors of general aviation as the small piston repair shop

and the small flight training school may not be able to afford the increasing

insurance premiums and in some cases may not be able to buy adeEuate insurance

at any price. &his may spell the end for many in these businesses. As of February

(=== at least three aviation insurance companies have ceased writing small

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?Instruction and 1ental? ris#s while others have increased their premiums for this

class.

&he future may see the small maintenance facility replaced with a new-

technology aircraft reEuiring far less maintenance. &he same style of maintenance

used by the military and airlines -- the remove-and-replace concept -- may become

commonplace throughout general aviation as well. 5aintenance problems may be

identified by computer and repaired only by the manufacturer at factory service

centers, a practice that is already common in today>s biz9et fleet. ?Plug and fly?

replacement parts #eyed to a computer analysis may decrease cost with little or no

downtime.

All this, of course, is little consolation to owners of eisting, older-

technology, maintenance-intensive aircraft. &hey>re not getting any younger ... and

neither are we.

AGNG FLEET9 AGING PILOTS

While aviation is not eactly a mature industry, it is aging. 5aybe what

we>re seeing today is 9ust the end of a plateau in the overall development of

aviation. &he average age of both our pilot population and our fleet :both

commercial and general aviation; is increasing. 5any commercial and airline

pilots today received their initial training in the military. &he World War II pilots

are now in their =s and 7=s, the )orean War pilots are in their late C=s, and the

Gietnam pilots are in their !=s and C=s. 4ne of the most common conversations we

have with our clients and friends concerns how they can etend their insurable

years as a pilot. Aviation is a great hobby for our retirement years.

!=


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Aircraft hull and liability insurance for the senior pilot has become such a

concern that our insurance agency has developed a special tas# force to help deal

with this problem. oo#ing into the future, as the baby boomers age, our average

pilot populations continue to age. As with automobile drivers, we have found this

segment of our industry to be no more li#ely to have an accident than the younger

group. In fact, they tend to be more cautious, better trained, and better financed

than most underwriters care to admit. 5aybe it is because we are growing older

ourselves, but we believe increased awareness at the underwriting level will soon

improve insurance company acceptance and serve to etend the insurable age of

the senior pilot. We can assure you, we are doing everything in our power to

influence the underwriting community in that direction.

5eantime, what can be done to infuse new blood in the coc#pit &he

industry is currently suffering from a lac# of trained professional pilots. Without

the military-trained pilot to help fill the need for commercial and airline pilots, we

must depend solely upon civilian-trained pilots. &his then becomes an economic

problem. &here is no longer a generous 8I 3ill to offset the cost of flight training

in an age of escalating costs.

5any of our charter and corporate clients complain of sending a young

second-in-command to school on their aircraft, only to have the airlines snap them

up upon completion. &he trend toward younger and younger pilots in the right seat

is disturbing whether at the charter, corporate, or airline level of operation.

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SHRINKING FLEET

Primary training costs are increasing for a number of reasons. &he high cost

of new replacement training aircraft and inadeEuate and epensive insurancerender the training sector of aviation vulnerable to lawsuits and financial disaster,

and a shortage of Eualified instructors has slowed the flow of new pilots to a

tric#le. &he shortage of career re 9ust barely able to stay in business as it

is.

&he ma9ority of the general aviation aircraft flying today are %! to (= years

old and older. &o replace a simple single-engine


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If you want proof, the military has already adopted this method of training

from the combat tan# to aircraft and everything in between, and airline pilots are

getting type-rated in new transport 9ets without having ever set foot in the actual

aircraft.

TREND TOWARDS TUBINES

&he current trend for corporate-owned-and-operated aircraft seems to be

toward turbine-powered aircraft. If new 3arons sell for ?a million buc#s? out of the

factory and a good used )ing Air is also in the D% million range, the decision is

clear to many which is the preferable aircraft in size, safety and maintenance cost.

&he myth that a light piston twin is easier to fly than a turbine-powered aircraft is

beginning to be dispelled. 2ow that the underwriting community is imposing

virtually the same training reEuirements upon the multi-engine piston pilot as the

turbine operator, there is less advantage in buying the piston-powered aircraft.


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4f course, adversity is the mother of innovation :and invention;. With this in mind,

the future is very bright. 2ew methods of training using simulators at all levels will

produce more, better-trained pilots. As these techniEues become more available,

the costs will continue to decrease. +ome of the new-generation flight simulation

software for home P


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INDIAN GOVERNMENT ON AVIATION

INSURANCE

I(*,"( A,"&,%( I($+"(/ M"+:& O+,; 2


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!

:36raful atel, :inistry of Ci;il A;iation, %nion 8o;ern'ent of India


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&his is more so in the 8eneral Aviation :generally aircraft with less than C% seats;

segment where the sum insured limits are within the capacities of many Indian

Insurers. 8eneral Aviation buyers in India have en9oyed substantially lower

premium payouts in (==7 compared to their world and regional peers, as buyers

have bargained hard ta#ing advantage of the soft mar#et conditions and ecess

mar#et Euite a few buyers have switched their insurers. 4n the Airline front,

pricing continues to be driven by leading international mar#ets especially in

ondon, as Indian Insurers continue to off load ma9or ris#s to international

companies mainly in the $uropean sub continent, with insurance bro#ers playing a

very important role in the entire process. 5ar#et Potential For (==7, Aviations

direct premium income in India is circa I21 /,!= million and this includes buyers

from all segments including airlines, general aviation, aerospace, airports, ground

handlers, catering companies etc but ecluding satellite. 4ver !" of the total

premium comes from the airline segment with another (/" from 8eneral Aviation.

A very small portion of (" is contributed by airport, ground handlers, catering

segment etc. In addition, capacity. In the process, 2ational 1einsurer, Q8I< 1e

writes substantial international aviation business :mainly by way of inward

reinsurance; coming into the country and gradually other insurers are following

suit, but with caution. 4ver the last %= years 8I< 1e has emerged as one of the

largest aviation reinsurer in the international mar#et and is playing a #ey role in

supporting Indian Insurers.


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When one compares the above limits to (-/ years bac# it signifies a 9ump of over

(=="-(!=" and ma9ority of the capacity comes from 2ational 1einsurer, 8I< 1e.

2ew capacity has entered Indian mar#et especially during (==, (==7 with Private

Insurers buying reinsurance programmes to support their direct underwriting. At

the same time eisting Insurers have epanded their underwriting limits.

It is epected that capacity will be more or less stable during (==' and as a result

dependence on international mar#et for 8eneral Aviation is li#ely to get reduced,

but for large airline ris#s reliance on international mar#et is epected to continue.

!'

Three a;iation 'ar$eting giants


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C!",)$ S/("+,%

$ach Insurer will have its own underwriting eperience to show

and can vary from its peers considerably depending on their participation on the

policies that has produced losses. 8eneral Aviation claims in (==7 are epected to

eceed 1s. !== million and (==' has started on a bad note with claims in first five

months eceeding 1s./!= million. As against this, past %= years average general

aviation losses are hovering around 1s.6== million. When we compare these claim

figures against the total general aviation premium in India, one may come to a

conclusion from the insurers perspective that general aviation is profitable over the

last %= years period. &his may not be true for all insurers, especially consideringthe fact that %= years average loss figure consists of two or three ma9or losses in

each year. Insurers participating on these losses would have been hit hard. 5a9ority

of the losses in the last %= years are on account of aircraft damages and liability

claims forma a very small portion of it. owever, by no means does this give any

indication into the future considering the catastrophic nature of aviation business.

C=


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M%(&+"! C%((&,%(

&he Indian 8overnment ratified L5ontreal


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&hrough the 5ontreal


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A,"&,%( L,",!, I($+"(/ L,),&$ ,( I(*,"

Western $uropean countries including countries in the Far $ast namely ong

)ong, +ingapore have adopted regulations specifying minimum liability insurance

limits for aircraft based on the Lmaimum ta#e off weight of the aircraftM and

Lpassenger seating capacityM, however India is yet to adopt any such regulations.

$ven neighboring countries li#e +ri an#a and 2epal have minimum liability

insurance reEuirements for aircraft and it may not be too long before India adopts

such reEuirements. While Airlines and


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AVIATION INSURANCE SERVICE

PROVIDERS IN INDIA0 NEW INDIA LIFE

ASSURANCE CO. LTD

In India the one

company which provides

aviation insurance as a

service is 2ew India ife

Assurance


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H!! A!! R,$: I($+"(/ P%!,/#

&his policy is suitable for small aircraft operators belonging to flying clubs,

companies engaged in agricultural spraying operations, aircrafts especiallydesigned for GGIPs, business eecutives and for those engaged in industrial

aids. &he policy scope includes all physical loss or damage sustained by the

insured aircraft including total loss, disappearance. All losses are paid sub9ect

to deductibles.

S"+$ A!! R,$: I($+"(/ P%!,/#


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A,"&,%( P+$%("! A//,*(& /+; ))+ I($+"(/

&his cover is designed to cover insured person against in9ury, disablement or

death arising as result of an accident that is generally granted on annual basis.&he cover operates while mounting or dismounting from and whilst traveling

an aircraft while the aircraft is being used within the geographical scope as

per its permitted usage. &his cover can also be on (6 hours basis. &he capital

sum insured varies according to the status of the insured or earning capacity

and fied by the insurers.

L%$$ % L,/($ I($+"(/

4perating crews of the aircraft are reEuired to have valid license. icense is

liable to be suspended either temporarily or permanently on medical grounds.


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FORMS REGARDING AVIATION

INSURANCE CLAIMS

&here are basically three types of forms provided by the company regarding

aviation insurance. &hey are as follows@

1. P+$%("! A//,*(& I($+"(/ F%+)$

2. A,+/+"& A,"&,%( L,",!, I($+"(/ F%+)$

3. L%$$ % F!#,(' L,/($ I($+"(/ F%+)$

All the forms are different from each other and also the columns to be filled. In

other words they differ from each other.

&hey loo# as follows@

C7


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&he 2ew India Assurance


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c.


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%%. Is the insurance to apply on(6 hours basis, or to apply toflying ris#s only @

%(. &he proposer may, at his option complete this column.If the proposer is also the insured person, this column should be completed.

I, SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSdo hereby assigns the monies payable by &he 2ew India Assurance


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&he 2ew India Assurance s business@ or occupation

6. *etails of aircraft to be insuredAir Frame $ngines

Passenger +eating


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C. Purpose for which the aircraft will be used

. 8eographical limits for which mover is reEuired

7. Will aircraft be flown at night

'. 3y whom will the maintenance and running repairs be carried out

%=. :a; Where will the aircraft usually be #ept :b; Is the aircraft normally #ept in a hanger :c; If so, state type of construction of hanger

%%. Will the aircraft be taied by persons other than licensed pilots or competent licensed engineers

%(. ave you entered into any agreement with any party whereby liability is assumed or denied in respect of theoperations of the aircraft If so, give details

%/. as any insurance company at any time, :a; *eclined your insurance proposal

:b;


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during last three years

%C. *etails of insurance reEuired@:A; +$


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&he 2ew India Assurance


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(. &ype of flying during past ( years e.g. Air ine,


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:+tate all illnesses of whatsoever nature and all accidents involving in9ury and give result of last cardiographeamination with date in all cases;

*A&$@ SSSSSSSSSS(= P14P4+$1>+ +I82A&1$@

+PA

29696045 project on aviavtion insurance

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