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Aviation Underwriting. Aviation Insurance Programme. Presentation By Vijay Thakur (Deccan Insurance Services ). Aviation History. Aviation History. On 17 th of December, 1903 Orville Wright flew an aeroplane for 12 seconds covering a distance of 120 feet. - PowerPoint PPT Presentation

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  • Aviation Underwriting

  • Aviation Insurance ProgrammePresentationByVijay Thakur(Deccan Insurance Services )

  • Aviation History

  • On 17th of December, 1903 Orville Wright flew an aeroplane for 12 seconds covering a distance of 120 feet. JRD Tata was the pioneer of aviation in India. In 1932 Aviation division of Tata Sons Limited was set up with mail service. In 1938 the Airline had carried a few hundred passengers too. In 1946, Tata Sons Ltd., was converted into Air India Limited.

    Aviation History

  • Main Airline Insurance CoveragesHull All RisksHull War RisksSpares All Risks / War RisksAircraft Liabilities Third PartyPassengerBaggageCargo and MailExcess Liability - Third Party War RisksHull DeductibleAerospace Manufacturers Products & Grounding LiabilityAirport Owners & Operators LiabilityProduct Liability

  • Hull All RisksCoverageCovers all risks of loss of or damage to aircraft unless otherwise excludedCovers flight and ground risksCoverage includes ingestion / Foreign Object Damage (F.O.D.) caused by a single recorded incident

    Main ExclusionsMechanical Breakdown / Wear and TearWar, Hi-jacking and Other Perils Exclusion Clause AVN 48BNuclear Risks Exclusion Clause AVN 38BItems detached from aircraft and held as spare partsLoss of Use

  • Hull All RisksLimitsTotal Loss / Constructive / Arranged Total Loss:- Pay agreed value as declared by airline and agreed by insurers for each aircraftPartial losses pay for cost of repairs less deductibleDeductible is also applied to TL/CTL claims of on Rotor Wing AircraftDeductibleJets wide-bodied US$1,000,000Hybrid US$750,000Narrow bodied US$500,000Standard market deductibles may be increased in the futureSeparate deductible insurance may be arranged to buy down to a lower level

  • Hull All RisksAdditional Provisions:-Missing aircraftForced landing, salvage charges and expensesCost of repairsLoss payee provisions (leased / financed aircraft)Leased components with Stipulated Loss ValueSupplementary Expenses Search & Rescue Operations, Runway Foaming

  • Hull War and Allied PerilsCoverageCovers loss of or damage to aircraft by War and Allied Perils as excluded from All Risks policy such as War / Civil War etc. Act of Terrorist, Strike / Riot, Civil Commotion, Confiscation etc., HijackingStandard market wording - LSW 555B / LSW 555CMain exclusionsHostile detonation of nuclear weapon.War between UK, USA, France, Russian Federation, ChinaConfiscation etc. by government of registrationConfiscation etc. for financial reasons.Repossession by title holderDelay, loss of use, consequential loss

  • Hull War and Allied Perils LimitsEach aircraft covered for the same agreed value as under the hull all risks policy subject to a policy aggregate sum insured per annumDeductibleNo deductibleAdditional Provisions:-Extortion and Hijack Expenses (90% of payments properly made)Leased components with Stipulated Loss Values

  • Hull War and Allied PerilsCancellation, Revision and Automatic Termination Provisions:-Insurers may issue 7 days notice to review premium and/or geographical limits at any timeAutomatic review of premium and/or geographical limits on expiry of 7 days from hostile detonation of nuclear weaponInsured or insurers may cancel policy by giving 7 days notice prior to the end of each policy quarterAutomatic policy cancellation in the event of war between UK, USA, France, Russian Federation, China (if aircraft are in the air, coverage continues until first landing)

  • Spares All RisksCoverageCovers all risks of loss or damage to spare aircraft engines, parts or equipment owned by the Assured or for which they are responsibleCovers whilst in storage or in transitCovers Ground EquipmentsCovers Engines

  • Spares All RisksMain ExclusionsMechanical / electrical breakdown, wear and tear.War, Hi-jacking and Other Perils Exclusion Clause (AVN 48B) (may buy-back cover normally in conjunction with hull war)Nuclear Risks Exclusion Clause AVN38B Inventory lossesLoss arising under process and directly resulting therefromAny spare whilst fitted to an aircraft

  • Spares All RisksLimitsNormally insured on a replacement value basis up to value declared - will pay cost of repair in event of partial loss (less deductible). Subject to a limit per occurrence and a sub-limit for any one transitDeductibleUS$ 10,000 each claim, but for engine running/testing losses the hull all risks deductible applies

  • Spares War and Allied PerilsUsually arranged in conjunction with hull warCoverage for paragraph (a) of LSW 555B limited to transit risks only

  • Legal LiabilityCoverageWill indemnify against legal liability for bodily injury or property damage suffered by third parties (including passengers baggage and cargo) arising from the aviation operations of the airline and caused by an occurrenceRelates mainly toOperation of aircraftInjury to passengersDamage to cargo / baggageOperations at airports and other aviation premisesServices to other airlinesCan include war and allied perils Writeback per AVN 52D

  • Legal LiabilityNon-Aviation Liability Clause AVN59 defines extent of aviation liability:-Occurrences involving aircraft or parts or equipmentOccurrences arising at airport locationsOccurrences arising at any other location in connection with the Insureds business of transporting passengers or goods by airOccurrences arising out of the supply of goods or services to others:-in connection with the use and/or operation of aircraftinvolved in the air transport industry

    Subject to policy conditions and exclusions

  • Legal LiabilityMain exclusions"Non-Aviation" risks e.g. Employers Liability / Motor liabilityDamage to property owned, leased or rented by the assuredNuclear risks (AVN38B)Noise, pollution, contamination, electrical interference (AVN46B).Hostile detonation of nuclear weapon (Article (b) of AVN48B).Other exclusions per AVS.104B

  • Legal LiabilityLimitsWill pay damages assessed against the assured subject to a limit any one occurrence. Plus legal fees and expensesAVN52D limits third party war liability coverage to USD 50,000,000 each occurrence and in the annual aggregate

    DeductibleBaggage US$1,250Standard Market Cargo / Mail US$10,000Deductibles

  • Legal LiabilitiesRatingDeparture rate plus per passenger carried basisUS$ amount per 1,000 RPKsSmaller risks Third Party Legal Liability (TPLL) US$ per aircraft plus Passenger Legal Liability (PLL) US$ per passenger seatFollowing 11/09/2001, Special Surcharge of USD 1.25 per passenger introduced for all airlines

  • Additional Provisions:-Funeral, medical, illness, transportation and repatriation expensesPublic enquiry, removal of wreck, search and rescue, runway foaming expensesDefence, settlement and supplementary payments

    Legal Liability

  • Legal LiabilityAdditional Provisions:-Excess Non Aviation LiabilitySum insured US$ 25,000,000 any one occurrence and in the annual aggregate, in excess of underlying insurancePersonal Liability (per AVN60)Sum insured US$ 25,000,000 any one offence and in the annual aggregate

  • Selected Policy ConditionsAirworthiness / comply with DGCA regulationsIssuance of tickets / waybillsAdvice of material alterationsCancellation clauseIndividual contracts to be agreed by insurersClaims notification / No admission of liability

  • Selected Policy ConditionsCoverageThird Party Excess AV52 coverageLimitsexcess of primary limitRateUS$ rate per passenger carried

  • Additional Airline Insurance CoveragesEngine Mechanical BreakdownProfit Commission InsurancePassenger Voluntary SettlementPersonal Accident / Loss of LicenseHull Total Loss OnlyTechnical Records

  • Additional Airline Insurance CoveragesFinancial Balance Sheet Protection ProductsLoss of UseLoss of Profits / Extra ExpensesGrounding

  • THANK YOU

    ***************HULL - COVERAGE / EXCLUSIONS F.O.D. Stress single recorded incident and normally must require immediate withdrawal from service. Ingestion of small stones, grit, ice etc with gradual deterioration not intended to cover. Mechanical breakdown / wear and tear exclusion - consequential damage covered but engine single unit so all damage within engine excluded.

    *HULL - LIMITS / DEDUCTIBLES Agreed value means that cash is paid - replacement option removed as opposed to Insured Value CTL is normally fixed at 75% or 80% of agreed value. Deductibles - Turbo-props sub minimum according to weight e.g. ATR72/F50/DHC8 $100,000, Twin Otter / DO228 $25,000. Piston minimum $2,500 single / $5,000 twin.Higher deductible levels have been discussed within the market and we wait to see what moves, if any, will be made in this area.Suggested levels:-US$ 3m for wide-bodied (but US$5m for B777)US$ 2m for hybrid aircraftUS$ 1m for narrow bodiedUS$ 250,000 for large turbo propsThis would make the need for deductible Insurance more pressing and we will discuss this type of coverage later in the presentation.

    *Missing Aircraft: - If unreported after certain period of times, eg 15 daysForced Landing:- In the event aircraft cannot take off again - cost of dismantling, transportation to airport, reassembly, even if no damage sustainedSalvage Charges:- Expenses incurred by Insured in defence, safety, preservation and recovery of the insured aircraftCost of Repairs:- Transportation of personnel, materials, tools and equipment to aircraft, or transportation of aircraft to place of repair / cost of replacement parts / Insureds labour costs etcAttach of leased engines / components - added to the aircraft value increases - though must be within Maximum hull aggregate valueGenerally adjusted at expiry*HULL WAR - COVERAGE / EXCLUSIONS Dovetails with Hull All Risks -