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AVIATION (RE)INSURANCE
-Hitesh Joshi
AVIATION MARKET - SEGMENTS AND FEATURES
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Aviation Industry--Segments
Civil Airlines General Aviation
Military
Aviation Class of Insurance
"aircraft" means any machine which can derive support in the atmosphere from reactions of the air, a[other than reactions of the air against the earth's surface] and includes balloons, whether fixed or free, airships, kites, gliders and flying machines;
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Commercial Corporate Business Personal / Private Sports /
Recreational Instructional Experimental Aerobatics
Transport-based Non-transport-based
General Aviation
Aviation Insurance Market--Buyer Segments
AirlinesGeneral Aviation-RW & FWProduct / ManufacturersSpaceOther Aviation Liability
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Aviation Insurance Market--Segments based on Coverage
Hull / Spares / LiabilityHull DeductibleHull WarExcess War Liability
Rotor-wings
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Turbo-props
Jets (Turbofans)
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Airliner Census - 2009
Business Aviation
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Worldwide Helicopter Fleet Distribution --33598 aircraft
Aircraft in India August 2010
Scheduled 403Non-Scheduled
Corporate jets 87Training 249Private 239Government 125Amateur 150 850
Helicopters 2821535
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Features
Catastrophe class of businessSpecialized branch of insurance International / Regional in CharacterData unavailable for GADrivers-Regulators and LessorsNot Marine InsuranceCombination of short & long tail
Features
Less homogeneity Discontinuity due to technological changes Reinsurance-driven
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Stakeholders
AdditionalInsured
Manufacturer /Repairer
Financier / Lessor
Surveyor /Adjustor /Solicitors
Broker
ReinsurerInsurer
Third Party
Cargo Owner
Passengers
Pilots / CrewOperator
Aircraft
AVIATION COVERS andAVN 1C
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Aviation Covers
Hull All Risk / Liability–AVN 1C Spares All Risk LPO344C Hull War Risk LSW555C-D Spares War Risk CL258/CL260
Hull Deductible War Liability –WRITEBACK AVN52E/G Airport Owners & Operators Liability-Ariel Refuelling Liability -Ariel Aviation Products Liability-AVN66 Loss of Licence Cover-Creechurch Personal Accident Cover-NMA2712
Other Aviation Insurances
Hull Total Loss Insurance Personal Accident Insurance – Crew
and/or Passengers Cargo All Risk Insurance Engine Mechanical Breakdown Aircraft Unavailability Insurance Contingency Insurances Profit Commission Insurance
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Terminology
Combined Single Limit Maximum Agreed Value GRO Cover / FFR Cover FOD / Ingestion Damage Bodily Injury / Personal Injury Named / Open Pilot Warranty Legal Liability / Admitted Liability Leases–Charter / Dry / Wet / Damp / Financial /
Operating Load Liability Documents of Carriage
Passenger ticket / luggage ticket / consignment note Contracting Carrier / Actual Carrier
Terminology
Bank / Pitch / Yaw FOD Bird Ingestion / Hit Angle of Attack / Stall Turbulence Pressurized aircraft MTOM / MTOW Cycles Type rated
Auto-rotation Go around TBO First officer Flight /cockpit/cabin crew VFR/IFR Autopilot
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LONDON AIRCRAFT INSURANCE POLICY-AVN 1C
SECTION I HULL COVER1. Coverage
Loss or damage to aircraft reasonable emergency expenses option to pay for, replace or repair.
2. Exclusions wear and tear, deterioration, breakdown, defect or failure
howsoever caused in any Unit of the Aircraft / consequences within such Unit;
damage to any Unit by anything which has a progressive or cumulative effect but damage attributable to a single recorded incident is covered.
HOWEVER consequential accidental loss / damage is covered.
LONDON AIRCRAFT INSURANCE POLICY – AVN 1C
SECTION I HULL COVER3. Conditions no dismantling / repairs without the consent of the Insurers; repairs and transport of labour and materials by the most
economical method; On indemnification, abandonment at the option of the insurer Betterment deduction No claim shall be payable if other insurance which is
payable without the knowledge or consent of the Insurers.
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SECTION II THIRD PARTY LIABILITY (EXCL.PASSENGERS)
1. Coverage Indemnity for legal liability for compensatory damages
(including costs awarded) in respect of accidental bodily injury and damage to property by the Aircraft or by person or object falling therefrom.
2. Exclusions director /employee /partner / flight, cabin or other crew
/ passengers loss of / damage to any property belonging to or in the
care, custody or control of the Insured;3. Limit of Indemnity any legal costs / expenses incurred with insurers’ written
consent in regard to any claim for compensatory damages If award higher than indemnity, pro-rata allocation of
expenses.
SECTION III PASSENGER LEGAL LIABILITY
1. Coverage Indemnity for legal liability as compensatory damages in respect of
(a) accidental bodily injury (fatal or otherwise) whilst entering, on board, or alighting from the Aircraft and
(b) loss of or damage to baggage and personal articles Provided always that
Insured to take measures to limit liability to the extent permitted by law; In the event of failure to comply, the liability of the Insurers shall
not exceed the amount of the legal liability, otherwise would have existed.
2. Exclusions (a) director / employee / partner in the Insured's business whilst acting
in the course of his employment with or duties for the Insured; (b) member of the flight, cabin or other crew whilst engaged in the operation of the Aircraft.
3. Limits of Indemnity applicable to this Section In addition any legal costs / expenses incurred with their written
consent in defending any action in respect of any claim for compensatory damages
If award higher than indemnity, pro-rata allocation of expenses.
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SECTION IVGENERAL EXCLUSIONS
1. any illegal purpose / any purpose other than those stated
2. outside the geographical limits 3. piloted by any person other than as stated4. landing on / taking off / attempting to do so
from a place not complying with the requirements laid down by the manufacturer of the Aircraft
5. contractual liability6. number of passengers exceeded
CONDITIONS PRECEDENT FOR ALL SECTIONS
1. Due diligence.Compliance with all air navigation and airworthiness orders and requirements issued by any competent authority (a) the Aircraft is airworthy at the commencement of each Flight;(b) all Log Books / other records be kept up to date and shall beproduced to the Insurers or their Agents on request;(c) the employees and agents of the Insured comply with such orders
and requirements.3. Immediate notice of any event likely to give rise to a claim shall be
given. In all cases the Insured shall(a) furnish full particulars in writing of such event and forward
immediately notice of anyclaim with any letters or documents relating thereto;(b) give notice of any impending prosecution;(c) render information and assistance to the Insurers;(d) not act in any way to the detriment or prejudice of the interest of the
Insurers.No admission of liability / offer or promise of payment by the Insured
without the written consent of the Insurers.
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GENERAL CONDITIONS
1. The Insurers entitled to take absolute control of all negotiations and proceedings and in the name of the Insured to settle, defend or pursue any claim.
2. Subrogation upon indemnity given / payment made by the Insurers-the Insured shall cooperate with and assist the Insurers to exercise such rights and remedies.
3. Cancellation by giving 10 days notice in writing. cancelled by the Insured, a return of premium shall be at the discretion of the Insurers. There will be no return of premium in respect of any Aircraft on which a loss is paid or is payable under this Policy.
4. No Assignment with out insurer’s consent. Assignment by endorsement only.
Definitions
1. "ACCIDENT" means any one accident or series of accidents arising out of one event.
2. "UNIT" means a part or an assembly of parts (including any sub-assemblies) of the Aircraft which has been assigned an Overhaul Life as a part or an assembly. Nevertheless, an engine complete with all parts normally attached when removed for the purpose of overhaul or replacement shall together constitute a single Unit.
3. "OVERHAUL LIFE" means the amount of use, or operational and/or calendar time which, according to the Airworthiness Authority, determines when overhaul or replacement of a Unit is required.
4. "OVERHAUL COST" means the costs of labour and materials which are or would be incurred in overhaul or replacement (whichever is necessary) at the end of the Overhaul Life of the damaged or a similar Unit.
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Definitions
5. "PRIVATE PLEASURE" means use for private and pleasure purposes but NOT use for any business or profession nor for hire or reward.
6. "BUSINESS" means the uses stated in Private Pleasure and use for business or professional purposes but NOT use for hire or reward.
7. "COMMERCIAL" means the uses stated in Private Pleasure and Business and use for the carriage by the Insured of passengers, baggage accompanying passengers and cargo for hire or reward.
8. "RENTAL" means rental, lease, charter or hire by the Insured to any person, company or organisation for Private Pleasure and Business uses only, where the operation of the Aircraft is not under the control of the Insured. Rental for any other purpose is NOT insured under this Policy unless specifically declared to Insurers and the detail of such use(s) stated in Part 3 of the Schedule under SPECIAL RENTAL USES.
Definitions
Definitions 5, 6, 7 and 8 constitute Standard Uses and do not include instruction, aerobatics, hunting, patrol, fire-fighting, the intentional dropping, spraying or release of anything, any form of experimental or competitive flying, and any other use involving abnormal hazard, but when cover is provided details of such use(s) are stated in Part 3 of the Schedule under SPECIAL USES.
9. "FLIGHT" means from the time the Aircraft moves forward in taking off or attempting to take off, whilst in the air, and until the Aircraft completes its landing run. A rotary-wing aircraft shall be deemed to be in Flight when the rotors are in motion as a result of engine power, the momentum generated therefrom, or autorotation.
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Definitions
10. "TAXIING" means movement of the Aircraft under its own power other than in Flight as defined above. Taxiing shall not be deemed to cease merely by reason of a temporary halting of the Aircraft.
11. "MOORED" means, in the case of aircraft designed to land on water, whilst the Aircraft is afloat and is not in Flight or Taxiing as defined above, and includes the risks of launching and hauling up.
12. "GROUND" means whilst the Aircraft is not in Flight or Taxiing or Moored as defined above.
Purposes of Use
Private and PleasureBusiness (Industrial Aid) CommercialRentalSpecial usages
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Special usages
Movie making Aerial photography Emergency Medical
Services High Altitude
Mountain Rescue Traffic Patrol Ship / Oil Platform Re-
supply Harbour Support Fire Fighting
Freight Carriage Police Assistance Pipeline & powerline
Patrol Tourism Sight
Seeing Flights Construction Crop spraying Game capture Surf rescue
Exclusions
AVN 38B Nuclear Risks Exclusion Clause AVN 46B Noise and Pollution and Other Perils
Exclusion Clause AVN 48B War, Hi-Jacking and Other Perils
Exclusion Clause (Aviation)
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Hull Coverage
War PerilsNon-War Perils
Hull War Risk CoverLSW 555C
Main policy giving Hull All Risk (HAR)
cover (AVN 1C) excludes (AVN 48B)
all war perils
Premium Calculation
Hull – % rate on Agreed Value Liability
Flat amount for third party Dollar amount per seat Dollar amount per departure Dollar amount per RPKMs / RPMs
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UNDERWRITING CONSIDERATIONS
Rating factors-RISK
Aircraft type- Rotor Wing / Fixed Wing Piston / Turbine / Jet
Generation Age Pilot/Co-pilot- Open/Named Fleet value-Operator Size Geographical Area Purpose of Usage Avionics – GPWS / EGPWS / TCAS / FMS /
TAWS Size / Capacity / Take-off Weight
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Rating factors
Agreed Value / Liability Limits Type of Operations Extent of Usage-Hrs / RPKMs / Departures / Load factor
Passenger Profile Routes Terrain / Weather Safety Culture Regulator / Domicile
Passenger Awards
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Heinrich Pyramid
Accidents and Onboard Fatalities by Phase of FlightHull Loss and/or Fatal Accidents – Worldwide Commercial Jet Fleet – 1995 through 2004
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Accidents by Primary Cause*Hull Loss Accidents – - Worldwide Commercial Jet Fleet – 1995 thru 2004
GENERAL AVIATION UNDERWRITING
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Types of Accidents
Hard Landing Forced Landing Crash Landing Ditching Runway incursion Runway Excursion Runway overshoot Runway undershoot
CFIT Runway Contact-tail
strike Gear up landing Decompression Icing Fuel Starvation
Generation of Aircraft
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Helicopter Operation
ATR-72 Cockpit
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Boeing 777 Cockpit
A320 Cockpit
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General Aviation-Causes of Fatal & Non-fatal Accidents
Pilots
Total Flying Hours Hours on Type Hours on Make &
Model Type of Licence
Student/ Private/ Commercial / ATP
Flying Record
Day-Night PIC Hours IFR –VFR Recency Training Route Familiarization
