Aviation Insurance

UNIVERSITY OF MUMBAIPROJECT REPORT ONAVIATION INSURANCET.Y.BBI (SEMESTER VI)ACADEMIC YEAR: 2011 2012SUBMITTED BY:PAYAL PEDNEKAR.ROLL NO: 1182326PROJECT GUIDEPROF. PRATIBHA JITESH. VIDYA PRASARAK MANDALS

R. Z. SHAH COLLEGE OF ARTS SCIENCE AND COMMERCE

MITNAGAR ROAD, MULUND (EAST) MUMBAI - 400081DECLERATION

I Payal Pednekar the student of Banking and Insurance Semester 6th (2011-12) hereby declare that I have completed the project on Aviation Insurance. The information submitted is true and original to the best of my knowledge. SignatureDate:

Place:ACKNOWLEDGEMENT

Words fall short to express my deep sense of gratitude towards them all, who have imparted their valuable time, energy and intellect towards the beautification of my project .

I express my sincere gratitude to our principal & our coordinator for their continuous support and encouragement.

I extend my sincere gratitude to PROF. PRATIBHA JITESH

my guide for guiding me throughout the project and for helping me whenever required.

I also thank my collage library for providing me with necessary books and magazines.

Last but not the least, I also thank My God, My parents and My friends for their contribution towards the project.

Objective of the project

This project has been undertaken with following objectives in mind:

To understand the Insurance Sector in India, its nature & functioning.

To understand the concept of Aviation Insurance. To comprehend the impacts of the new norms on the functioning of the Insurance sector in India. To understand how these norms are put to practice. This involves understanding of the coalition of input data, the process of data sorting, computing according to the norms, assessing different stress scenarios and the final output of such computations. It also involves close observation of the problems faced in implementation. To draw a parallel of this situation to the Insurance industry as a whole. RESEARCH METHODOLOGY

Research always starts with a question or a problem. Its purpose is to question through the application of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied.There are two types of data collection method use in my project report.

Primary data

For my project, I decided on primary data collection method for observing Aviation Insurance Company. For this information I visited to the Reliance General Insurance. & asked the questions to sales manager about the aviation insurance.

Secondary data

I decided on Secondary data collection method was used by referring to various websites, books, magazines, journals and daily newspapers for collecting information regarding project under study.

Executive Summary

Aviation Insurance was first introduced in the early years of the 20th Century. The first aviation insurance policy was written by Lloyd's of London in 1911. The company stopped writing aviation policies in 1912 after bad weather and the resulting crashes at an air meet caused losses on many of those first policies. Insurance is one of the most popular in business today since they characterized the new economy & disappearance of country boundaries. The purpose of these study the valuation process & approaches in aviation by analyzing the insurance corporation case base upon the valuation this report will identify the why aviation insurance is needed.

This report the Indian Insurance sector, History of insurance in India, History of Aviation Insurance, products & features of Aviation Insurance,& Effects Of 9/11 Attack On Aviation Insurance

INDEX

SR.NOCHAPTER

1.History Of Insurance9-16

2.Origin & Development Of Insurance17-23

3.History Of Aviation Insurance24-29

4.Products Of Aviation Insurance30-40

5.Future of aviation insurance41-58

6.Case Study59-64

7.Conclusion

8.Bibliography

Aviation Insurance

CHAPTER 1

HISTORY OF INSURANCE1.1 Introduction

Humans have always sought security. This quest for security was an important motivating force in the earliest formations of families, tribes, and other groups. The groups have been the primary source of both emotional and physical security since the beginning of humankind. Humans today continue their quest o achieve security and reduce uncertainty. We still rely on groups for financial stability.

With industrialization our physical and economic security has diminished. Mankind is exposed to many serious hazards, which cause stoppage of income. The biggest worry any human being has is the economic worry. He is always thinking of tomorrow and the days to come and he will be planning to meet the demands of his family, his business and that of his own needs. The economic worries may arise due to stoppage of income. Our income dependent, wealth- acquiring lifestyle renders us and our families more vulnerable to environmental and social changes over which we have no control. There may be accidents, sickness disability, or due to premature death of the breadwinner. It is impossible to prevent such calamities. But it is always possible to provide against the loss of income that may result out of such these perils.

Risk is defined as uncertainty of financial loss. If the event were certain to happen, then there be no loss if the event were certain not to happen, then also there is no loss. It is the uncertainty about the time of loss that worries the mankind.Insurance in India The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

1.2 An Overview of Insurance Industry Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three areas: a) Pre Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to nationalize in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.1.3 Global Standards

While the world is eyeing India for growth and expansion, Indian companies are becoming increasingly world class. Take the case of LIC, which has set its sight on becoming a major global player following an Rs280-crore investment from the Indian government. The company now operates in Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon start operations in Saudi Arabia. It also plans to venture into the African and Asia-Pacific regions in 2006.The year 2005 was a testing phase for the general insurance industry with a series of catastrophes hitting the Indian sub-continent. However, with robust reinsurance programmers in place, insurers have successfully managed to tide over the crisis without any adverse impact on their balance sheets. With life insurance premiums being just 2.5% of GDP and general insurance premiums being 0.65% of GDP, the opportunities in the Indian market place is immense. The next five years will be challenging but those that can build scale and market share will survive and prosper.1.4 REGULATORY ACTS

A number of acts govern the insurance sector

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business.General Insurance Business (Nationalization) Act, 1972 The General Insurance Business (Nationalization) Act 1972 was enacted to nationalize the 100 odd general insurance companies and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance, and United India Insurance.

Insurance Regulatory and Development Authority Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector. The Govt. of India then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies into the insurance. Further, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies.

1.5 Regulations for Indian Insurers To protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry Insurance Regulatory and Development Authority (IRDA) was established.

Under the new dispensation Indian insurance companies in private sector were permitted to operate in India with the following conditions:

Company is formed and registered under the Companies Act, 1956.

The aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed 26%, paid up equity capital of such Indian insurance company.

The Companys sole purpose is to carry on life insurance business or general insurance business or reinsurance business.

The minimum paid up equity capital for life or general insurance business is 100crores.

The minimum paid up equity capital for carrying on reinsurance business has been prescribed as 200crores.

1.6 Role & Functions of IRDA: Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include.

Issue to the applicant a certificate of registration, renews, modify, withdraw, suspend or cancel such registration.

Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.

Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. Specifying the code of conduct for surveyors and loss assessors. Promoting efficiency in the conduct of insurance business. Promoting and regulating professional organizations connected with the insurance and re-insurance business. Levying fees and other charges for carrying out the purposes of this Act.1.7 Functions of Insurance The function of insurance is to safeguard against such misfortunes by having contributions of the many pay for the losses of the unfortunate few. This is the essence of insurance- the sharing of losses and, in the process, the substitution of certain, small loss called the premium for an uncertain, large loss.

From an economic perspective, insurance is a financial intermediation function by which individuals exposed to a specified contingency each contribute to a pool from which covered events suffered by participating individuals are paid. Insurance then is a contingent claim contract on the pools assets.

From a legal perspective, insurance is an agreement, the insurance policy or insurance contract, by which one party, the policy owner, pays a stipulated consideration called the premium to the other party called the insurer, in return for which the insurer agrees to pay a defined amount of provide a defined service if a covered event occurs during the policy term.

The person whose life, health or property is the object of the insurance policy is referred to as the insured. Insurance provides certainty of payment of sum assured at the happening of the event. Since no one can predict the happening of the event in advance, it is not possible to compensate against the loss There is an uncertainty about the time of the event happening. We will not be also sure about the quantum of loss. Provides Assistance to Business Large capital investments on buildings and machinery can be protected against loss by Insurance. The cost of Insurance will be very small compared to the total loss. Provides financial stability to commerce and industry When material damage takes place due to peril, there will be stoppage in production resulting in reduction in profit. Loss of profit Insurance can take care of the loss in net profits in addition to loss of machinery. Insurance serves as a basis of credit Industry and commerce approach banks and financial institutions for financial assistance to develop their business. A collateral security may be necessary to secure against the finance advanced. Insurance policies can provide against such advances. Insurance plays a role in reduction of losses. Insurance companies render advice as to how losses can be minimized by using various safety measures because of their experience. Insurance provides fund for investment The Insurer will have huge funds collected from Insured by way of premiums. These funds are not kept idle, but invested in nation building activities. Insurance earns foreign exchange Indian Insurance companies have branches in different countries, where large volume of business is transacted. This will fetch huge amount in foreign currency.1.8 Nature of Insurance Sharing Of Risk

Insurance is a social devise to share the financial loss, which may befall individuals due to many events. Whereas it is not possible to share deaths, accidents or sickness, it is always possible to share the economic losses, which come out of these events. All persons who are exposed to similar risks come together and share the loss.

Co-Operative Endeavour

In every type of Insurance, large number of persons are brought together to share the loss. They have a common goal viz., to plan the economic future. Such people come together voluntarily or through publicity or through soliciting. It is the Insurer who compensates the loss of few from the contributions received from many. Value of risk The risk or financial loss is measured in terms of money before insuring. This is done by means of past experience of the Insurer. This will enable him to collect the cost of Insurance in adequate measure.

Payment at contingency

The payment of sum assured is made on the happening of the event, which is insured. It may be premature death or end of the term in Life Insurance. In non-life, it may be the happening of the event. Amount of payment

In Life Insurance the amount is fixed at the beginning of the contract and full amount is paid at death or end of term. But in other types of Insurance the amount of loss only is paid.

CHAPTER 2Origin and Development of Insurance

2.1 Introduction Insurance in the modern form originated in the Mediterranean during 13/14th century. The earliest references to insurance have been found in Babylonia, the Greeks and the Romans. The use of insurance appeared in the account of North Italian merchant banks who then dominated the international trade in Europe at that time. Marine insurance is the oldest form of insurance followed by life insurance and fire insurance. The patterns that have been used in England followed in other countries also in these kinds of insurance. The origin and growth of Marine Insurance, life Insurance, Fire Insurance and miscellaneous insurance are given below:1. Marine Insurance

The oldest and the earliest records of marine policy relates to a Mediterranean voyage in 1347. In the year 1400, a book written by a merchant of Florence, indicates premium rates charged for the shipments by sea from London to Pisa.Marine Insurance spread from Italy to trading routes in other countries of Europe.

Marine Insurance in India There is evidence that marine insurance was practiced in India some three thousand years ago. In earlier days travelers by sea and land were exposed to risk of losing their vessels and merchandise because of piracy on the open seas. Moreland has maintained that the practice of insurance was quite common during the rule of Akbar to Aurangzeb, but the nature and coverage of insurance in this period is not well known. It was the British, insurers who introduced general insurance in India, in its modern form. The Bruisers opened general insurance in India around the year 1700. The first company, known as the Sun Insurance Office Ltd. Was set up in Calcutta in the year 1710. This followed by several insurance companies of different parts of the world, in the field of marine insurance. In 1972, the government of India nationalized the general insurance business by forming GIC.2. Life Insurance

The early developments of life insurance were closely linked with that of marine insurance. The first insurers of life were the marine insurance underwriters who started issuing life insurance policies on the life of master and crew of the ship, and the merchants. The early insurance contracts took the nature of policies for a short period only. The underwriters issued annuities and pension for a fixed period or for life to provide relief to widows on the death of their husbands. The first life insurance policy was issued on 18th June 1583, on the life of William Gibbons for a period of 12 months.

Life Insurance in India The British companies started life insurance business in India, by issuing policies exclusively on the lives of European soldiers and civilians. They sometimes issued policies on the lives of Indians by charging extra. Different insurance companies like Bombay Insurance Company LTD. (1793) and Oriental Life Assurance Company (1818) was formed to issue life assurance policies in India. Gradually, the first Indian Company named as Bombay Mutual Life Insurance Society Ltd. was formed in Dec. 1870. By 1971, the total numbers of companies working in India were 15, out of which 7 were Indian and the remaining were British companies. After several changes have been made for the period from 1930 to 1938, the Government of India passed Insurance Act, 1938. The act still applies to all kinds of insurance business by instituting necessary amendments from time to time.3. Fire Insurance

Fire insurance has its origin in Germany where it was introduced in municipalities for providing compensation to owners of the property, in return for an annual contribution, based on the rent of those premises. The fire insurance in its present form started after the most disastrous fire in human history known as the 'Great Fire' in London, which had destroyed several buildings. It drew the attention of the public and the first fire insurance commercially transacted in 1667. The Industrial Revolution (1720-1850) gave much impetus to fire insurance. The Nineteenth century marked the development of fire insurance.

Fire Insurance in India In India, fire insurance was started during the British regime. The oldest of these companies include the Sun Insurance Office, Calcutta (1710), London Assurance and Royal Exchange Assurance (1720), Phoenix Assurance Company (1782), etc.4. Miscellaneous Insurance Due to the increasing demands of the time, different forms of insurance have been developed. Industrial Revolution of 19th century had facilitated the development of accidental insurance, theft and dacoit, fidelity insurance, etc. In 20th century, many types of social insurance started operating, viz., unemployment insurance, crop insurance, cattle insurance, etc. This way the business of insurance developed simultaneously with human and social development. Today, the use of computers in the field of insurance is frequently increasing. Insurance becomes an inseparable part of human development.Miscellaneous insurance are of many types like: Health Insurance

All-risks Insurance

Consequential Loss Insurance

General Public Liability Insurance

Burglary Insurance

Golf Insurance

Money Insurance

Fidelity Guarantee Insurance

Workmen Compensation Insurance

Aviation Insurance

Aviation Insurance which is again a type of miscellaneous insurance, concentrating on each and every aspect of aviation insurance and how it has affected the service sector in recent times. Aviation is the most expensive industry means of transport today. This sector gained importance and created awareness after the 9/11 attack on the twin towers of America. After this attack lot of changes took place in the aviation sector and also lot of amendments were made by the law to regulate the aviation insurance contracts. So let us see what these changes are and how aviation insurance forms one of the important part of any countrys insurance sector.2.2 Effects of 9/11 Attack on Aviation Insurance Following the September 11the attack in the United States, the subject of aviation insurance attracted much attention in the media and elsewhere after aviation insurers worldwide withdrew cover for the specific acts of war and terrorism. As a result, many national governments stepped in to provide temporary insurance cover to ensure that airlines continued flying. Short to medium term solutions

At the request of the airline industry the International Civil Aviation Organization established a special group on war risk insurance (SGWI) which, as a short and medium term measure recommended the setting up of an international mechanism funded by insurance premiums to provide no cancelable third-party aviation war risk coverage through a non-profit special purpose insurance entity (GLOBALTIME) with multilateral government backing for the initial years. As a long-term solution the SGWI recommended that an international convention be developed which would limit the third-party liability of the aviation industry for losses arising from war, hijacking and allied perils.

Uncertainty ahead?

Some four years on from 9/11, most governments have withdrawn guarantees for hull and over to airlines and airport service providers. Notable exceptions include the United States, China and Singapore. The market has now responded with certain insurers offering major airlines limited no cancelable third party coverage. Enthusiasm for GLOBALTIME has waned and a new convention on damage caused to third parties on the ground has yet to be agreed. In Asia at least, the airline industry has experienced a dramatic turnaround in fortunes with renewed prosperity. However, as with other classes of catastrophe business, there remain underlying uncertainties in the aviation insurance market that could dramatically change the environment.

Convention and statutory limits

The Montreal Convention 1999, which governs the liability of airlines in relation to passengers and cargo interests, requires airlines to obtain adequate insurance to cover their liabilities under the Convention. In addition, airlines are required by many states to have minimum insurance limits to cover such liabilities including third party surface damage. After the September 11, 2001, terrorist attacks on the United States, the insurance costs for commercial airlines and college aviation programs rose sharply. The prevailing assumption is that increased aviation insurance costs are the result of an increased risk of life and property loss from additional terrorist attacks. This paper questions the assumption and posits that the September 11, 2001, attacks were a catalyst for and not the cause of increased insurance costs. Two alternative explanations for the increased costs are offered. First, after September 11th, insurance managers became aware that they had not been making the incremental rate increases necessary to maintain acceptable profit margins. Second, sharp declines in the value of the insurance company stock portfolios eroded profits. CHAPTER 3

History of Aviation Insurance3.1 AVIATION INSURANCE

History of Aviation Insurance

Aviation Insurance was first introduced in the early years of the 20th Century. The first aviation insurance policy was written by Lloyd's of London in 1911. The company stopped writing aviation policies in 1912 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 Underwriting community. In 1929 the Warsaw convention was signed. The 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 know it today. By 1933 realizing that there should be a specialist industry sector the International Union of Marine Insurance (IUMI) set up an aviation committee, and by 1934 eight European aviation insurance companies and pools were formally established and the International Union of Aviation Insurers (IUAI) was born. The London insurance market is still the largest single centre for aviation insurance. The market is made up of the traditional Lloyds of London syndicates and numerous other traditional insurance markets. Throughout the rest of the world there are national markets established in various countries, this is dependent on the aviation activity within each country, the US has a large percentage of the world's general aviation fleet and has a large established market. No single insurer has the resources to retain a risk the size of a major airline, or even a substantial proportion of such a risk. The Catastrophic nature of aviation insurance can be measured in the number of losses that have cost insurers hundreds of millions of dollars (Aviation accidents and incidents).

Most airlines arrange "fleet policies to cover all aircraft they own or operate.3.2 The Risks Hull "All Risks" The hull "All Risks" policy will usually refer to something like "all risks of physical loss or damage to the aircraft from any cause except as hereinafter excluded" Airline hull "All Risks" policies are subject to a standard level of deductible (that is an uninsured amount borne by the Insured) applicable in the event of partial (non-total) loss. Currently, this deductible can range from $50,000 in respect of a Twin Otter to $1,000,000 in respect of a wide-bodied jet aircraft, such as a Boeing 747. Deductibles too can be reduced by means of a separate "Deductible Insurance" policy. The Deductible Insurance Policy is effected to reduce the large "All Risks" policy deductibles to a more manageable level. For example the US$1,000,000 applicable to a Boeing 747 can be reduced to say US$100,000. Such an eventuality would not be covered by an "all risks" policy because in such circumstances there is no PHYSICAL loss or damage. What the policy will cover is the reinstatement of the aircraft to its "pre-loss" condition, if repairable damage is involved, or some other form of settlement in the event that more substantial damage is sustained. Exactly what form of settlement is to be done will depend on the policy conditions. Today, the vast majority of airline hull "all risks" policies are arranged on an "Agreed Value Basis". This provides that the Insurers agree with the Insured, for the policy period, the value of the aircraft and as such, in the event of total loss, this Agreed Value is payable in full. Under an Agreed Value policy the replacement option is deleted. Spares 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". Under most "Hull" policies the word "Aircraft" means Hulls, machinery, instruments and the entire equipment of the aircraft (including parts removed but not replaced). Once a part is replaced it is no longer, from an insurance viewpoint, part of the aircraft. Conversely once a spare part is attached to an aircraft as a part of that aircraft (not in the hold as cargo or on the wing as an extra pod) it is no longer a "spare". If the equipment is insured on the hull "All Risks" policy the automatic transfer of coverage from "aircraft" to "spare" and vice versa is automatically accomplished. Spares installed on any aircraft are not covered by the Spares Insurance. They become, from an insurance standpoint, a part of the aircraft upon which they are installed and a part of the Agreed Value for which it is insured. This becomes particularly important if the parts are loaned to another airline. Hull War Risks The hull "All Risks" policy will contain the exclusion of "War and Allied Perils". Generally speaking, throughout the aviation insurance world, "War and Allied Perils" have a defined meaning. In the London Aviation Insurance Market the standard exclusion is called the War, Hi-jacking and Other Perils Exclusion Clause (currently known by its reference - AVN48B for short) this lists and defines these so-called war and allied perils. Hull Total Loss Only Cover This is similar to Hull All Risks cover given above but will respond only to total losses of aircraft, whether actual, constructive or arranged. This 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 inadequate for the partial losses. The ratio of partial losses to total losses in such old aircraft is distorted.

3.3 Liability Insurance Liability in respect of Passengers, Baggage, Cargo and Mail carried on the aircraft. These liabilities result from the operations the airline is set up to perform and are normally the subject of a contract of carriage like a ticket or airway bill, which provides some possibility of limiting the airline's liability.

Aircraft Third Party Liability is the liability for damage done to property or people outside the aircraft itself. Every airline will arrange liability insurance for these two categories, normally in a single liability policy. In many countries there are requirements laid down imposing minimum limits of liability that are a prerequisite to obtaining an operator's license. Elsewhere limits are specified for an aircraft to be allowed to land. The size of limit required is often related to the size of the aircraft concerned (and its potential for causing damage). A small aircraft operating only in remote regions and using small airstrips incurs considerably less potential exposure than an aircraft flying into and out of major airports.3.4 General Liabilities The other category of liability covers premises, hangar keepers and products liability and is called "Airline General Third Party" - being the liability for damage done to property or people arising from other than the use of aircraft. Many airlines cover their "Airline General Third Party Liability" within their main liability program. It is called "Airline General Third Party Liability" these days since the insurers took steps specifically to exclude all non aviation activities (for example hotel ownership or management) from "Aviation" Policies a few years ago. Basically for a risk to be considered as "Airline General Third Party Liability" it must arise from what are described as "aviation occurrences" being those involving aircraft or parts relating thereto, or arising at airport locations or arising at other locations in connection with the airline's business or transporting passengers/cargo or arising out of the sale of goods or services to others involved in the air transport industry.This means that there is a definitive language detailing what is considered as "aviation exposure" such that any other (non-aviation) exposure is excluded.Exclusion from Liability Insurance is such things as: Damage to the Insured's own property. (It is after all a third party liability policy).

War and Allied Risks although these are "written back" by a device called "The Extended Coverage Endorsement - AVN 52".

Noise and Pollution - unless caused by or resulting in a crash, fire, explosion or recorded in flight" emergency.

General Liability policies usually includes the "war and allied perils" exposure by way of a "write back" and will probably provide for such things as search and rescue expenses, first aid and other humanitarian expenses and also defense costs.

Radioactive Contamination Noise and Pollution - unless caused by or resulting in a crash, fire, explosion or recorded "in flight" emergency.

Both the Aircraft and General Liability policies usually includes the "war and allied perils" exposure by way of a "write back" and will probably provide for such things as search and rescue expenses, first aid and other humanitarian expenses and also defense costs.CHAPTER 4

Product of Aviation Insurance To protect the Air Lines Company the Aviation Insurance Company has provided a so many products to the airlines company i.e. Owned Aviation Insurance, Non-owned Aviation Insurance & Other Insurance they are explaining is as follows:4.1 Owned Aviation Insurance Owned aviation insurance it means the company operating their own aircraft or fortunate enough to have another Pilot in Command, the team at Elite Risk has assembled the right experts to assist all owned Aircraft insurance needs.1. Air Cargo Operators

Modern air cargo operators need to be technologically proficient and globally savvy, and that means working with other industry partners to ensure a smooth transit of cargo. The Elite Risk Team takes great pride in being one of those partners to all of our air cargo clients. Through our unique relationship with the Aviation insurance community we are able to insure all types of air cargo operators regardless of aircraft type, aircraft age or aircraft use. Our aviation insurance market relationships allow air cargo operators of light piston aircraft to global transport heavy jets, access to all insurance sources worldwide.Coverage includes:

Aircraft hull physical damage

Third party property damage and bodily injury liability

Officers and directors liability

Workers compensation2. Hangar and Contents

Through our Partner Carriers Elite Risk provides comprehensive insurance coverage for airport hangars, buildings, property, contents, mobile equipment, automobile and business interruption all of which are unique exposures that demand specialized expertise and most often excluded on non-aviation policies. It obtain Coverage for all classes of airport tenants including commercial aviation facilities, corporate offices, private hangars and major aircraft modification centers located on public or private airport facilities.

Coverage includes:

Special "Deluxe" Policy Form

100% Replacement Cost Coverage

Valuable Papers

Theft Damage3. Aircraft Hull and Liability

The in-depth experience that our insurance partners offer will ensure comprehensive coverage and complete protection anywhere in the world.

Products and services include:

Comprehensive aviation liability to passengers, third parties and their property Coverage for bodily injury or property damage caused to third parties and passengers, arising out of the operation of the insured's aircraft. Terrorism, War, Hi-jacking Other perils liability to third parties arising from restriction or exclusion from the operators liability policy.

Aviation war and political risks Protection against physical damage to or loss of the aircraft arising from war and associated perils excluded from the Hull All Risks policy.4. Fractional Jet Ownership

As with any business owning a piece of any entity adds liability exposure to your portfolio. The Fractional Jet and Aircraft Ownership Contingent Liability provides coverage for fractional share owners when a third party operator is responsible for the hiring and training of crew members, scheduling aircraft maintenance and repair, and the procurement of liability and aircraft (hull) insurance. The Fractional operator certainly has an interest in obtaining adequate liability protection, they cannot always provide the unique liability protection or limits each fractional owner might require, every owner is unique and has different needs and requirements

The policy is designed to be your personal protection against any unforeseen claims that may involve you and those related toyou allow the insurance company to pay those defense costs and any judgments directly on your behalf without the worry that someone else has the right coverage.Coverage Programs Include: Contingent aviation liability Liability limits to $500,000,000

Products liability for sale of fractional share

Non-owned aircraft liability for use of third party aircraft.4.2 Non-owned Aviation Insurance

Non-Owned Aircraft Liability Insurance provides coverage to companies or individuals that use aircraft that they do not own and that are operated by third parties such as chartered aircraft or permissive use. These exposures are primarily contingent liabilities where the user does not employ the crew and is not directly involved with the operation and maintenance of the aircraft.1. Non Owned Aircraft

Individual and Corporate Non-Owned Aircraft Liability Insurance provide acoverage that is invaluable to the frequent Charter or Borrowed Aircraft traveler. Whether it is for Business or Personal use, Non owned Aircraft and Hull coverage provides a piece of mind insurance. It is designed to protect and defendthe Individual or Corporation for acts that they may or may not be liable for.Specifically this policy covers for Aircraft they do not own and that are operated by third parties such as chartered aircraft or permissive use. These exposures are primarily contingent liabilities where the user does not employ the crew and is not directly involved with the operation and maintenance of the aircraft.Non-Owned Hull and Liability for Special Uses: Film and Production

Power-line Patrol

Pipe-line Patrol

Aerial Photo and Survey

Air Ambulance2. Airport Liability

Products and services include: Premises Standard Liability policies include coveragefor the safety of members of the public while on the premises and within the environment controlled by the airport authority. In addition the policy would also cover sickness or death caused by food or drink purchased and consumed on the premises and while being transported around the airport by employees of the airport authority.

Aircraft Traffic Control Airport traffic control is a Liability for the safe handling of aircraft on the ground, while in the air or under the control of the Air Traffic control center operated by the airport authority. Aviation Freight and Cargo Handling It is a Liability for the loss of or damage to freight, cargo or baggage when being handled by employees of the airport authority.

Airport Security Airport security is a Liability for the security of the airport environs and screening of passengers and cargo. With terrorism a major world wide problem, this aspect is increasingly important.4.3 Other Insurance

The Elite Risk Team is capable of Direct or indirect placement of insurance needs and moving parts. We approach needs as a Quarterback would approach a play. We surround ourselves with the best offensive line in the insurance industry; we create insurance solutions for Personal Residences, Vacation Homes, Automobiles and other vehicle.1.Rotor way International

Rotor Way International is dedicated to producing an award-winning, high performance, light helicopter offering top quality, comprehensive engineering and the most advanced technology in the marketplace.As the worlds oldest and largest kit helicopter manufacturer, it is exciting for us to havethe opportunity to offer protection that makes sense, for such as established forward thinking company.

The Elite Risk team is able to offer liability coverage from construction to completion.Hull coverage is also available.

Aircraft Hull Coverage The Insured value is what will be paid on a loss, not a "Blue Book" or actual cash value. Aircraft Liability Coverage Combined single limit coverage bodily injury and property damage coverage with ONLY passenger bodily injury limited, not passenger and third party bodily injury combined.2. Family Office Private Client

The team at Elite Risk (the best experts in managing the special needs and exposures of Aircraft Affiliates and withour background and history takes pride in offering you anexperience) is committed to its family office and Private Client Practice and is comprised of professionals with diverse skills and backgrounds to meet the unique insurance needs of Affluent Individuals, Families and their Respected Advisors. Our Aviation Insurance Partners at Transport Risk have adeep knowledge in the niche field of aviation risk management and aviation insurance. They work only for, and in the best interest of their clients. 3. Sports and Entertainment

Within the unique world of aviation insurance sports and entertainment aviation insurance is unique within itself, professional sports team and entertainment aircraft insurance placements are among the most complex and demanding risks in the world to manage.

As one of the most prominent insurance groups to understand the unique needs of Affluent individuals and organizations and all their moving parts.CHAPTER 5Future of Aviation Insurance

As the industry enters into the millennium, the insurance industry must look at several problems that also face the aviation industry. Survival for the small FBOs is getting harder each day; the threat of financial devastation is real when it comes to lawsuits. General aviation may be forced to change its way of doing business and become more like the military and commercial airlines. Insurance and the Future of Aviation the aviation industry, as it is known today, has grown into a set of definable industries. Modern aircraft range from military to commercial airlines to the most diverse group, general aviation. Aviation has come a long way the last 100 years. The industry is still developing. With growth comes a problem that must be solved before the industry can go to the next level. FBOs insurance rates are skyrocketing because of this, which contributes to the cycle by causing higher repair cost. Many small business operators really dont want to take the chance and cant afford the rising cost thats associated with liability insurance. As of February 2000 at least three aviation insurance under writers ceased writing coverage for the small business operators, saying its a major risk. One of the main reasons is the cost to the underwriters. Aviation insurance companies have paid out a dollar and quarter for every dollar theyve taking in, for each of the last several years. No wonder so many are closing down, merging, or getting out of the historically riskier aviation activities, General aviation may be forced to change its way of doing business and become more like the military and commercial airlines. Maintenance problems may be identified by computers, and then repaired by the manufacturers. The industry is coping with the mounting cost associated with liability insurance. Remove and replace maintenance is the attitude the industry must lean towards Insurance cost for the industry remains high, with the shrinking fleet of aircraft, means that the training cost will increase. The value of airplanes is soaring; the high cost of new replacement aircraft for training isnt feasible. The FBOs are facing insurance thats inadequate and expensive, and its forcing companies to reduce their operations or even cut them all together. Owners of flight schools are having a hard time just staying in business. The shortage of qualified instructors has slowed the flow of new pilots, which in turn is putting a hardship on the industry. The future of the industry could hold a brighter out-looks. One can only hope that society will change their attitude towards litigation, this would hopefully drive down cost of liability coverage insurance. The industry hopes that with the use of simulators at all levels of training will increase the number of bettertrained pilots and hopefully lower insurance cost at the same time. Insurance can be one of the most expensive elements in the fix cost of owning an aircraft. To keep insurance cost under control in this difficult environment, aircraft and aviation business owners are going to have to make some changes in the way they purchase and think about insurance. There are ways to reduce your insurance cost, remember buying cheap insurance isnt always the best way to go, and its not heavily regulated by our government. Aviation has come a long way the last 100 years, and the future could hold a brighter out-look for the industry. One can only hope that society will change their attitude towards the aviation industry and the litigation that surrounds the industry. In the future, this could drive cost down and make liability insurance affordable to the private owners, and to the FBOs.5.1 Buying Aviation Insurance Contract

As with many specialized service or commodity purchasing, the use of an experienced intermediary or middleman is usually prudent for the transaction process. Although this middleman may not be required in all facets or industries for successful purchases, in the Aviation Insurance Industry, with only one exception, it is required. As a middleman they are discussing is often referred to as a Broker; it is quite frankly the only way to accomplish this need. All the Aviation Insurance companies or groups require the use of a Broker to secure insurance on behalf of the consumer. So what is this Aviation Insurance Broker they need to utilize and access most of the companies providing insurance? Well, the term broker refers to an independent insurance person who is licensed by the State to represent and work for the consumer in the insurance purchasing and service process. Unlike an insurance agent who represents an insurance company and represents that insurance companys interest, a broker is independent of the insurance company and represents the needs and interest of the client. This independence allows the broker the freedom and opportunity to deal with multiple aviation insurance companies and is considered to be working the client. The brokers compensation is paid by a percentage of premiums, which comes from the consumer. This commission structure keeps the brokers attention to represent the best interest of the client/consumer and places a responsibility that the broker provides a continuous service and handling of the insurance needs or requirements.5.2 Selection of a Broker The selection process of a broker should be more involving for the consumer, than which insurance company to buy the coverage from. That is a process consumer and the broker decides upon. The selection of a broker should take several considerations, such as the experience the broker has in the consumers segment of aviation or operation, the infra-structure or team support behind the broker to achieve the demands of technical service and document handling, the market relationship and credibility with underwriters (the insurance company), and the overall reputation in the aviation community. Just as an extensive interview process in conducted to select an employee for a company, so should the hiring process involve searching for, and selecting the aviation insurance broker. This can be conducted by an interview process where the broker sells themselves and the organization they represent as well as a check upon their credentials with a client list of references. Once this process is complete and the consumer feels comfortable with the selection, the long-term relationship the consumer develops with his broker will provide the consumer years of professional service. If, however, the client believes his choice was not good or the broker service does not meet his expectations for a variety of reasons, the client can always change the broker as in the original selection process by writing a "Broker of Record" letter which is provided to the current insurance company. This letter will replace or fire the current broker with the clients new selection, which is based on his criteria and not that of any insurance company. Whatever the process by which the client select or remove the broker representation is controlled by the client.5.3 Duties of the BrokerIt is necessary to Understanding the brokers job should help the client during the selection process. The broker will gather the "underwriting" information on the clients "risk", the aircraft or operation, and submit this information to the insurance company. This gathering of information can be as simple as a one-page application for small risk such as private aircraft usage or as complex as booklets of information for large commercial operations. In any event it is important that the broker knows what information to secure, how to present it and understands completely its context. Thats because the next important part of the brokers responsibility to the client is to negotiate the best combination of coverage and price for clients risk. This can only be achieved with a brokers level of understanding of clients risk, their experience in this area, and for larger risk having a support mechanism the underwriter can relate to. It is in this process the brokers skill is utilized to create the competition between insurance companies to obtain best industry prices at the current time.Once the broker has negotiated the clients insurance program, they will continue to advise the client from the purchasing process through the coverage issues that may arise during the policy period, usually one year. This expertise in service can deal with changes in your policy during its term to the most important reason the client bought the policy in the first place and that is handling a claim should one occur during the policy term. This service process from the client broker may not involve just one person, but multiples of support personnel depending on the size and complexity of risk. As stated earlier, this is why the selection process is important and should involve understanding the structure of the entire brokerage firm for which to represent the client.5.4 What Give To Insurance Broker Aircraft Information Report year, make, model and acquisition value, plus tail and serial numbers and information about passenger and crew seating. Base InformationGive details about home airport, hanger space and ground handling. ContractsSupply drafts of usage, ownership and storage agreements. Liability Limits & Provisions Report average passenger load and profile and review insurance provisions, deductibles and warrisk perils. Maintenance Details Explain whether insurer outsource it, use an in-house mechanic or do a little of both. Mission Information Detailed purpose of use, territory of operations and anticipated annual hours of operations. Pilot History Forms Submit signed forms (which are obtainable from insurance broker) for all pilots.5.5 Renewing Aviation Insurance If aviation insurer like most owners and pilots, he simply renew aviation insurance policy every year. If it was good enough last year it will be good enough this year. Then he probably doesnt give it another thought until next year. And this pattern often repeats itself for many years. There are two very big problems with this scenario. First, things change. Aircraft, where he fly, who fly with him, how much he flymany of these things can change over the years, and they should be reflected in the policy. Second, and even more serious, it is quite possible that policy wasn't the right one for to begin with! In that situation, company simply renewing mistake year after year. In either case, aviation insurance policy deserves a little bit of time once a year. Here are the five things he should do to make sure are adequately protected.5.6 Aviation Insurance in India: Take Off Stage

The unbridled growth in the aviation sector has come as a bonanza for the insurance sector. Thanks to capacity addition and the entry of new aviation players, a host of insurance companies are eyeing this growing market to offer insurance cover to new planes that are being brought to India. The aviation insurance market is looking up and is currently at Rs 350 crore. But with new aircraft being bought by new players entering the business and the existing one on an expansion mode, the aviation market is set to take off, said Bajaj Allianz General Insurances Head-Underwriting K. Krishna moorthy. With the entry of several low cost airlines along with fleet expansions by existing ones and increasing corporate aircraft ownership, the Indian aviation insurance market is all set to take off in a big way. Industry trackers believe that with several airlines including India Go, East West Airlines and Magic Air set to enter the market in the coming weeks, the airline premium income could be up 50 per cent in the next two years. Before the boom in the Indian aviation sector, the airline insurance market was dominated by the four state-owned general insurance companies: New India Assurance Company, Oriental Insurance Company, National Insurance Company and United India. However, with the growth in the Indian aviation story, private players like ICICI Lombard, Bajaj Allianz, Iffco Tokyo General Insurance and Reliance General Insurance Company are also trying to muscle their way into this lucrative sector. The unprecedented growth in this sector is also seeing private players join hands with each other to bid for accounts. The latest such case is the ICICI Lombard-Bajaj Allianz tie-up where they are jointly bidding for Air Indias insurance account which includes providing cover for 50 planes valued over $3 billion.

Currently, a consortium of public sector insurance companies including New India Assurance, Oriental Fire and General Insurance and United Fire and General Insurance handle Air Indias account for which the airline is paying an annual premium of close to US $ 14 million. Aviation insurance business is a high severity loss business and in the future you could see a lot of Indian insurance companies joining hands to manage airline accounts. The role of an reinsure is important in the Indian context as most of the companies do not have the requisite experience of handling a market of this size. The reinsured helps in providing the technical expertise, capacity to underwrite the business and their ability to handle such large risks, the official said. Estimated to be in the region of Rs.3.5 billion, aviation insurance premium business is growing at a fast clip. At present the government-owned four non-life insurers are the major players in this segment as they cover public sector airlines like Air India and Indian.

Out of the eight private players, Bajaj Allianz General Insurance Company and ICICI Lombard General Insurance Company Limited are most active in this segment. The Pune-based Bajaj Allianz is co-insurer for Kingfisher Airlines, Go Air, Indigo Air among the scheduled airlines and has also insured aircrafts owned by corporate like the Bajaj Auto consortium, Force Motors, Ranbaxy group, Shamanur Sugar group and Orient Flight School. ICICI Lombard has insured around 75 aircrafts.Normally the types of insurance covers available are: Aircraft owners / operators

Aircraft hull policy - covering loss of or damage to aircraft

Aircraft liability policy

Liability of aircraft owner/ operator in respect of accidental bodily injury or property damage.

Liability towards passengers both in respect of accidental bodily injury and also towards loss or damage to baggage and personal belongings of passengers.

Aviation war and allied perils

Aviation product's liability

Airport operator's liability

Aviation service provider's liability5.7 Current Scenario of Aviation Insurance The magic of multiplier effect is now working for the aviation Ancillary industry. Reaping the benefits of the aviation boom is not only maintenance, repairs & overhaul (MRO) operations but also the insurance sector. In fact, the spiraling growth in the aviation sector has given an upshot to the insurance segment. As per an airline risk management survey - commissioned by international magazine Airline Business and global airline insurance broker on - airlines are spending no less than $8.36 billion a year on risk management, with around 70%, or $5.86 billion, spent on insurance premiums. Aviation premiums are, on an average, growing by 15.5% post-9/11, the survey reports. It further states that while the industry's loss record has been respectable in the last four years, traffic and passenger numbers have risen significantly, increasing the exposure to risk. In India, a majority of the private players, including Bajaj Allianz, ICICI Lombard, Reliance and the four public sector general insurance companies - Oriental, New India Assurance, United India, National Insurance - offer aviation insurance in the market. Although there are no official estimates, industry players put a ballpark figure of the Indian aviation insurance market at somewhere around Rs 400 crore to Rs 500 cr. "With new aircraft being bought by new players entering the sky and the existing one in expansion mode, this segment will only grow," says T A Ram lingam, head, underwriting, Bajaj Allianz. Bajaj Allianz is one of the most active players in the market and a co-insurer with Kingfisher Airlines, Go Air, indigo Air and Air India among the scheduled airlines and also insured aircraft owned by India companies such as Bajaj Auto consortium, Force Motors, Ranbaxy group, Shamanur Sugar group, Orient Flight school, Asia Aviation, a part of the BILT group, Mundra Port and SEZ Ltd, an Adani group company. In India, this segment is highly reinsurance-driven. A majority of the players have re-insured the value of risk covered with foreign companies. Take the case of Air India where almost 90% of the risk is insured overseas through reinsurance arrangements, while the remaining cover rests domestically. According to Ernst & Young, a global consultancy firm, Indian skies would have over 700 aircraft - from 235 currently - by 2012, an increase of almost 200%. The numbers speak for the potential of this segment in the market, which is one of the fastest growing in the world. "Predictions for aircraft deliveries to meet the increasing demand for air travel, particularly in Asia, mean that some 4,000 new airliners are on order, with this region at 1,242 leading the way. Growth in purchasing power of passengers and entry of low cost airlines has driven the upward movement of the airline industry both in terms of equipment and staff and opening new opportunities for this niche segment," believes Kartik Jain, head, marketing and e-channel, ICICI Lombard. The company has insured more than 75 aircraft till date.5.8 Premium & Claim of Aviation Insurance Global Aviation Premium USD 1.5 billion. Incurred claims including attritional losses USD 1.7 billion. Indian Insurance Premium

General Aviation USD 17.

Airlines 56 million.

Claim Ratio 95 %

Total No. of Aircraft - 1118

MAJOR PLAYERS OF AVIATION INSURANCE IN INDIA

CASE STUDY ANALYSIS-1AVIATION INSURANCE OF KINGFISHER

AIRLINES

Two private sector general insurance companies, ICICI Lombard General Insurance and Bajaj Allianz General Insurance, have bagged the insurance account of Vijay Mallyas Kingfisher Airlines. This is for the first time that the private sector general insurance companies have made major inroads into the aviation sector, which has mainly been the forte of the public sector insurers. Both ICICI Lombard and Bajaj General Insurance will share the Kingfisher Airlines account in a 75:25 ratio. After a beauty parade by the public sector and private general insurance companies, the account was awarded to the two private sector general insurance companies last week. ICICI Bank, one of the promoters of ICICI Lombard, has also financed the aircraft acquisition plans of the Kingfisher Airlines. The insurance deal will be executed the Moment Kingfisher Airlines acquires its fleet of aircraft. Kingfisher will be the first private carrier to be launched with an all-new fleet. The airline has signed an agreement with Airbus Industries of France for the purchase of three brand new Airbus A319 aircraft. With this new purchase, Kingfisher Airlines, which will launch its operations on May 7, has ordered a total of 33 brand new aircraft. Of these, a total of 13 aircraft 10 A320s and 3 A319s are on firm order, with options for buying a further 20 aircraft.KINGFISHER AIRLINES

Kingfisher Airlines is India`s first and only private airline to receive the prestigious, `Best New Airline of the Year` award in the Asia-Pacific and Middle East region from Centre for Asia Pacific Aviation (CAPA). Kingfisher Airlines has also been voted as the 3rd Most Successful Brand Launch of the Year 2005, in the annual Brand Derby Survey conducted by Indias leading business daily-Business Standard. In another Survey conducted by agencyfaqs.com and Brand Reporter, Kingfisher was voted as the 7th Buzziest Brand of 2005 amongst 2000 leading national and international brands. More recently, Kingfisher Airlines has bagged the Service Excellence for a New Airline award from Skytrax, a UK based specialist global air transport advisor.

The latest addition to the list of laurels is the Best New Domestic Airline for Excellent Services and Cuisine award from Pacific Area Travel Writers Association (PATWA), the biggest travel writers organization, representing members from 70 countries across the globe, that conducts independent annual surveys across various industries related with Travel and Tourism in order to select the best in each category. Kingfisher Airlines commenced operations on May 9th, 2005 with a brand new fleet of aircraft.

Kingfisher Airlines offers Full Service at True Value and promises an unparalleled experience to the Indian air traveler. On offer are extra-wide seats and spacious leg room, delicious gourmet meals, international-class cabin crew and a whole host of comforts and delights. FLEET DETAILSTYPE OF AIRCRAFTIN SERVICEIMAGES

A3305

A 321(Dual cabin)6

A 321(Single cabin)2

A 320 (Dual cabin)10

A 320 (Single cabin)16

A 3193

ATR 72-50027

ATR 42-5006NA

Kingfisher Airlines currently operates a fleet of 75 aircraft, which includes 10 A 320 (Dual cabin) aircraft, 16 A 320 (Single cabin) aircraft, 27 classic and next generation ATR 72-500 aircraft and 6 A 321(Dual cabin) aircraft, 5 A330 aircraft, 2 A 321(Single cabin) aircraft, 3 A 319 aircraft and 6 ATR 42-500 aircraft.CASE STUDY ANALYSIS-2AVIATION INSURANCE OF AIR INDIA

New India Assurance Company participated in the Aviation Insurance of Air India way back in 1946. New India Assurance Company provides professional aviation insurance advice and solutions to the needs of small aircraft operators as well as scheduled airlines.

The aviation portfolio of New India Assurance Company encompasses following type of covers.

Hull All Risk Insurance Policy

This policy is suitable for small aircraft operators belonging to flying clubs, companies engaged in agricultural spraying operations, aircrafts especially designed for VIPs, business executives and for those engaged in industrial aids. The policy scope includes all physical loss or damage sustained by the insured aircraft including total loss, disappearance. All losses are paid subject to deductibles. Spares All Risk Insurance Policy Covers loss or damage to spares, tools, equipments and supplies owned by the insured or the property for which the insured is responsible whilst on ground or in transit by land, sea, air including in own aircraft or whilst on the premises of others for storage only.

Hull/Spares War Risk Insurance

Indemnity is provided to the aircraft as well as spares caused by war, invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, resurrection, martial law, strikes, riots, civil commotion, malicious acts, sabotage. Hull Deductible Insurance

Airlines at times have to bear a proportion of loss due to application of a deductible under All Risk Policy, which may impose considerable financial difficulty on the insured. Therefore the operators insure part of their deductibles under this kind of insurance. Aviation Personal Accident (crew member) Insurance This cover is designed to cover insured person against injury, disablement or death arising as result of an accident that is generally granted on annual basis. The 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. This cover can also be on 24 hours basis. The capital sum insured varies according to the status of the insured or earning capacity and fixed by the insurers.

Loss of License Insurance

Operating crews of the aircraft are required to have valid license. License is liable to be suspended either temporarily or permanently on medical grounds. Consequential financial loss is covered by the loss of license policy. Cover provided is in respect of incapacity causing permanent total disablement or temporary total disablement due to bodily injury or illness. Besides the aforesaid general aviation policies New India Assurance Company also provides various other tailor-made insurance as per specific requirements of the insured.

Claims

In case of claims following are illustrative documents that are generally called for from the insured

Documents in connection with aircraft details

Documents in connection with flight details

Documents in connection with the accident

Certificate of airworthiness/registration

Crew details

Maintenance & engineering information

Operational manual passenger documentation in case of claims

AIR INDIA

Air India is Indias finest flying Ambassador. The urge to excel and the enthusiasm, which characterized Air India's first flight, way back on October 15, 1932, is quintessential even today - thanks to Air Indians who have kept alive the tradition of flying high. The recent merger of Air India and Indian, Emerge as a major force in the airline industry. The re-branding exercise is currently underway and passengers are getting to see the unified face of the new invigorated Air India. The merged entity, which presently has a fleet of 148 aircraft, offers passengers seamless travel across domestic and international routes.FLEET DETAILS

Aircraft TypeOwnedLeasedTotal

B77710414

B747336

A310099

A3199514

A32110010

A320301848

A330022

B737-80013720

ATR077

CRJ-700033

B737-800505

B737- Freighters606

A310- Freighters4

04

Total9058148

CASE STUDY ANALYSIS-3(ON PRIMARY RESEARCH)RESPONSE TO THE QUESTIONSI visited the Reliance General Insurance Company & asked the questions to the sales manager about the Aviation Insurance. They are as follows:

1) Your company has provided Aviation Insurance? Yes

2) How many companies have taken Aviation Insurance? The aviation insurance is not provided by one insurance company the two companies are joined together & give insurance.3) What basis you should charge a premium? It depends up on what a type of policy is company taken.

4) What procedure is settled the claim?

First they survey what is a reason for the accident. See all information & documents is correct or not. CONCLUSION In the course of the analysis various trends and developments in the aviation industry were discussed that provide partial answers to this question. Airlines employ a wide variety of business models while taking an aviation insurance contract. For example, some companies like Kingfisher Airlines take policy with high premium while others like Air India take an aviation insurance contract with low premium. It was also observed that airlines with huge and expensive airbuses like ATR 42-500 aircraft tend to generate high amounts of risk; while relatively less expensive aircraft like A330 aircraft tend to generate less risk. The aviation insurance market is highly volatile due to the inherent nature of the risk and the underwriting cycle of insurance. Historically, the market wide premium appears to be almost as volatile as the claims, suggesting a lack of consistency in underwriting this business. The major caveat to my conclusion is that there is significant amount of public data available to assist in underwriting and pricing aviation insurance. This data can be used to develop more effective underwriting rating models for aviation insurance and this should result in better selection of risks and more consistent profits for the insurer. The aviation insurance market, by its own nature, is highly volatile. There are many causes including the overall insurance underwriting cycle, the major accident risk, the short-term memory of the insurance market, and the long-tailed nature of determining responsible parties. However, the increasing involvement of analytical professionals such as actuaries should introduce more effective methods for pricing airline insurance and this should help stabilize the premium component of the loss ratio equation.BIBLIOGRAPHY

BOOKS:

Insurance in India ( P.S. Palande, R.S. Shah) IRDA

Fundamental Insurance ( P. K. Gupta ) IRDA Journals

WEBSITES:

www.irdaindia.comn www.google.com www.flykingfisher.com63