A Project on aviation insurance

8/19/2019 A Project on aviation insurance

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

Page 1 of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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A PROJECT REPORT ON

'' AVIATION INSURANCE & ITS IMPACT ON TOURISM

INDUSTRY''

BACHELOR OF COMMERCE

BANKING &INSURANCE



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SEMESTERVI

YEAR 2!1"1#

SUBMITTED BY

ONA JACINTO

ROLL NO.14

PROJECT GUIDE

PROF.DHANYA PANICKER

N.G.ACHARYA & D.K. MARATHE COLLEGE

OF

ARTS$ SCIENCE & COMMERCE

CHEMBUR$ MUMBAI 4!! !71

CERTIFICATE

N.G. A%() & D.K. M(*+ C,--++ ,/ A(*0$ S%+%+ & C,+(%+



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N%A%%(+5*+56

This is to certify that ONA JACINTO ,/ T.Y. %+-,( ,/ 8 5

09(%+6 0++0*+( VI

Y+( 2!1"1#6 has successfully completed the project on :AVIATION

INSURANCE & ITS IMPACT ON TOURISM INDUSTRY; under the guidance

of M(0. D) P%8+(.

Signature of project guidance signature of principal

Signature of Co-ordinator signature of external

examiner

ACKNO


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I would like to extend my thanks to our Principal r& && uley and (ice

Principal rs& )kila aheshwari for their constant e*orts to conduct this

course smoothly&

I would also like to extend my heartfelt thanks to course Co-ordinator+ myparents+ ,i!rarian and friends for their constant support and encouragement

ate

Place um!ai signature of student

DECLARATION

I .na /acinto the student of 0&1& )charya % &2& arathe college of )rts+

Science and Commerce studying in T&3& 4$achelor of $anking and Insurance5

Page # of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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Semester-(& 6ere!y declare that I ha#e completed this project 7AVIATION

INSURANCE & ITS IMPACT ON TOURISM INDUSTRY; in the academic

year 89:;-:+ ,/ *+ ?(,=+%*

This project has !een undertaken with following o!jecti#es in mind

• To understand the Insurance Sector in India, it’s nature & functioning.



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To understand the concept of )#iation 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 in#ol#es

understanding of the coalition of input data+ the process of data

sorting+ computing according to the norms+ assessing di*erent

stress scenarios and the nal output of such computations& It also

in#ol#es close o!ser#ation of the pro!lems faced inimplementation&

To draw a parallel of this situation to the Insurance industry as a

whole&

E@+%9*>+ S9()

)#iation Insurance was rst introduced in the early years of the 89th

Century& The rst a#iation insurance policy was written !y ,loyd's of ,ondon

in :=::&

Page of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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The company stopped writing a#iation policies in :=:8 after !ad weather

and the resulting crashes at an air meet caused losses on many of those rst

policies&

Insurance is one of the most popular in !usiness today since they

characteri>ed the new economy % disappearance of country !oundaries& The

purpose of these study the #aluation process % approaches in a#iation !y

analy>ing the insurance corporation case !ase upon the (aluation this report

will identify the why a#iation insurance is needed&

This report the Indian Insurance sector+ 6istory of insurance in India+ 6istory

of )#iation Insurance+ products % features of )#iation Insurance+% ?*ects .f =@:: )ttack .n )#iation Insurance&

INDE

Page of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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SR.N

O

CHAPTER PG.N

O

1. H0*,() O/ A>*, I09(%+ 11

2. R080 %,>+(+5 A>*, I09(%+ 1223

3. L-*+0 A>*, I09(%+ 24"4

4. F9*9(+ ,/ >*, 09(%+ ""#1

". I5 G,>+(+* A>*,

I09(%+

#2##

#. I?%* ,/ >*, 09(%+ ,

*,9(0 590*()

#7#

7. C,%-90, #

. B-,(?) A9

CHAPTER 1

Page 1! of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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HISTORY OF AVIATION INSURANCE

INTRODUCTION OF INDIAN AVIATION SECTOR

)#iation Industry in India is one of the fastest growing a#iation

industries in the world& Bith the li!erali>ation of the Indian a#iation sector+

a#iation industry in India has undergone a rapid transformation& rom !eing

primarily a go#ernment-owned industry+ the Indian a#iation industry is nowdominated !y pri#ately owned full ser#ice airlines and low cost carriers&

Pri#ate airlines account for around A;D share of the domestic a#iation

market& ?arlier air tra#el was a pri#ilege only a few could a*ord+ !ut today air



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tra#el has !ecome much cheaper and can !e a*orded !y a large num!er of

people&

The origin of Indian ci#il a#iation industry can !e traced !ack to :=:8+

when the rst air Eight !etween 2arachi and elhi was started !y the Indian

State )ir Ser#ices in colla!oration with the "2 !ased Imperial )irways& It was

an extension of ,ondon-2arachi Eight of the Imperial )irways& In :=F8+ /G

Tata founded Tata )irline+ the rst Indian airline& )t the time of independence+

nine air transport companies were carrying !oth air cargo and passengers&

These were Tata )irlines+ Indian 0ational )irways+ )ir ser#ice of India+ eccan

)irways+ )m!ica )irways+ $harat )irways+ .rient )irways and istry )irways&

)fter partition .rient )irways shifted to Pakistan&

In early :=H+ 1o#ernment of India esta!lished a joint sector company+ )ir

India International ,td in colla!oration with )ir India 4earlier Tata )irline5 with

a capital of Gs 8 crore and a Eeet of three ,ockheed constellation aircraft&

The inaugural Eight of )ir India International ,td took o* on /une + :=H onthe um!ai-,ondon air route& The 1o#ernment nationali>ed nine airline

companies #ide the )ir Corporations )ct+ :=;F& )ccordingly it esta!lished !y

:==;+ se#eral pri#ate airlines had #entured into the a#iation !usiness and

accounted for more than :9 percent of the domestic air traJc& These

included /et )irways Sahara+ 0?PC )irlines+ ?ast Best )irlines+ odi,uft

)irlines+ /ag sons )irlines+ Continental )#iation+ and amania )irways& $ut

only /et )irways and Sahara managed to sur#i#e the competition& eanwhile+

Indian )irlines+ which had dominated the Indian air tra#el industry+ !egan to

lose market share to /et )irways and Sahara& Today+ Indian a#iation industry

is dominated !y pri#ate airlines and these include low cost carriers such as

eccan )irlines+ 1o )ir+ and Spice /et etc+ who ha#e made air+ tra#el

a*orda!le&



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HISTORY OF AVIATION INSURANCE

Aviation Insurance was first

introduced in the early years

of the 20th Century. The first

aviation insurance policy was

written y !loyd"s of !ondonin #$##. The co%pany stopped

writing aviation policies in

#$#2 after ad weather and

the resulting crashes at an air

%eet caused losses on %any

of those first policies.

It is elieved that the first

aviation polices were underwritten y the %arine insurance underwriting co%%unity.

In #$2$ the arsaw convention was signed. The convention was an agree%ent to

estalish ter%s, conditions and li%itations of liaility for carriage y air, this was the first

recognition of the airline industry as we 'now it today.

(y #$)) reali*ing that there should e a specialist industry sector the International +nion

of arine Insurance set up an aviation co%%ittee, and y #$)- eight uropean aviation

insurance co%panies and pools were for%ally estalished and the International +nion of

Aviation Insurers was orn.


) light Eight of :=::

http://en.wikipedia.org/wiki/Warsaw_conventionhttp://en.wikipedia.org/wiki/Warsaw_conventionhttp://en.wikipedia.org/wiki/Warsaw_convention


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The !ondon insurance %ar'et is still the largest single centre for aviation insurance. The%ar'et is %ade up of the traditional !loyds of !ondon syndicates and nu%erous other traditional

insurance %ar'ets. Throughout the rest of the world there are national %ar'ets estalished in

various countries, this is dependent on the aviation activity within each country, the +S has a

large percentage of the world"s general aviation fleet and has a large estalished %ar'et.

/o single insurer has the resources to retain a ris' the si*e of a %aor airline, or even asustantial proportion of such a ris'. The Catastrophic nature of aviation insurance can e

%easured in the nu%er of losses that have cost insurers hundreds of %illions of dollars

1Aviation accidents and incidents. ost airlines arrange 3fleet policies3 to cover all aircraft they

own or operate.



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CHAPTER 2

RISK COVERED IN AVIATION INSURANCE

There are different types of ris' which ta'es place in aviation insurance and those ris's are

covered in aviation insurance they are as follows4

The aove diagra% suggests that there are %ainly two 'inds of ris's which an aviation insurance

co%pany will cover which has een divided into two parts. They are4

#. /or%al 5is's

2. !iailities

These two ris's are further divided into various parts which involve various ris's and

liailities they are which is e6plained in detail later on.

Page 1" of 74N.G.ACHARYA & D.K. MARATHE COLLEGE

AVIATION

NORMAL LIABILITIE


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NORMAL RISKS

These ris's are those ris's which every aviation co%pany in this industry carries it on its

ac' when it enters into the usiness. These ris's %ay differ fro% ti%e to ti%e and situation to

situation. These are

#. 7ull 5is's

2. 7ull ar 5is's). Spares All 5is's8 ar 5is's

-. 7ull total !oss 9nly cover

These ris's are those ris's which ta'es place when these ta'es place when any of these

factors co%es into action. (ecause all the aove ris's %entioned aove are unpredictale and

%ay occur at any ti%e

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HULL RISKS

The hull 3All 5is's3 policy will usually refer to so%ething li'e 3all ris's of physical loss

or da%age to the aircraft fro% any cause e6cept as hereinafter e6cluded3.

Airline hull 3All 5is's3 policies are suect to a standard level of deductile 1that is an

uninsured a%ount orne y the Insured applicale in the event of partial 1non:total loss.

Currently, this deductile can range fro% ;eductiles too can e reduced y %eans of a separate 3>eductile Insurance3 policy.

The >eductile Insurance ?olicy is affected to reduce the large 3All 5is's3 policy deductiles to

a %ore %anageale level.

@or e6a%ple the +S;#,000,000 applicale to a (oeing =-= can e reduced to say

+S;#00,000.

The ter% 3all ris's3 can e %isleading. 3All ris's of physical loss or da%age3 does not

include loss of use, delay, or conseuential loss. 3Brounding3 is a good e6a%ple of conseuential

loss. So%e years ago when there had een a couple of accidents involving >C#0 Aircraft, the

Civil Aviation Authorities throughout the world i%posed a 3grounding order3 on that type of

aircraft.

That order in e*ect said until certain things had !een esta!lished and

checked out those aircraft could not Ey& The operators of those aircraft were

una!le to Ey them and as a conseKuence of that they LlostL the use of them&

$ut the aircraft were not LlostL - it was known precisely where they were !utthey could not !e used to carry passengers& Such an e#entuality would not

!e co#ered !y an Lall risksL policy !ecause in such circumstances there is no

P63SIC), loss or damage&



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hat the policy will cover is the reinstate%ent of the aircraft to its 3pre:loss3 condition, if

repairale da%age is involved, or so%e other for% of settle%ent in the event that %ore

sustantial da%age is sustained. 6actly what for% of settle%ent will depend on the policy

conditions.

Today, the vast %aority of airline hull 3all ris's3 policies are arranged on an 3Agreed alue

(asis3. 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 alue is payale in full. +nder an

Agreed alue policy the replace%ent option is deleted.

C,%,(5+ ?-+ 500*+( F(%+$ 2" J9-) 2!!!



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The hull ris' does not cover so%e ris's whish are as follows



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:& Bear+ tear and gradual deterioration - in common with most non-

marine policies 4which includes a#iation insurance5 these perils are

thought to !e a trading expense and not a peril to !e insured&

8& Ingestion damage - caused !y stones+ grit+ dust+ sand+ ice+ etc&+

which result in progressi#e engine deterioration is also regarded as

Lwear and tear and gradual deteriorationL+ and as such is excluded&

Ingestion damage caused !y a single recorded incident 4such as

ingestion of a Eock of !irds5 where the engine or engines concerned

ha#e to shut down is not regarded as wear and tear and is co#ered

su!ject to the applica!le policy deducti!le&

). echanical (rea'down : li'ewise is thought y aviation insurers to e an operating

e6pense, ut suseuent da%age outside the unit concerned is usually covered.

7owever, it is possile to otain insurance coverage against %echanical rea'down

of engines y way of a separate policy. This coverage has a high degree of e6posure

and as a result is relatively e6pensive. The %aority of airlines do not purchase it

proaly viewing such e6posure as a part of the 3engineering3



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HULL WAR RISKS

The hull 3All 5is's3 policy will contain the e6clusion of 3ar and Allied ?erils3.

Benerally spea'ing, throughout the aviation insurance world, 3ar and Allied ?erils3 have a

defined %eaning. In the !ondon Aviation Insurance ar'et the standard e6clusion is called the

ar, 7i:ac'ing and 9ther ?erils 6clusion Clause 1currently 'nown y its reference : A/-D(

for short this lists and defines these so:called war and allied perils. It say,

1. Bar - this includes ci#il war and war with no formal declaration&

2. The detonation of a weapon

3. Strikes+ riots+ ci#il commotions and la!our distur!ances&

4. Political or terrorist acts&

". alicious or sa!otage acts&

#. Conscation+ nationali>ation+ reKuisition and the like !y anygo#ernment&

7. 6ijacking or "nlawful exercise to control plane other than crew

mem!ers of the Eight concerned&



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The %aority of the e6cluded 3ar and Allied ?erils3, other than the detonation of a

nuclear weapon and a war etween the Breat ?owers 1the aviation insurance world identifies

these as the +.S.A., the 5ussian @ederation, China, @rance and the +E, can nor%ally e covered

y way of a separate 3ar and Allied ?erils3 policy. Aircraft deductiles are not nor%ally applied

in respect of losses arising out of 3ar and Allied ?erils3.

9ther e6clusions insurers will usually apply are, as follows4:

:& Conscation etc& !y the LstateL of registration 4this exclusion can often

!e deleted in respect of nancial interests - al!eit+ in some instances at

an additional premium charge5

8& )ny de!t+ failure to pro#ide !ond or security or any other nancial

cause under court order or otherwiseM

F& The repossession or attempted repossession of the )ircraft either !y

any title holder or arising out of any contractual agreement to which

any Insured protected under the policy may !e partyM

H& elay and loss of use& 4)lthough there is often an extension to the

policy for a limited amount for extra expenses necessarily incurred

following conscation or hijacking5&

The aircraft hull 3ar and Allied ?erils3 policy will cover the aircraft on an 3Agreed

alue3 asis against physical loss or da%age to the aircraft occasioned y any of these perils.

This state%ent is %ade carefully and delierately in order to highlight the essential difference

fro% a 3?olitical 5is's3 Insurance.



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SPARES ALL RISKS

@irst of all we %ust identify what we %ean y a 3spare3 or perhaps : 3when is a spare not

a spare3 to which a si%ple answer is 3when it is attached3. +nder %ost 37ull3 policies the word

3Aircraft3 %eans 7ulls, %achinery, instru%ents and the entire euip%ent of the aircraft

1including parts re%oved ut not replaced. 9nce a part is replaced it is no longer, fro% aninsurance viewpoint, part of the aircraft. Conversely once a spare part is attached to an aircraft as

a part of that aircraft 1not in the hold as cargo or on the wing as an e6tra pod it is no longer a

3spare3.

If the euip%ent is insured on the hull 3All 5is's3 policy the auto%atic transfer of

coverage fro% 3aircraft3 to 3spare3 and vice versa is auto%atically acco%plished.

7aving estalished when a spare is a spare how is it insured as suchF +sually in one oftwo ways. ither under a 3spares3 section of a hull policy or y a separate Spares ?olicy. In

either case the scope of coverage will proaly e si%ilar. All 5is's whilst on the Bround and in

Transit for a li%it of Gso %uchH any one ite% or sending or any one location. ar 5is's can also

e covered 1in respect of transits, Stri'es, 5iots, Civil Co%%otions can e covered in

accordance with standard %ar'et clauses. Spares coverage is usually suect to a s%all

deductile e6cept, however, in respect of ground running of spare engines when the appropriate

Ingestion deductile will e applied. Spares are nor%ally covered on an agreed value asis :

usually their replace%ent cost 1e it new or reconditioned : as is reuired.



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Spares installed on any aircraft are not covered y the Spares Insurance. They eco%e,

fro% an insurance standpoint, a part of the aircraft upon which they are installed and a part of the

Agreed alue for which it is insured. This eco%es particularly i%portant if the parts are loaned

to another airline.


A * %,%8?* * *0 0?(+ ?(*0 A ++ * *0 0?(+ ?(*0

,(8 05+


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HULL TOTAL LOSS ONLY COVER

This is si%ilar to 7ull All 5is's cover given aove ut 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 su%s and pre%iu% on such low su%s

would result in low pre%iu%, which would e inadeuate for the partial losses. The ratio of

partial losses to total losses in such old aircraft is distorted.


The )erocor 4)eroline as Cordeillra5 C-F used in


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CHAPTER 3

LIABILITIES IN AVIATION INSURANCE

!iailities are those ris's which %ay arise due to so%e conseuences or so%e reasonsJ

the co%pany has to face. Those reasonsJ are as follows

#. Aircraft !iaility

2. 6cess !iaility

). Aerospace anufacturers products and Brounding !iaility

-. Airport 9wners and 9perations !iaility


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AIRCRAFT LIABILITY

7ere in aircraft liaility there are %any other liailities involved which are further

divided into four parts. They are

These are the 'inds of liailities which are covered in aviation insurance the e6planation in

detail is given elow


AIRCRAFT

CARGO

AND

MAIL

BAGGAG3RD PASSENGE


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PASSENGER LIABILITY

Co#erage for

aircraft operators in

the e#ent a

passenger is injured+

killed or disa!led

during an accident

while a!oard an

insured aircraft&

)#iation policies

di#ided lia!ility

co#erage into two

parts--general lia!ility 4excluding passengers5+ and passenger lia!ility&

) Passenger ,ia!ility policy co#ers incidents resulting from the transportation

of passengers !y land+ sea or air and can often !e included as part of a

a#iation insurance policy&

7owever care %ust e ta'en to chec' that the %otor policy wording does not e6clude fare:

paying passengers, which is often the case. It is unli'ely that an underwriter will e prepared to

cancel or a%end the wording of a standard %otor vehicle policy.

@or this reason >aily Cover policies are specifically for to cater for fare:paying passenger

liaility.


Passengers injured in OTurkish )irlines Plane Crash in

0etherlands' e! 8;+ 899=


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THIRD PARTY LIABILITY

This progra% offers )rd ?arty !iaility insurance coverage for non:co%%ercial

operations only. ?ilot and passenger inuries and aircraft physical da%age are not covered. This

%e%er enefit progra% is designed to allow non:co%%ercial pilots the enefits that insurance

coverage can offer.

hile pilot and passenger inuries and da%age to the aircraft itself are not covered under

a Third ?arty progra%, financial responsiilities odily inury or property da%age caused y the

aircraft for which the pilot is found to e legally liale to pay to others is covered. Additional

insured parties such as landowners, %unicipalities and airports, can also e covered under this

type of policy. (ecause the possession of Third ?arty coverage provides landowners with a

Certificate of Insurance showing that coverage is in place, access to %ore flying sites are

accessile for the operation of your aircraft



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C,%,(5+ %(0 , ,*+- +( P(0 A(?,(* =90* /+ 9*+0 /*+( *+ *8+ ,

% (+09-*+5 5+0*(9%*, ,/ *+ ,*+- * /+-- ,$ 2" J9-)$ 2!!!

hen one engages in recreational activities reuiring the use of a vehicle : whether it e land,

water, or air sports related : there are inherent factors that could result in liaility issues. /o one

wants to enoy an activity and then have the pleasure of it clouded with possile situations that



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would result in liaility clai%s against their hard earned savings. This Third ?arty liaility

insurance for +S+A %e%ers can help relieve the worry of possile clai%s against the pilot

should this type of situation occurs. Additionally, access to airports, flight par's, and flying

events often reuire liaility coverage. any states reuire insurance of this nature ust tooperate an airplane of any description. Third party liaility coverage is also less e6pensive than

full coverage, and therefore allows the %e%ers 1insurance holders the opportunity to enoy the

thrill of aviation without the worry of liaility concerns or the e6pense of high:priced insurance.

The people can e only eligile who are a registered, certificated or licensed pilot are eligile.

Sport ?ilot Students who are endorsed to solo are also eligile. ?ilot registration can e with any

recogni*ed organi*ation.



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BAGGAGE LIABILITY

This 'ind of liaility %ay include various reasons in the happening. They are as follows4

1. D+-)0

If your !ags are delayed+ try not to panic& The airlines typically ha#e

ways to track them+ and a!out = percent of all misplaced luggage is

returned e#entually& If your !ags are on the next Eight+ you could ha#e

them within a few hours& If they'#e !een sent to the wrong airport+ it could

take a couple of days& ake sure to le your claim immediately at the

airport and to gi#e the attendant a hotel or home phone num!er and

address&


Passengers hit !y !aggage delay


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The airlines will typically !ring you your luggage when it is

foundM you will rarely need to return to the airport to pick it up&

)dditionally+ many airlines will reim!urse any unexpected expenses

caused !y the loss or delay 4keep your receipts5& $ut !e careful here --

the airline sometimes has the option to deduct any reim!ursement or

stipend from any su!seKuent awards&

$efore you lea#e the airport+ !e sure you know how to check on your!ag's statusM some airlines ha#e an online system while others will

pro#ide you with a phone num!er to call for updates&

8& L,0* B+



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If the airline loses your !ags+ make sure you get a written claim for

damages& This may reKuire a di*erent form than the original Lmissing

luggageL form& This can !e done at the airport or !y mail& .n domestic

Eights+ the airline!aggage lia!ility is

capped at QF+F99 per

person& .n international

trips+ the lia!ility limit

may #ary+ as it is

go#erned !y #arious

international treaties+

including the ontreal

and Barsaw

Con#entions&

3ou may need to produce receipts to pro#e the #alue of items you had in

your suitcase& If you ha#e them+ include copies in any documentation you

send to the airline& 42eep in mind that you will !e reim!ursed for the

depreciated #alue of your items -- so the airline won't gi#e you the full

Q:+999 you paid for that suit you purchased two years ago&5 3ou can

purchase Lexcess #aluationL protection if your checked !aggage is worth

more than these limits 4!ut !efore doing so+ make sure the items aren't

already co#ered !y your homeowner's or tra#el insurance policy5&



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The airlines typically ha#e a long list of items for which they will not

!e held responsi!leM these include jewelry+ money+ heirlooms and other

#alua!les& These sorts of items should always !e packed in your carry-on!ag&

3. S*,-+ B+

6ead directly to

the !aggage carousel

when you get o* your

Eight& any airlines

scan !ags when they're

loaded into the

!aggage claim area and

keep records+ especially

at larger airports& .nce

you'#e left the !aggage claim area+ your claim is no longer with the

airline+ !ut with the police&

4. D+5 B+


"nclaimed !aggage ready to !e stolen


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.nce you'#e gotten your !ags o* the carousel+ immediately check them

for damage or other signs of tampering or mishandling& Geport any

damage !efore lea#ing the airportM airline customer ser#ice will often

want to inspect the !ag& 2eep in mind that most airlines won't co#er

minor wear and tear&


) damaged !ag due to hush made !y the airport workers


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". C(, 5 M- D+

A%%,(5 *,$

“ Although artinair Cargo will

give its est efforts to deliver your ship%ent at its final destination in good order and

condition, so%eti%es da%age 8 depreciation, delay or 1partial loss unfortunately occurs.

In case such an irregularity should affect your ship%ent, a clai% can e filed with artinair

Cargo Clai%s.


Consignment damaged while cargo or mail from one place to another


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In order to facilitate and speed up the clai% handling process, we 'indly would li'e to draw

your attention to the following4

I what to o !" #a$% &o' (%#%!)% &o'( $h!*+%"t w!th a+a,%

# a'e sure that the da%age of the ship%ent is noted on the release for%8delivery receipt

of the warehouse.

# If possile, please ta'e 1digital pictures of the da%aged ship%ent upon receipt of your

cargo at the final destination, as recorded on the Airway (ill.

# To strengthen your case, you can appoint an independent and oective surveyor.

7owever 'indly e advised that the decision to appoint a surveyor is up to the clai%ant as

the clai%ant always has to provide independent evidence in order to prove the e6tent of

the da%age as clai%ed for.

# Send a written preli%inary clai% to artinair Cargo Clai%s within #- days fro% the date

of delivery at the final destination.

# easure the te%perature of the ship%ent upon release and %easure the o6es on the

outside of the pallets in case of co%plete pallet delivery. ?lease record the te%perature on

the release for%8delivery receipt of the warehouse.



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To strengthen your case, you can appoint an independent and oective surveyor to chec' the condition

of your perishale ship%ent. ?lease %a'e sure that your ship%ent will e surveyed as soon as possile

ut not later than D hours after arrival at your pre%ises4 perishales are ti%e sensitive and8or

te%perature sensitive co%%odities, therefore only a survey done shortly after arrival of the cargo will e considered as an oective survey.



41/74


II What to o !" #a$% o- .*a(t!a/0 /o$$*!/-%(a,% o- &o'( $h!*+%"t Lo$$

.

# >efinition4 loss is defined as all pieces 1%entioned on the aster Air ayill reported%issing

2

) Send a preli%inary clai% to artinair Cargo Clai%s within #20 days fro% the date of

issue of the aster Air ayill.

?artial loss 8 pilferage4

# ?artial loss is defined as one or %ore pieces of the total ship%ent 1%entioned on the

aster Air ayill are reported %issing

2 ?ilferage is defined as the loss of one or %ore ite%s out of one or %ore pieces

# Send a preli%inary clai% to artinair Cargo Clai%s within #- days fro% the date of

delivery 1oth partial loss and pilferage are considered as da%age.

# a'e sure, that partial loss and8or pilferage is noted on the warehouse release

for%8delivery receipt of the warehouse or on the Truc'ing docu%ent in case of directdeliveries. In case of pilferage, please also estalish the weight discrepancy.

III How to -!/% a *(!#% #/a!+

Bhene#er a priced claim is led+ the necessary information must !e gathered& Be

strongly reKuest you to enclose the rele#ant documentation and information as

mentioned !elow+ in the ?nglish language

# endor’s 8 shipper’s invoice covering the co%plete ship%ent. ?lease e6plicitly indicate

the ite%s 8 pieces clai%ed for. ?lease note that artinair Cargo cannot offer full

co%pensation ased on the co%%ercial 8 sales invoice as a refund for loss of profit is not

part of our contractual liaility.



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2 ?ac'ing list. ?lease indicate the ite%s 8 pieces clai%ed for Cession of 5ights, if reuired,

fro% the party 1shipper 8 consignee as %entioned of the aster Air ayill entitled to

clai%, which states that your co%pany is authori*ed to act on their ehalf.

)- Copy of the artinair aster Air ayill 1and if possile a copy of the relevant 7ouse

Air ayill.

<

A specification of the a%ount clai%ed for 1y %eans of a shipper’s invoice, an

independent survey report, a ill of sale or a ill of repair.

# Copy of the delivery receipt.

2 1digital ?ictures, if availale.

) Kour an'ing details, including swift code.

In case your claim concerns damage @ depreciation+ please ena!le us to #erify the

extent @ direct conseKuences of the irregularity !y also enclosing

# Independent and oective survey report, if issued. In case the a%ount of the da%age 8

depreciation is e6pected to e elow the costs involved in e%ploying a surveyor, a survey

report oviously is not reuired. ?lease note that the decision whether or not to involve a

surveyor is entirely yours. The presence of an oective survey report, however, will

never reduce the strength of your case.

2 >estruction report, in case the ship%ent was no longer fit for sale.

)

- (ill 1s of sale, in case the ship%ent was still fit for sale.

< (ill 1s of repair 1if applicale.

9nly upon receipt of the infor%ation as reuested aove, your clai% can e ta'en into

consideration. If any of these docu%ents are not availale, please e6plicitly state so. ?lease e

infor%ed that an adeuate and sufficient provision of all relevant docu%ents enales a swift and

efficient clai% handling procedure.



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IV C/a!+$ ha"/!", !"-o(+at!o"

# Clai%s will e handled in accordance with the applicale Conventions and 8or BeneralConditions and 8 or Conditions of Contract.

# An airline can only e held responsile for proven irregularities which can e held

against the carrier and which occurred while eing under its custody. This %eans the

period fro% acceptance of the ship%ent at the airport of departure until delivery at the

airport of destination.

# A preli%inary notice of clai% %ust e %ade in writing y separate notice. In case of

da%age 1also including partial loss and pilferage a 1preli%inary notice of clai% %ust e

filed within #- days fro% the date of receipt of the cargo. In case of loss 1all pieces

reported %issing a 1preli%inary notice of clai% %ust e filed within #20 days fro% the

date of issue of the aw.

# The %a6i%u% liaility of artinair Cargo is li%ited. e refer to the relevant provisions

of the arsaw 8 ontreal Convention, as well as to our Beneral Conditions 1availale on

the wesite of artinair Cargo4 www.%artinaircargo.co% and our Conditions of

Contract. As a conseuence hereof, we politely advise you to file a clai% with your

1client’s underwriters in first instance, in case your ship%ent is covered y an insurance

policy.

# @or a nu%er of irregularities artinair Cargo is protected y an e6clusion of all liaility.

@or e6a%ple4 the da%age as clai%ed for is of an indirect 8 conseuential nature 1 e.g. loss

of profits, additional ta6es incurred, fines etc., Act of Bod , @orce aeure situation,

authority regulations. 5eference is %ade to our Beneral Conditions. artinair also will

decline all liaility for goods not properly pac'ed for air transportation.

artinair Cargo does not accept liaility for perishale cargo delivered into our custody at a

te%perature e6ceeding the te%perature li%its %entioned on the warehouse receipt 8 acceptance



44/74


slip or e6ceeding the te%perature li%its %entioned in the IATA, ?erishale Cargo anualJ.

Also liaility is not accepted y artinair Cargo for da%ages which are a result of inherent

defect, nature or vice of the cargo whilst ship%ent has not suffered a significant delay.

# The right to clai% shall e e6tinguished if any action is not rought within two years,

rec'oned fro% the date of arrival at the destination, or fro% the date on which the aircraft

ought to have arrived, or fro% the date on which the carriage was stopped.

# henever our liaility for a clai% e6ceeds our policy deductile, artinair Cargo will e

forced to hand over the file to the liaility clai%s adusters appointed y our insurers. The

clai% will then e dealt with directly y these clai%s adusters and the clai%ants will e

contacted accordingly.

# In case we accept liaility we reuest the clai%ant to sign and to sta%p a @inal 5elease

@or% efore eing ale to settle, hence relieving artinair Cargo fro% any further future

liaility. After receipt of the duly signed and sta%ped @inal 5elease @or% and if

necessary the Cession of 5ights, settle%ent will e effected. 9ur financial depart%ent

will transfer the a%ount to your an' account, for which we of course need your an'ing

details, including swift code.J

1



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ECESS LIABILITY

6cess liaility is all aout the refueling and the defueling of the aircraft. 6cess liaility is also

'nown as THIRD PARTY WAR RISKS.


Gefueling done !y one aircraft to another in air


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Gefueling done on ground


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AEROSPACE MANUFACTURERS PRODUCTS AND

GROUNDING LIABILITY

MANUFACTURERS PRODUCTS LIABILITIES

This type of insurance is essential for the %anufacturer of aircrafts, its co%ponents

and related euip%ent. In addition, it is also necessary for those engaged in selling airplanes,

its parts or fuel, and for individuals who repair and8or %aintain the aircrafts.

There are different laws, federal regulations and considerations for co%%ercial airliners

versus s%all planes.

Beneral aviation refers to aircraft such as s%all planes that seat less than 20 passengers

and were not engaged at the ti%e of the flight in scheduled passenger:carrying operations. It

includes helicopters, as well. Enowledgeale ro'ers can assist in the process of identifying

what type of coverage is necessary on a case y case asis.



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Co)%(a,%

This policy protects parties fro% clai%s arising fro% inury or da%age caused y

defects in the products sold or %anufactured or fro% i%properly co%pleted operations.

anufacturers, distriutors and sellers can e open to liaility even if it is proven that the

product was used i%properly. Insurance coverage will cover their legal fees needed for

defense against clai%s and class action suits



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Th(%% t!+%$ 4!, t&(%$ o- a */a"%

Stat!$t!#$

Though air traffic is considered to e a safe %eans of transportation, accidents do

occur. So%e of the %ore co%%on causes of %any of these incidents are faulty euip%ent and

structural or design prole%s. Aviation products can cause catastrophic accidents as the result

of relatively %inor failures.

GROUNDING LIABILITIES

This %ay include liailities as follows



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PREMISES5LIABILITY

This asic part of the policy will protect the liaility of the operation for the e%ployees while

perfor%ing their duties. This would e the fueling operation, and any part of the usiness

associated with the office and ra%p areas. The facility will add to these policy additional parts

to cover the specific needs of each operation.

HANGARKEEPERS

Page "! of 74N.G.ACHARYA & D.K. MARATHE COLLEGE

1round sta* at its work


51/74


The larger operations, you 'now, li'e a (ell service centre with D to #0 eautiful ships in various

stages of %aintenance with full pilot training facilities for instance is al%ost always going to

have e6ceptional policies covering their usiness operations that include what you do.

Their policy will cover any person acting on ehalf of the operation in the carrying out of their

duties. This policy will protect you if you should do so%ething unintentional that causes da%age.

An e6a%ple %ight e in the process of %oving a helot in or out of the hangar with a power tug.

If you are watching one side and start the turn too soon and catch the tail oo% or rotor on the

hangar door or another helicopter sitting ne6t to the one you are %oving, the da%age you cause

will e covered y the coverage.

/ow let’s say you wor' for a %aintenance only shop with ust #or 2 ships eing wor'ed on at

any one ti%e. In these difficult econo%ic ti%es, it is not unheard of for so%e operations to Tri%

e6penses and not purchase the 7angar 'eepers

option of the policy.

If you are unsure, wor' up the courage to as'

your oss if you are covered under this part of

the policy.

Seeing a copy of the declarations page

with the policy effective dates will help

reassure you and will operations 7angar

'eepers also tell you if the coverage has een

purchased.

Page "1 of 74N.G.ACHARYA & D.K. MARATHE COLLEGE

P+,?-+ ,(8 0 ( 8++?+(0


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TRAINING

A *!/ot ,%tt!", t(a!"% !" a #o#6*!t

It is the hope of the insurance underwriters that if you are as'ed to do so%ething new that

you will have received training ahead of ti%e. If you usually %ove a 5oinson 522 or Schwei*er

)00 and are now as'ed to %ove a %ulti:%illion dollar Si'ors'y S:L#, please e sure you as' for

training or assistance. This sa%e training will apply to any part of the operation you perfor%.

ven so%ething that see%s as si%ple as fueling or de:fueling %ust e part of your training

efore you perfor% it y yourself. +nderwriters would prefer the operation participate in /ATA’s

Safety.



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IN5FLIGHT5HANGARKEEPERS

This coverage is i%portant if you are operating the helicopter in flight. It is not unco%%on for an

operation to do a test flight after %aintenance has een perfor%ed or if avionics have een

installed or changed. So%eti%es a prole% reported y the owner can only e replicated while in

flight. If you are the one who flies it, e sure you %eet all of the pilot reuire%ents of oth the

operators’ policy and the helicopter owners’ policy.

In al%ost every case, an owner will have an aircraft policy that has as part of their pilot warrantya paragraph that states what ualifications a pilot needs to %eet efore he can fly as part of a

%aintenance flight. There are so%e operators who elieve that the owners’ policy will cover any

da%age that results fro% a loss to the aircraft while flying under this provision. 5e%e%er that

the owner has a policy to protect the%M not you.


E--+ ?-,*0


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AIRPORTS O


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I09(%+ ?+(,5

Period specied in the insurance policy R normally one year&

The cost of insurance is inEuenced !y

- num!er of takeo* and landing operationsM

Page "" of 74N.G.ACHARYA & D.K. MARATHE COLLEGE

$eautifully !uilt Giyadh )irport


56/74


- types of aircraft !ased at the airportM

- passenger and freight Eow #olumesM

- structures comprising the airportM

- security measuresM

- working conditions of air traJc control center&

E@%-90,0

Standard military risksM risks related to nuclear explosion e*ects and

radiation ha>ard&

S?+%%

- lia!ility to the InsuredNs personnelM

- lia!ility for property owned or temporarily possessed !y the

InsuredM

- lia!ility for injuries to persons and property resulting unless

such acti#ities ha#e !een agreed on with the Insurer&

)lso to mention that airport ownerNs lia!ility also includes operations

lia!ilities

Page "# of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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PRODUCT LIABILITY

Product lia!ility is the area of law in which manufacturers+

distri!utors+ suppliers+ retailers+ and others who make products a#aila!le to

the pu!lic are held responsi!le for the injuries those products cause&

T+,(+0 ,/ --*)

In the +nited States, the clai%s %ost co%%only associated with product liaility are negligence,

strict liaility, reach of warranty, and various consu%er protection clai%s. The %aority of

product liaility laws is deter%ined at the state level and varies widely fro% state to state. ach

type of product liaility clai% reuires different ele%ents to e proven to present a successful

clai%.


?lane crash due to %anufactures and other %e%ers related with the airlines


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T)?+0 ,/ --*)

Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes etween three

%aor types of product liaility clai%s4

•

manufacturing defect+

• design defect+

• ) failure to warn 4also known as marketing defects5&

anufacturing defects are those that occur in the %anufacturing process and usually involve

poor:uality %aterials or shoddy wor'%anship. >esign defects occur where the product design is

inherently dangerous or useless 1and hence defective no %atter how carefully %anufactured.

@ailure:to:warn defects arise in products that carry inherent no ovious dangers which could e

%itigated through adeuate warnings to the user, and these dangers are present regardless of how

well the product is %anufactured and designed for its intended purpose.

Page " of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


59/74


CHAPTER 7

FUTURE OF AVIATION INSURANCE

>uring the past century, %an has reali*ed his drea% to fly. The aircraft has een

developed and partially perfected. The aviation industry, as it is 'nown today, has grown into a

set of definale su:industries ased upon usage. odern:day aircraft range fro% %ilitary to

co%%ercial airlines to the %ost diverse group, general aviation. As with any technology:ased

industry, aviation continues to grow and develop. /ew uses for aircraft are identified, etter

aircraft and avionics are created, and prole%s are recogni*ed and solved.

Although aviation has co%e a long way in the last #00 years, it is still a developing

industry. ith growth and develop%ent co%e prole%s that %ust e solved efore an industry

can graduate to the ne6t level. In the +nited States, aviation is now eing confronted with a

series of prole%s that %ay ta'e as long to solve as the act of flight itself. As aviation enters thenew %illenniu%, it is these prole%s with which the aviation insurance industry %ust deal. So%e

are si%ply growing pains. 9thers are outside influences for which no si%ple solution %ay e6ist.

LEGAL CONCERNS

In %any cases, changes in other areas of our society have a great influence over aviation.

This is the case with our court syste%. The trend toward unreasonale verdicts and ridiculous

awards has forced %any aircraft owners to create shell corporations to 3front3 as the registeredowner of their aircraft. 9wners today are uncertain as to how %uch liaility insurance is

adeuate protection, a situation %ade far worse y the growing reluctance of insurance

underwriters to offer higher li%its of liaility protection at any price. The underwriters e6plain

that it is i%possile for any aviation insurance co%pany to predict an adeuate liaility pre%iu%

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

Page " of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


60/74


co%panies are heavily reinsured y co%panies in !ondon and other foreign %ar'ets, and those

foreign insurers usually charge passenger liaility pre%iu%s for aircraft operated in the +nited

States that are three to five ti%es as %uch as those paid y non:+.S. operators.

And so it goes for the owner of general aviation and co%%ercial aviation aircraft in the +nited

States. Aircraft owners see% to e trapped etween inadeuate coverage li%its, high:priced

liaility insurance pre%iu%s, and the perils of the +.S. court syste%.

CAN SMALL AVAITION BUSINESSES SURVIVE8

In the future, so%e sectors of the aviation co%%unity %ay si%ply cease to e6ist as a

result of the threat of financial devastation due to lawsuit. e"ve had a gli%pse of this already

when the escalating cost of products liaility insurance practically stopped the production of

light aircraft in the %id:#$D0s. It was only after a change in legislation li%iting the ti%e an

aircraft %anufacturer could e held responsile for products liaility that our industry resu%ed

production of new light aircraft.

In the future, such sectors of general aviation as the s%all piston repair shop and the

s%all flight training school %ay not e ale to afford the increasing insurance pre%iu%s and in

so%e cases %ay not e ale to uy adeuate insurance at any price. This %ay spell the end for %any in these usinesses. As of @eruary 2000 at least three aviation insurance co%panies have

ceased writing s%all 3Instruction and 5ental3 ris's while others have increased their pre%iu%s

for this class.

The future %ay see the s%all %aintenance facility replaced with a new:technology

aircraft reuiring far less %aintenance. The sa%e style of %aintenance used y the %ilitary and

airlines :: the re%ove:and:replace concept :: %ay eco%e co%%onplace throughout general

aviation as well. aintenance prole%s %ay e identified y co%puter and repaired only y the

%anufacturer at factory service centers, a practice that is already co%%on in today"s i*et fleet.

3?lug and fly3 replace%ent parts 'eyed to a co%puter analysis %ay decrease cost with little or no

downti%e.

Page #! of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


61/74


All this, of course, is little consolation to owners of e6isting, older:technology,

%aintenance:intensive aircraft. They"re not getting any younger ... and neither are we.

AGING FLEET9 AGING PILOTS

hile aviation is not e6actly a %ature industry, it is aging. aye what we"re seeing

today is ust the end of a plateau in the overall develop%ent of aviation. The average age of oth

our pilot population and our fleet 1oth co%%ercial and general aviation is increasing. any

co%%ercial and airline pilots today received their initial training in the %ilitary. The orld ar

II pilots are now in their =0s and D0s, the Eorean ar pilots are in their late L0s, and the ietna%

pilots are in their


62/74


any of our charter and corporate clients co%plain of sending a young second:in:

co%%and to school on their aircraft, only to have the airlines snap the% up upon co%pletion.

The trend toward younger and younger pilots in the right seat is disturing whether at the charter,

corporate, or airline level of operation.

SHRINKING FLEET

?ri%ary training costs are increasing for a nu%er of reasons. The high cost of new

replace%ent training aircraft and inadeuate and e6pensive insurance render the training sector

of aviation vulnerale to lawsuits and financial disaster, and a shortage of ualified instructors

has slowed the flow of new pilots to a tric'le. The shortage of career C@Is is due in part to the

low pay scale at %ost flight schools, whose owners respond that they"re ust arely ale to stay in usiness as it is.

The %aority of the general aviation aircraft flying today are #< to 20 years old and older.

To replace a si%ple single:engine Cessna #=2 today would cost in e6cess of ;#-0,000. A new

twin:engine (eech (aron is in the ;#,000,000 range. 9f course, used aircraft are always an

option. The ovious prole% is that as new replace%ent aircraft increase in cost, the price of

good used aircraft is forced up as well. Today, there are no argains. It is often a struggle to find

a used aircraft for sale with no da%age history. Couple the nor%al attrition of our aging fleet

with the high cost of replace%ent aircraft and it is easy to understand why our overall general

aviation nu%ers are plu%%eting.

Again, a loo' into the future suggests that the %aority of pri%ary training will e done in

flight si%ulators and co%puteri*ed flight:training devices. As de%and increases and technology

advances, the full:%otion si%ulator should eco%e %uch %ore affordale and so realistic the

only thing left for the student pilot is the chec' ride. 3Safe and ine6pensive3 will eco%e the

na%e of the ga%e.

Page #2 of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


63/74


If you want proof, the %ilitary has already adopted this %ethod of training fro% the

co%at tan' to aircraft and everything in etween, and airline pilots are getting type:rated in new

transport ets without having ever set foot in the actual aircraft.

TREND TOWARDS TUBINES

The current trend for corporate:owned:and:operated aircraft see%s to e toward turine: powered aircraft. If new (arons sell for 3a %illion uc's3 out of the factory and a good used

Eing Air is also in the ;# %illion range, the decision is clear to %any which is the preferale

aircraft in si*e, safety and %aintenance cost. The %yth that a light piston twin is easier to fly than

a turine:powered aircraft is eginning to e dispelled. /ow that the underwriting co%%unity is

i%posing virtually the sa%e training reuire%ents upon the %ulti:engine piston pilot as the

turine operator, there is less advantage in uying the piston:powered aircraft. Couple the ease of

operation of the turoprop and et aircraft with the co%parale cost of acuisition, and you has

an even %ore co%pelling argu%ent against the piston engine.

The proof is in the reuests our agency receives for insurance uotations. e are seeing

increasing %o%entu% toward turine and et aircraft. @or years, the corporate flight depart%ent

has insisted upon the usiness et for co%fort and safety. /ow, with the develop%ent of the

single:pilot ets, there is increased interest fro% the usiness%an pilot in Citation S?s,

CitationNets, and other new:generation illia%s:engine:powered ets. In our opinion, this is

clearly a loo' into the future. ith the ease of operation and safety and the decreasingacuisition and operational costs of new:generation turine aircraft, it is easy to see what the

near future holds for the piston:powered aircraft.



64/74


TRANING BETTER MORE EPENSIVE

There is no argu%ent a%ong %ost co%%ercial pilots and aviation insurance underwriters

that full:%otion flight si%ulators should e a part of every training process. Kou si%ply cannot

practice the e%ergency procedures in the aircraft that can e de%onstrated in a si%ulator.

Although not availale for every aircraft at this ti%e, %ore and %ore underwriters are reuiring

si%ulator:ased training at least annually. e get the co%plaint fro% %any of our clients that the

cost to attend @light Safety or Sitco% is too high. +sually, they do not ta'e into account the cost

of aircraft operation when co%paring this with the traditional in:aircraft flight training.

There is good news ahead, however. There is %ore co%petition in the upper:level flight trainingarea. ith increased co%petition will co%e i%proved progra%s and i%proved affordaility.

There will e %ore flight si%ulators availale for a wider variety of aircraft. In the future, we

predict there will e full:%otion si%ulator:ased training at every level ... yes, even for pri%ary

training. Kou %ay see a pilot solo without ever leaving the ground. This is an insurance

underwriter"s drea%O

WHAT DOES THE FUTURE HOLD 8

e have no idea what can or should e done aout the +.S. court syste% with its

irrational verdicts and out:of:control da%age awards. @ro% this standpoint, aircraft owners and

operators will continue to e plagued y high liaility insurance pre%iu%s and inadeuate li%its.

e can only hope that society will wa'e up at so%e point, change its attitude toward litigation,

and rea' loose fro% the hold that attitude has over all of us.



65/74


9f course, adversity is the %other of innovation 1and invention. ith this in %ind, the future is

very right. /ew %ethods of training using si%ulators at all levels will produce %ore, etter:

trained pilots. As these techniues eco%e %ore availale, the costs will continue to decrease.

So%e of the new:generation flight si%ulation software for ho%e ?Cs is uite spectacular, andC@Is tell us it offers e6cellent training value 1although the @AA does not yet recogni*e this fact.

/ew technology and new production %ethods %ay eventually ring down the cost of new

aircraft ownership, and a younger, %ore efficient fleet will e orn. A %odern fleet of this type

should e less e6pensive to repair and with the i%proved repair costs, insurance hull pre%iu%s

will also decline. In addition, these new:age i%prove%ents are producing aircraft that are easier

to handle and fly. Safety and co%fort see% to e a priority. As this per%eates our fleet, accidents

will surely decrease, and insurance pre%iu%s will decline as well.

The advent of the co%puter is changing the way we live our lives, and the coc'pit is no

e6ception. @irst seen in our navigational aids with the very affordale B?S, the co%puter is

revolutioni*ing the entire loo' and function of our instru%ent panels. To% Chappell, president of

our agency, recently attended the open house of one of our clients to view his new !ear -


66/74


CHAPTER "

INDIAN GOVERNMENT ON AVIATION INSURANCE

I"!a" A)!at!o" I"$'(a"#% Ma(6%t O)%()!%w 2::; A"a"t Pawa(

Th% a'tho( !$ th% V!#% P(%$!%"t < H%a = A)!at!o" at Ao" G/o4a/ I"$'(a"#%

B(o6%($ P)t> Lt>

Insurers on aviation growth path Indian Insurers have co%e a long way in developing the %ar'et

capacity for aviation insurance usiness and as India s growth story continues, Insurers have‟

'ept pace with the growing de%and fro% uyers in India. Today the Indian %ar'et is playing a

'ey role in supporting not only uyers in India ut also uyers in the su:continent, including

%aor support to the SAA5C region. As the Indian aviation industry continues to grow, %any

new uyers have entered the insurance %ar'et with reuire%ent for different types of products.

Apart fro% traditional airline and aircraft related insurances, Insurers are now covering different

verticals of aviation industry ranging fro% airports to aircraft %anufacturers with igger ris's

appetite. The year 200D has seen heightened level of co%petition a%ongst oth ?ulic and

?rivate Sector Insurance Co%panies in an atte%pt to retain the current %ar'et share and to fulfill

an ever increasing desire to participate in the aviation growth story.

Page ## of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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This is more so in the 1eneral )#iation 4generally aircraft with less than

*, (8+* *0


68/74


.#er the last :9 years 1IC Ge has emerged as one of the largest

a#iation reinsurer in the international market and is playing a key role in

supporting Indian Insurers& Currently there are o#er 899 !uyers of a#iationinsurances in the country who need a#iation products in one form or other&

any new !uyers ha#e entered the market in 899 and the trend is

expected to continue in 899= al!eit at a slow pace& or the airline sector+

customer !ase and num!er of aircrafts has increased signicantly in the past

three years !ut current economic situation is taking a toll on its future

growth&

Page # of 74N.G.ACHARYA & D.K. MARATHE COLLEGE


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C/a!+$ S#%"a(!o

ach Insurer will have its own underwriting e6perience to show and can

vary fro% its peers consideraly depending on their participation on the policies that has

produced losses. Beneral Aviation clai%s in 200D are e6pected to e6ceed 5s.


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Mo"t(%a/ Co")%"t!o"

The Indian Bovern%ent ratified ontreal Convention #$$$J in arch 200$ and currently it

applies to international travel. There is nothing on record at this stage to show that the revised

liaility li%its are applicale to do%estic sectors. In rief, the Convention has increasedco%pensation levels for international passengers in the event of death or odily inury and

da%age and delay to the passenger aggage and cargo. hile the co%pensation for death or

odily inury has increased al%ost = ti%es fro% the e6isting levels of appro6i%ately +S> 20,000

to around +S> #-0,000, the co%pensation for da%age to the chec'ed aggage has increased

fro% appro6i%ately +S> 20 per 'g to around +S> #,-00 per passenger. The co%pensation for

da%age to cargo has increased fro% +S> 20 per 'g appro6i%ately to +S> 2- per 'g. The

arsaw Syste%, which is in force in India y way of Carriage y Air Act, #$=2 had allowed four

choices of urisdiction for filing of a clai% y the passenger, na%ely, place of issue of tic'et,

principle place of usiness of the carrier, the place of destination of the passenger and the place

of do%icile of the carrier. Through the ontreal Convention a fifth urisdiction is added which is

the place of do%icile of the passenger, provided the airline has a presence there. Therefore an

Indian would e ale to file clai% in India even if the ourney was underta'en outside India.

!iaility !i%it for do%estic passengers in the event of death or odily inury continues to e at

the old level of 5s.=


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CHAPTER #

IMPACT OF AVIATION INSURANCE ON TOURISM INDUSTRY

Tourism industry has contri!uted enormously in the Eourishing graph of

India's economy !y attracting a huge num!er of !oth foreign and domestic

tourists tra#eling for professional as well as holiday purpose&

The tourism industry in India witnessed a stupendous growth in 899


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P According to the uropean Travel Co%%ission, the average e6penditure per trip of Indiantourists traveling aroad has increased fro% +S> L## in 2000 to +S> D22 in 200L

P the oo%ing success of Indian touris% industry has led to a drastic change in the hospitalitydepart%ent as well. The increase in the ratio of tourists resulted in the increase of roo% rates and

also setting up of a wide range of hotels and other residing areas.P a nu%er of international hotels such as the 7ilton, Accor, arriott International, (erggruen7otels, Caana 7otels, ?re%ier Travel Inn 1?TI and Inter Continental 7otels groups have professed aout %a'ing so%e large:scale invest%ents to append L ))) %illion and is %ost li'ely to reach +S> 2.2 illion y the year 20#2.



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CONCLUSION

In the course of the analysis #arious trends and de#elopments in the

a#iation industry were discussed that pro#ide partial answers to this

Kuestion& )irlines employ a wide #ariety of !usiness models while

taking an a#iation insurance contract& or example+ some companies

like 2ingsher )irlines take policy with high premium while others like

)ir India take an a#iation insurance contract with low premium& It was

also o!ser#ed that airlines with huge and expensi#e air!uses like )TG

H8-;99 aircraft tend to generate high amounts of riskM while relati#ely less

expensi#e aircraft like )FF9 aircraft tend to generate less risk&

The a#iation insurance market is highly #olatile due to the inherent

nature of the risk and the underwriting cycle of insurance& 6istorically+ the

market wide premium appears to !e almost as #olatile as the claims+

suggesting a lack of consistency in underwriting this !usiness& The major

ca#eat to my conclusion is that there is signicant amount of pu!lic

data a#aila!le to assist in underwriting and pricing a#iation insurance& This

data can !e used to de#elop more e*ecti#e underwriting rating models

for a#iation insurance and this should result in !etter selection of risks

and more consistent prots for the insurer&

The a#iation insurance market+ !y its own nature+ is highly #olatile&

There are many causes including the o#erall insurance underwriting cycle+

the major accident risk+ the short-term memory of the insurance market+ and

the long-tailed nature of determining responsi!le parties& 6owe#er+ the

increasing in#ol#ement of analytical professionals such as actuaries

should introduce more e*ecti#e methods for pricing airline insurance

and this should help sta!ili>e the premium component of the loss ratio

eKuation&



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BIBLIOGRAPHY

BBB&BI2IP?I)&C.

BBB&SCGI$&C.

Www. business.mapsofindia.com › India-gdp › Industries

www&google&com

Documents

A Project on aviation insurance