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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

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

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

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

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

A PROJECT REPORT ON

'' AVIATION INSURANCE & ITS IMPACT ON TOURISM


INDUSTRY''

BACHELOR OF COMMERCE
BANKING &INSURANCE
N.G.ACHARYA & D.K. MARATHE COLLEGE

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

SEMESTER-VI
YEAR 2015-16

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- 400 071

CERTIFICATE
N.G. Acharya & D.K. Marathe College of Arts, Science & Commerce

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

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

(Naac-Accredited)

This is to certify that ONA JACINTO of T.Y. (bachelor of banking and


insurance) semester VI
(Year 2015-16) has successfully completed the project on AVIATION
INSURANCE & ITS IMPACT ON TOURISM INDUSTRY under the guidance
of Mrs. Dhanya Panicker.

Signature of project guidance

Signature of Co-ordinator
examiner

signature of principal

signature of external

ACKNOWDLEDGEMENT
I would first thanks to Mumbai University for introducing the Bachelor of
Banking & Insurance course. Thereby giving us a platform to conduct this
study that has helped us to gain practical knowledge about the course.
N.G.ACHARYA & D.K. MARATHE COLLEGE

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

I would like to extend my thanks to our Principal Dr. D.M. Muley and Vice
Principal Mrs. Akila Maheshwari for their constant efforts to conduct this
course smoothly.

I would also like to extend my heartfelt thanks to course Co-ordinator, my


parents, Librarian and friends for their constant support and encouragement

Date:
Place: Mumbai

signature of student

DECLARATION

I Ona Jacinto the student of N.G. Acharya & D.K. Marathe college of Arts,
Science and Commerce studying in T.Y. (Bachelor of Banking and Insurance)
N.G.ACHARYA & D.K. MARATHE COLLEGE

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

Semester-V. Hereby declare that I have completed this project AVIATION


INSURANCE & ITS IMPACT ON TOURISM INDUSTRY in the academic
year 2015-16.

This information submitted is true and original to the best of my knowledge.

Date:
Place: Mumbai

signature of student

Objective of the project

This project has been undertaken with following objectives in mind:

To understand the Insurance Sector in India, its nature &

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

functioning.

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AVIATION INSURANCE & ITS IMPACT ON TOURISM INDUSTRY

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.

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.

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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

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SR.N
O

CHAPTER

1.

History Of Aviation Insurance

2.

PG.N
O
8-11

Risks covered in Aviation Insurance 12-23

3.

Liabilities in Aviation Insurance

24-54

4.

Future of aviation insurance

55-61

5.

Indian Government in Aviation


Insurance

62-66

6.

Impact of aviation insurance on


tourism industry

67-68

7.

Conclusion

69

8.

Bibliography

70

CHAPTER 1

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HISTORY OF AVIATION INSURANCE


INTRODUCTION OF INDIAN AVIATION SECTOR

Aviation Industry in India is one of the fastest growing aviation


industries in the world. With the liberalization of the Indian aviation sector,
aviation industry in India has undergone a rapid transformation. From being
primarily a government-owned industry, the Indian aviation industry is now
dominated by privately owned full service airlines and low cost carriers.
Private airlines account for around 75% share of the domestic aviation
market. Earlier air travel was a privilege only a few could afford, but today air

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travel has become much cheaper and can be afforded by a large number of
people.

The origin of Indian civil aviation industry can be traced back to 1912,
when the first air flight between Karachi and Delhi was started by the Indian
State Air Services in collaboration with the UK based Imperial Airways. It was
an extension of London-Karachi flight of the Imperial Airways. In 1932, JRD
Tata founded Tata Airline, the first Indian airline. At the time of independence,
nine air transport companies were carrying both air cargo and passengers.
These were Tata Airlines, Indian National Airways, Air service of India, Deccan
Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways.
After partition Orient Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air


India International Ltd in collaboration with Air India (earlier Tata Airline) with
a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft.
The inaugural flight of Air India International Ltd took off on June 8, 1948 on
the Mumbai-London air route. The Government nationalized nine airline
companies vide the Air Corporations Act, 1953. Accordingly it established by
1995, several private airlines had ventured into the aviation business and
accounted for more than 10 percent of the domestic air traffic. These
included Jet Airways Sahara, NEPC Airlines, East West Airlines, ModiLuft
Airlines, Jag sons Airlines, Continental Aviation, and Damania Airways. But
only Jet Airways and Sahara managed to survive the competition. Meanwhile,
Indian Airlines, which had dominated the Indian air travel industry, began to
lose market share to Jet Airways and Sahara. Today, Indian aviation industry
is dominated by private airlines and these include low cost carriers such as
Deccan Airlines, Go Air, and Spice Jet etc, who have made air, travel
affordable.

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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 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.

A light flight of 1911

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 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 was born.

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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.

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CHAPTER 2
RISK COVERED IN AVIATION INSURANCE
There are different types of risk which takes place in aviation insurance and those risks are
covered in aviation insurance they are as follows:

AVIATION
INSURANCE

NORMAL
RISKS

LIABILITIE
S

The above diagram suggests that there are mainly two kinds of risks which an aviation insurance
company will cover which has been divided into two parts. They are:
1. Normal Risks
2. Liabilities
These two risks are further divided into various parts which involve various risks and
liabilities they are which is explained in detail later on.

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NORMAL RISKS

These risks are those risks which every aviation company in this industry carries it on its
back when it enters into the business. These risks may differ from time to time and situation to
situation. These are
1. Hull Risks
2. Hull War Risks
3. Spares All Risks/ War Risks
4. Hull total Loss Only cover
These risks are those risks which takes place when these takes place when any of these
factors comes into action. Because all the above risks mentioned above are unpredictable and
may occur at any time

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HULL 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 affected 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.
The term "all risks" can be misleading. "All risks of physical loss or damage" does not
include loss of use, delay, or consequential loss. "Grounding" is a good example of consequential
loss. Some years ago when there had been a couple of accidents involving DC10 Aircraft, the
Civil Aviation Authorities throughout the world imposed a "grounding order" on that type of
aircraft.
That order in effect said until certain things had been established and
checked out those aircraft could not fly. The operators of those aircraft were
unable to fly them and as a consequence of that they "lost" the use of them.
But the aircraft were not "lost" - it was known precisely where they were but
they could not be used to carry passengers. Such an eventuality would not
be covered by an "all risks" policy because in such circumstances there is no
PHYSICAL loss or damage.

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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 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.

Concorde plane disaster in France, 25 July 2000

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The hull risk does not cover some risks whish are as follows
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1. Wear, tear and gradual deterioration - in common with most nonmarine policies (which includes aviation insurance) these perils are
thought to be a trading expense and not a peril to be insured.
2. Ingestion damage - caused by stones, grit, dust, sand, ice, etc.,
which result in progressive engine deterioration is also regarded as
"wear and tear and gradual deterioration", and as such is excluded.
Ingestion damage caused by a single recorded incident (such as
ingestion of a flock of birds) where the engine or engines concerned
have to shut down is not regarded as wear and tear and is covered
subject to the applicable policy deductible.
3. Mechanical Breakdown - likewise is thought by aviation insurers to be an operating
expense, but subsequent damage outside the unit concerned is usually covered.
However, it is possible to obtain insurance coverage against mechanical breakdown
of engines by way of a separate policy. This coverage has a high degree of exposure
and as a result is relatively expensive. The majority of airlines do not purchase it
probably viewing such exposure as a part of the "engineering"

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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. It say,
1. War - this includes civil war and war with no formal declaration.
2. The detonation of a weapon
3. Strikes, riots, civil commotions and labour disturbances.
4. Political or terrorist acts.
5. Malicious or sabotage acts.
6. Confiscation, nationalization, requisition and the like by any
government.
7. Hijacking or Unlawful exercise to control plane other than crew
members of the flight concerned.

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The brutal second plane crash in World Trade Center, New York, United States
of Ameica, 11 September, 2001

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The majority of the excluded "War and Allied Perils", other than the detonation of a
nuclear weapon and a war between the Great Powers (the aviation insurance world identifies
these as the U.S.A., the Russian Federation, China, France and the UK), can normally be covered
by way of a separate "War and Allied Perils" policy. Aircraft deductibles are not normally applied
in respect of losses arising out of "War and Allied Perils".
Other exclusions insurers will usually apply are, as follows:1. Confiscation etc. by the "state" of registration (this exclusion can often
be deleted in respect of financial interests - albeit, in some instances at
an additional premium charge)
2. Any debt, failure to provide bond or security or any other financial
cause under court order or otherwise;
3. The repossession or attempted repossession of the Aircraft either by
any title holder or arising out of any contractual agreement to which
any Insured protected under the policy may be party;
4. Delay and loss of use. (Although there is often an extension to the
policy for a limited amount for extra expenses necessarily incurred
following confiscation or hijacking).
The aircraft hull "War and Allied Perils" policy will cover the aircraft on an "Agreed
Value" basis against physical loss or damage to the aircraft occasioned by any of these perils.
This statement is made carefully and deliberately in order to highlight the essential difference
from a "Political Risks" Insurance.

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SPARES ALL RISKS


First of all we must identify what we mean by a "spare" or perhaps - "when is a spare not
a spare" to which a simple answer is "when it is attached". 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.
Having established when a spare is a spare how is it insured as such? Usually in one of
two ways. Either under a "spares" section of a hull policy or by a separate Spares Policy. In
either case the scope of coverage will probably be similar. All Risks whilst on the Ground and in
Transit for a limit of [so much] any one item or sending or any one location. War Risks can also
be covered (in respect of transits), Strikes, Riots, Civil Commotions can be covered in
accordance with standard market clauses. Spares coverage is usually subject to a small
deductible except, however, in respect of ground running of spare engines when the appropriate
Ingestion deductible will be applied. Spares are normally covered on an agreed value basis usually their replacement cost (be it new or reconditioned - as is required).

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A flight cockpit with its spare parts

An engine with its spare parts

working inside

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.

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HULL TOTAL LOSS ONLY COVER

The Aerocor (Aeroline as Cordeillra) DC-3 used in 60s and 70s

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.

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CHAPTER 3
LIABILITIES IN AVIATION INSURANCE

Liabilities are those risks which may arise due to some consequences or some reasons
the company has to face. Those reasons are as follows
1. Aircraft Liability
2. Excess Liability
3. Aerospace Manufacturers products and Grounding Liability
4. Airport Owners and Operations Liability
5. Product Liability
A liability is a present obligation of the enterprise arising from past events, the settlement
of which is expected to result in an outflow from the enterprise of resources embodying
economic benefits.
The explanations of all the liabilities are given below

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AIRCRAFT LIABILITY
Here in aircraft liability there are many other liabilities involved which are further
divided into four parts. They are

AIRCRAFT
LIABILITY

PASSENGE

3RD

BAGGAG

CARGO

PARTY

AND
MAIL

These are the kinds of liabilities which are covered in aviation insurance the explanation in
detail is given below

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PASSENGER LIABILITY

Coverage

for

aircraft operators in
the

event

passenger is injured,

Passengers injured in Turkish Airlines Plane Crash in


Netherlands' Feb 25, 2009

killed

or

disabled

during

an

accident

while

aboard

an

insured

aircraft.

Aviation

policies

divided

liability

coverage

into

two

parts--general liability (excluding passengers), and passenger liability.

A Passenger Liability policy covers incidents resulting from the transportation


of passengers by land, sea or air and can often be included as part of a
aviation insurance policy.
However care must be taken to check that the motor policy wording does not exclude farepaying passengers, which is often the case. It is unlikely that an underwriter will be prepared to
cancel or amend the wording of a standard motor vehicle policy.
For this reason Daily Cover policies are specifically for to cater for fare-paying passenger
liability.

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THIRD PARTY LIABILITY

This program offers 3rd Party Liability insurance coverage for non-commercial
operations only. Pilot and passenger injuries and aircraft physical damage are not covered. This
member benefit program is designed to allow non-commercial pilots the benefits that insurance
coverage can offer.

While pilot and passenger injuries and damage to the aircraft itself are not covered under
a Third Party program, financial responsibilities bodily injury or property damage caused by the
aircraft for which the pilot is found to be legally liable to pay to others is covered. Additional
insured parties such as landowners, municipalities and airports, can also be covered under this
type of policy. Because the possession of Third Party coverage provides landowners with a
Certificate of Insurance showing that coverage is in place, access to more flying sites are
accessible for the operation of your aircraft

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Concorde crash on a hotel near Paris Airport just few minutes after the take of
which resulted in destruction of the hotel it fell on, 25 July, 2000

When one engages in recreational activities requiring the use of a vehicle - whether it be land,
water, or air sports related - there are inherent factors that could result in liability issues. No one
wants to enjoy an activity and then have the pleasure of it clouded with possible situations that

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would result in liability claims against their hard earned savings. This Third Party liability
insurance for USUA members can help relieve the worry of possible claims against the pilot
should this type of situation occurs. Additionally, access to airports, flight parks, and flying
events often require liability coverage. Many states require insurance of this nature just to
operate an airplane of any description. Third party liability coverage is also less expensive than
full coverage, and therefore allows the members (insurance holders) the opportunity to enjoy the
thrill of aviation without the worry of liability concerns or the expense of high-priced insurance.
The people can be only eligible who are a registered, certificated or licensed pilot are eligible.
Sport Pilot Students who are endorsed to solo are also eligible. Pilot registration can be with any
recognized organization.

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BAGGAGE LIABILITY
This kind of liability may include various reasons in the happening. They are as follows:

1. Delays
If your bags are delayed, try not to panic. The airlines typically have
ways to track them, and about 98 percent of all misplaced luggage is
returned eventually. If your bags are on the next flight, you could have
them within a few hours. If they've been sent to the wrong airport, it could
take a couple of days. Make sure to file your claim immediately at the
airport and to give the attendant a hotel or home phone number and
address.

Passengers hit by baggage delay

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The airlines will typically bring you your luggage when it is


found; you will rarely need to return to the airport to pick it up.
Additionally, many airlines will reimburse any unexpected expenses
caused by the loss or delay (keep your receipts!). But be careful here -the airline sometimes has the option to deduct any reimbursement or
stipend from any subsequent awards.

Before you leave the airport, be sure you know how to check on your
bag's status; some airlines have an online system while others will
provide you with a phone number to call for updates.

2. Lost Baggage

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If the airline loses your bags, make sure you get a written claim for
damages. This may require a different form than the original "missing
luggage" form. This can be done at the airport or by mail. On domestic
flights,

the

baggage
capped

airline

liability

is

$3,300

per

at

person. On international
trips, the liability limit
may

vary,

governed

as
by

it

is

various

international

treaties,

including

Montreal

the

and

Warsaw

Conventions.
A place consisting lost baggages in airport

You may need to produce receipts to prove the value of items you had in
your suitcase. If you have them, include copies in any documentation you
send to the airline. (Keep in mind that you will be reimbursed for the
depreciated value of your items -- so the airline won't give you the full
$1,000 you paid for that suit you purchased two years ago.) You can
purchase "excess valuation" protection if your checked baggage is worth
more than these limits (but before doing so, make sure the items aren't
already covered by your homeowner's or travel insurance policy).

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The airlines typically have a long list of items for which they will not
be held responsible; these include jewelry, money, heirlooms and other
valuables. These sorts of items should always be packed in your carry-on
bag.

3. Stolen Baggage

Head directly to
the baggage

carousel

when you get off your


flight.

Many

airlines

scan bags when they're


loaded

into

the

baggage claim area and


keep records, especially
Unclaimed baggage ready to be stolen

at larger airports. Once

you've left the baggage claim area, your claim is no longer with the
airline, but with the police.

4. Damaged Baggage

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A damaged bag due to hush made by the airport workers

Once you've gotten your bags off the carousel, immediately check them
for damage or other signs of tampering or mishandling. Report any
damage before leaving the airport; airline customer service will often
want to inspect the bag. Keep in mind that most airlines won't cover
minor wear and tear.

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5. Cargo and Mail Damage

Consignment damaged while cargo or mail from one place to another

According to,

Although Martinair Cargo will


give its best efforts to deliver your shipment at its final destination in good order and
condition, sometimes damage / depreciation, delay or (partial) loss unfortunately occurs.

In case such an irregularity should affect your shipment, a claim can be filed with Martinair
Cargo Claims.

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In order to facilitate and speed up the claim handling process, we kindly would like to draw
your attention to the following:

I what to do in case you receive your shipment with damage

Make sure that the damage of the shipment is noted on the release form/delivery receipt
of the warehouse.

If possible, please take (digital) pictures of the damaged shipment upon receipt of your
cargo at the final destination, as recorded on the Airway Bill.

To strengthen your case, you can appoint an independent and objective surveyor.
However kindly be advised that the decision to appoint a surveyor is up to the claimant as
the claimant always has to provide independent evidence in order to prove the extent of
the damage as claimed for.

Send a written preliminary claim to Martinair Cargo Claims within 14 days from the date
of delivery at the final destination.

Measure the temperature of the shipment upon release and measure the boxes on the
outside of the pallets in case of complete pallet delivery. Please record the temperature on
the release form/delivery receipt of the warehouse.

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To strengthen your case, you can appoint an independent and objective surveyor to check the condition
of your perishable shipment. Please make sure that your shipment will be surveyed as soon as possible
but not later than 8 hours after arrival at your premises: perishables are time sensitive and/or
temperature sensitive commodities, therefore only a survey done shortly after arrival of the cargo will
be considered as an objective survey.

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II What to do in case of (partial) loss/pilferage of your shipment Loss:


.
1

Definition: loss is defined as all pieces (mentioned on the Master Air Waybill) reported
missing

2
3

Send a preliminary claim to Martinair Cargo Claims within 120 days from the date of
issue of the Master Air Waybill.

Partial loss / pilferage:


1

Partial loss is defined as one or more pieces of the total shipment (mentioned on the
Master Air Waybill) are reported missing

Pilferage is defined as the loss of one or more items out of one or more pieces

Send a preliminary claim to Martinair Cargo Claims within 14 days from the date of
delivery (both partial loss and pilferage are considered as damage).

Make sure, that partial loss and/or pilferage is noted on the warehouse release
form/delivery receipt of the warehouse or on the Trucking document in case of direct
deliveries. In case of pilferage, please also establish the weight discrepancy.

III How to file a priced claim


Whenever a priced claim is filed, the necessary information must be gathered. We
strongly request you to enclose the relevant documentation and information as
mentioned below, in the English language:
1

Vendors / shippers invoice covering the complete shipment. Please explicitly indicate
the items / pieces claimed for. Please note that Martinair Cargo cannot offer full
compensation based on the commercial / sales invoice as a refund for loss of profit is not
part of our contractual liability.

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Packing list. Please indicate the items / pieces claimed for Cession of Rights, if required,
from the party (shipper / consignee as mentioned of the Master Air Waybill) entitled to
claim, which states that your company is authorized to act on their behalf.

3
4

Copy of the Martinair Master Air Waybill (and if possible a copy of the relevant House
Air Waybill).

5
A specification of the amount claimed for (by means of a shippers invoice, an
independent survey report, a bill of sale or a bill of repair).
1

Copy of the delivery receipt.

(digital) Pictures, if available.

Your banking details, including swift code.

In case your claim concerns damage / depreciation, please enable us to verify the
extent / direct consequences of the irregularity by also enclosing:
1

Independent and objective survey report, if issued. In case the amount of the damage /
depreciation is expected to be below the costs involved in employing a surveyor, a survey
report obviously is not required. Please note that the decision whether or not to involve a
surveyor is entirely yours. The presence of an objective survey report, however, will
never reduce the strength of your case.

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

3
4

Bill (s) of sale, in case the shipment was still fit for sale.

Bill (s) of repair (if applicable).

Only upon receipt of the information as requested above, your claim can be taken into
consideration. If any of these documents are not available, please explicitly state so. Please be
informed that an adequate and sufficient provision of all relevant documents enables a swift and
efficient claim handling procedure.

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IV Claims handling information


1

Claims will be handled in accordance with the applicable Conventions and /or General
Conditions and / or Conditions of Contract.

An airline can only be held responsible for proven irregularities which can be held
against the carrier and which occurred while being under its custody. This means the
period from acceptance of the shipment at the airport of departure until delivery at the
airport of destination.

A preliminary notice of claim must be made in writing by separate notice. In case of


damage (also including partial loss and pilferage) a (preliminary) notice of claim must be
filed within 14 days from the date of receipt of the cargo. In case of loss (all pieces
reported missing) a (preliminary) notice of claim must be filed within 120 days from the
date of issue of the Mawb.

The maximum liability of Martinair Cargo is limited. We refer to the relevant provisions
of the Warsaw / Montreal Convention, as well as to our General Conditions (available on
the website of Martinair Cargo: www.martinaircargo.com) and our Conditions of
Contract. As a consequence hereof, we politely advise you to file a claim with your
(clients) underwriters in first instance, in case your shipment is covered by an insurance
policy.

For a number of irregularities Martinair Cargo is protected by an exclusion of all liability.


For example: the damage as claimed for is of an indirect / consequential nature ( e.g. loss
of profits, additional taxes incurred, fines etc.), Act of God , Force Majeure situation,
authority regulations. Reference is made to our General Conditions. Martinair also will
decline all liability for goods not properly packed for air transportation.
Martinair Cargo does not accept liability for perishable cargo delivered into our custody at a

temperature exceeding the temperature limits mentioned on the warehouse receipt / acceptance

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slip or exceeding the temperature limits mentioned in the IATA, Perishable Cargo Manual.
Also liability is not accepted by Martinair Cargo for damages which are a result of inherent
defect, nature or vice of the cargo whilst shipment has not suffered a significant delay.
1

The right to claim shall be extinguished if any action is not brought within two years,
reckoned from the date of arrival at the destination, or from the date on which the aircraft
ought to have arrived, or from the date on which the carriage was stopped.

Whenever our liability for a claim exceeds our policy deductible, Martinair Cargo will be
forced to hand over the file to the liability claims adjusters appointed by our insurers. The
claim will then be dealt with directly by these claims adjusters and the claimants will be
contacted accordingly.

In case we accept liability we request the claimant to sign and to stamp a Final Release
Form before being able to settle, hence relieving Martinair Cargo from any further future
liability. After receipt of the duly signed and stamped Final Release Form and if
necessary the Cession of Rights, settlement will be effected. Our financial department
will transfer the amount to your bank account, for which we of course need your banking
details, including swift code.

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EXCESS LIABILITY
Excess liability is all about the refueling and the defueling of the aircraft. Excess liability is also
known as THIRD PARTY WAR RISKS.

Refueling done by one aircraft to another in air

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Refueling done on ground

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AEROSPACE MANUFACTURERS PRODUCTS AND


GROUNDING LIABILITY
MANUFACTURERS PRODUCTS LIABILITIES

This type of insurance is essential for the manufacturer of aircrafts, its components
and related equipment. In addition, it is also necessary for those engaged in selling airplanes,
its parts or fuel, and for individuals who repair and/or maintain the aircrafts.
There are different laws, federal regulations and considerations for commercial airliners
versus small planes.
General aviation refers to aircraft such as small planes that seat less than 20 passengers
and were not engaged at the time of the flight in scheduled passenger-carrying operations. It
includes helicopters, as well. Knowledgeable brokers can assist in the process of identifying
what type of coverage is necessary on a case by case basis.

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Wings of the plane made of Aluminum

Lifeline of an aircraft- Big 1.5 storey size engines


Coverage
This policy protects parties from claims arising from injury or damage caused by
defects in the products sold or manufactured or from improperly completed operations.
Manufacturers, distributors and sellers can be open to liability even if it is proven that the
product was used improperly. Insurance coverage will cover their legal fees needed for
defense against claims and class action suits

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Three times big tyres of a plane


Statistics
Though air traffic is considered to be a safe means of transportation, accidents do
occur. Some of the more common causes of many of these incidents are faulty equipment and
structural or design problems. Aviation products can cause catastrophic accidents as the result
of relatively minor failures.

GROUNDING LIABILITIES
This may include liabilities as follows

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PREMISES-LIABILITY
This basic part of the policy will protect the liability of the operation for the employees while
performing their duties. This would be the fueling operation, and any part of the business
associated with the office and ramp areas. The facility will add to these policy additional parts
to cover the specific needs of each operation.

Ground staff at its work

HANGARKEEPERS

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The larger operations, you know, like a Bell service centre with 8 to 10 beautiful ships in various
stages of maintenance with full pilot training facilities for instance is almost always going to
have exceptional policies covering their business operations that include what you do.
Their policy will cover any person acting on behalf of the operation in the carrying out of their
duties. This policy will protect you if you should do something unintentional that causes damage.
An example might be in the process of moving 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 boom or rotor on the
hangar door or another helicopter sitting next to the one you are moving, the damage you cause
will be covered by the coverage.
Now lets say you work for a maintenance only shop with just 1or 2 ships being worked on at
any one time. In these difficult economic times, it is not unheard of for some operations to Trim
expenses and not purchase the Hangar keepers
option of the policy.
If you are unsure, work up the courage to ask
your boss 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 Hangar
keepers also tell you if the coverage has been
purchased.

People working as hangar keepers

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TRAINING

A pilot getting trained in a cockpit

It is the hope of the insurance underwriters that if you are asked to do something new that
you will have received training ahead of time. If you usually move a Robinson R22 or Schweizer
300 and are now asked to move a multi-million dollar Sikorsky S-61, please be sure you ask for
training or assistance. This same training will apply to any part of the operation you perform.
Even something that seems as simple as fueling or de-fueling must be part of your training
before you perform it by yourself. Underwriters would prefer the operation participate in NATAs
Safety.

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IN-FLIGHT-HANGARKEEPERS
This coverage is important if you are operating the helicopter in flight. It is not uncommon for an
operation to do a test flight after maintenance has been performed or if avionics have been
installed or changed. Sometimes a problem reported by the owner can only be replicated while in
flight. If you are the one who flies it, be sure you meet all of the pilot requirements of both the
operators policy and the helicopter owners policy.
In almost every case, an owner will have an aircraft policy that has as part of their pilot warranty
a paragraph that states what qualifications a pilot needs to meet before he can fly as part of a
maintenance flight. There are some operators who believe that the owners policy will cover any
damage that results from a loss to the aircraft while flying under this provision. Remember that
the owner has a policy to protect them; not you.

Eligible pilots

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AIRPORTS OWNERS AND OPERATIONS LIABILITY

AIRPORT OWNERS LIABILITY

The work done by airport employees is considered to involve the greatest


level of professional responsibility. Even smallest errors by airport personnel
can result in enormous casualties and material losses. Therefore it is
important for airport owners to insure not only their property but also thirdparty liability.
Insurance objects:
The Insureds liability as an airport owners and/or airport structures
that may include:
- airport terminal, airfield and other infrastructure;

- fuelling station;

- air traffic control center.


Insurance risks:
- liability for causing material damage to third parties;

- liability for causing damage to life and health of third


parties.

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Beautifully built Riyadh Airport

Insurance period:
Period specified in the insurance policy normally one year.

The cost of insurance is influenced by:

- number of takeoff and landing operations;

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- types of aircraft based at the airport;

- passenger and freight flow volumes;

- structures comprising the airport;

- security measures;

- working conditions of air traffic control center.

Exclusions:
Standard: military risks; risks related to nuclear explosion effects and
radiation hazard.

Specific:
-

liability to the Insureds personnel;

- liability for property owned or temporarily possessed by the


Insured;

- liability for injuries to persons and property resulting unless


such activities have been agreed on with the Insurer.

Also to mention that airport owners liability also includes operations


liabilities

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PRODUCT LIABILITY
Product liability is the area of law in which manufacturers,
distributors, suppliers, retailers, and others who make products available to
the public are held responsible for the injuries those products cause.

Theories of liability
In the United States, the claims most commonly associated with product liability are negligence,
strict liability, breach of warranty, and various consumer protection claims. The majority of
product liability laws is determined at the state level and varies widely from state to state. Each
type of product liability claim requires different elements to be proven to present a successful
claim.

Plane crash due to manufactures and other members related with the airlines

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Types of liability
Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes between three
major types of product liability claims:

manufacturing defect,

design defect,

A failure to warn (also known as marketing defects).

Manufacturing defects are those that occur in the manufacturing process and usually involve
poor-quality materials or shoddy workmanship. Design defects occur where the product design is
inherently dangerous or useless (and hence defective) no matter how carefully manufactured.
Failure-to-warn defects arise in products that carry inherent no obvious dangers which could be
mitigated through adequate warnings to the user, and these dangers are present regardless of how
well the product is manufactured and designed for its intended purpose.

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CHAPTER 4
FUTURE OF AVIATION INSURANCE
During the past century, man has realized his dream to fly. The aircraft has been
developed and partially perfected. The aviation industry, as it is known today, has grown into a
set of definable sub-industries based upon usage. Modern-day aircraft range from military to
commercial airlines to the most diverse group, general aviation. As with any technology-based
industry, aviation continues to grow and develop. New uses for aircraft are identified, better
aircraft and avionics are created, and problems are recognized and solved.
Although aviation has come a long way in the last 100 years, it is still a developing
industry. With growth and development come problems that must be solved before an industry
can graduate to the next level. In the United States, aviation is now being confronted with a
series of problems that may take as long to solve as the act of flight itself. As aviation enters the
new millennium, it is these problems with which the aviation insurance industry must deal. Some
are simply growing pains. Others are outside influences for which no simple solution may exist.
LEGAL CONCERNS
In many cases, changes in other areas of our society have a great influence over aviation.
This is the case with our court system. The trend toward unreasonable verdicts and ridiculous
awards has forced many aircraft owners to create shell corporations to "front" as the registered
owner of their aircraft. Owners today are uncertain as to how much liability insurance is
adequate protection, a situation made far worse by the growing reluctance of insurance
underwriters to offer higher limits of liability protection at any price. The underwriters explain
that it is impossible for any aviation insurance company to predict an adequate liability premium
rating structure when the court decisions are so volatile and erratic. All aviation insurance
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companies are heavily reinsured by companies in London and other foreign markets, and those
foreign insurers usually charge passenger liability premiums for aircraft operated in the United
States that are three to five times as much as those paid by non-U.S. operators.
And so it goes for the owner of general aviation and commercial aviation aircraft in the United
States. Aircraft owners seem to be trapped between inadequate coverage limits, high-priced
liability insurance premiums, and the perils of the U.S. court system.
CAN SMALL AVAITION BUSINESSES SURVIVE?
In the future, some sectors of the aviation community may simply cease to exist as a
result of the threat of financial devastation due to lawsuit. We've had a glimpse of this already
when the escalating cost of products liability insurance practically stopped the production of
light aircraft in the mid-1980s. It was only after a change in legislation limiting the time an
aircraft manufacturer could be held responsible for products liability that our industry resumed
production of new light aircraft.
In the future, such sectors of general aviation as the small piston repair shop and the
small flight training school may not be able to afford the increasing insurance premiums and in
some cases may not be able to buy adequate insurance at any price. This may spell the end for
many in these businesses. As of February 2000 at least three aviation insurance companies have
ceased writing small "Instruction and Rental" risks while others have increased their premiums
for this class.
The future may see the small maintenance facility replaced with a new-technology
aircraft requiring far less maintenance. The same style of maintenance used by the military and
airlines -- the remove-and-replace concept -- may become commonplace throughout general
aviation as well. Maintenance problems may be identified by computer and repaired only by the
manufacturer at factory service centers, a practice that is already common in today's bizjet fleet.
"Plug and fly" replacement parts keyed to a computer analysis may decrease cost with little or no
downtime.

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


maintenance-intensive aircraft. They're not getting any younger ... and neither are we.

AGING FLEET, AGING PILOTS


While aviation is not exactly a mature industry, it is aging. Maybe what we're seeing
today is just the end of a plateau in the overall development of aviation. The average age of both
our pilot population and our fleet (both commercial and general aviation) is increasing. Many
commercial and airline pilots today received their initial training in the military. The World War
II pilots are now in their 70s and 80s, the Korean War pilots are in their late 60s, and the Vietnam
pilots are in their 50s and 60s. One of the most common conversations we have with our clients
and friends concerns how they can extend their insurable years as a pilot. Aviation is a great
hobby for our retirement years.
Aircraft hull and liability insurance for the senior pilot has become such a concern that
our insurance agency has developed a special task force to help deal with this problem. Looking
into the future, as the baby boomers age, our average pilot populations continue to age. As with
automobile drivers, we have found this segment of our industry to be no more likely to have an
accident than the younger group. In fact, they tend to be more cautious, better trained, and better
financed than most underwriters care to admit. Maybe it is because we are growing older
ourselves, but we believe increased awareness at the underwriting level will soon improve
insurance company acceptance and serve to extend the insurable age of the senior pilot. We can
assure you, we are doing everything in our power to influence the underwriting community in
that direction.
Meantime, what can be done to infuse new blood in the cockpit? The industry is currently
suffering from a lack of trained professional pilots. Without the military-trained pilot to help fill
the need for commercial and airline pilots, we must depend solely upon civilian-trained pilots.
This then becomes an economic problem. There is no longer a generous GI Bill to offset the cost
of flight training in an age of escalating costs.

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Many of our charter and corporate clients complain of sending a young second-incommand to school on their aircraft, only to have the airlines snap them up upon completion.
The trend toward younger and younger pilots in the right seat is disturbing whether at the charter,
corporate, or airline level of operation.
SHRINKING FLEET
Primary training costs are increasing for a number of reasons. The high cost of new
replacement training aircraft and inadequate and expensive insurance render the training sector
of aviation vulnerable to lawsuits and financial disaster, and a shortage of qualified instructors
has slowed the flow of new pilots to a trickle. The shortage of career CFIs is due in part to the
low pay scale at most flight schools, whose owners respond that they're just barely able to stay in
business as it is.
The majority of the general aviation aircraft flying today are 15 to 20 years old and older.
To replace a simple single-engine Cessna 172 today would cost in excess of $140,000. A new
twin-engine Beech Baron is in the $1,000,000 range. Of course, used aircraft are always an
option. The obvious problem is that as new replacement aircraft increase in cost, the price of
good used aircraft is forced up as well. Today, there are no bargains. It is often a struggle to find
a used aircraft for sale with no damage history. Couple the normal attrition of our aging fleet
with the high cost of replacement aircraft and it is easy to understand why our overall general
aviation numbers are plummeting.
Again, a look into the future suggests that the majority of primary training will be done in
flight simulators and computerized flight-training devices. As demand increases and technology
advances, the full-motion simulator should become much more affordable and so realistic the
only thing left for the student pilot is the check ride. "Safe and inexpensive" will become the
name of the game.

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If you want proof, the military has already adopted this method of training from the
combat tank to aircraft and everything in between, and airline pilots are getting type-rated in new
transport jets without having ever set foot in the actual aircraft.

TREND TOWARDS TUBINES


The current trend for corporate-owned-and-operated aircraft seems to be toward turbinepowered aircraft. If new Barons sell for "a million bucks" out of the factory and a good used
King Air is also in the $1 million range, the decision is clear to many which is the preferable
aircraft in size, safety and maintenance cost. The myth that a light piston twin is easier to fly than
a turbine-powered aircraft is beginning to be dispelled. Now that the underwriting community is
imposing virtually the same training requirements upon the multi-engine piston pilot as the
turbine operator, there is less advantage in buying the piston-powered aircraft. Couple the ease of
operation of the turboprop and jet aircraft with the comparable cost of acquisition, and you has
an even more compelling argument against the piston engine.
The proof is in the requests our agency receives for insurance quotations. We are seeing
increasing momentum toward turbine and jet aircraft. For years, the corporate flight department
has insisted upon the business jet for comfort and safety. Now, with the development of the
single-pilot jets, there is increased interest from the businessman pilot in Citation SPs,
CitationJets, and other new-generation Williams-engine-powered jets. In our opinion, this is
clearly a look into the future. With the ease of operation and safety and the decreasing
acquisition and operational costs of new-generation turbine aircraft, it is easy to see what the
near future holds for the piston-powered aircraft.

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TRANING: BETTER MORE EXPENSIVE


There is no argument among most commercial pilots and aviation insurance underwriters
that full-motion flight simulators should be a part of every training process. You simply cannot
practice the emergency procedures in the aircraft that can be demonstrated in a simulator.
Although not available for every aircraft at this time, more and more underwriters are requiring
simulator-based training at least annually. We get the complaint from many of our clients that the
cost to attend Flight Safety or Sitcom is too high. Usually, they do not take into account the cost
of aircraft operation when comparing this with the traditional in-aircraft flight training.
There is good news ahead, however. There is more competition in the upper-level flight training
area. With increased competition will come improved programs and improved affordability.
There will be more flight simulators available for a wider variety of aircraft. In the future, we
predict there will be full-motion simulator-based training at every level ... yes, even for primary
training. You may see a pilot solo without ever leaving the ground. This is an insurance
underwriter's dream!
WHAT DOES THE FUTURE HOLD ?
We have no idea what can or should be done about the U.S. court system with its
irrational verdicts and out-of-control damage awards. From this standpoint, aircraft owners and
operators will continue to be plagued by high liability insurance premiums and inadequate limits.
We can only hope that society will wake up at some point, change its attitude toward litigation,
and break loose from the hold that attitude has over all of us.
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Of course, adversity is the mother of innovation (and invention). With this in mind, the future is
very bright. New methods of training using simulators at all levels will produce more, bettertrained pilots. As these techniques become more available, the costs will continue to decrease.
Some of the new-generation flight simulation software for home PCs is quite spectacular, and
CFIs tell us it offers excellent training value (although the FAA does not yet recognize this fact).
New technology and new production methods may eventually bring down the cost of new
aircraft ownership, and a younger, more efficient fleet will be born. A modern fleet of this type
should be less expensive to repair and with the improved repair costs, insurance hull premiums
will also decline. In addition, these new-age improvements are producing aircraft that are easier
to handle and fly. Safety and comfort seem to be a priority. As this permeates our fleet, accidents
will surely decrease, and insurance premiums will decline as well.
The advent of the computer is changing the way we live our lives, and the cockpit is no
exception. First seen in our navigational aids with the very affordable GPS, the computer is
revolutionizing the entire look and function of our instrument panels. Tom Chappell, president of
our agency, recently attended the open house of one of our clients to view his new Lear 45. This
new-generation aircraft is truly an awakening. Sitting in the cockpit wondering just what all the
new pretty and colorful screens and dials were, Tom felt as if he was viewing a piece of
equipment from a future epoch. The instrumentation, function and completeness of the panel
were truly a look into the future of general aviation. The way pilots are trained in the future will
be changing -- not just to cut costs, but because the aircraft of the future are here and are like
nothing you have ever seen.

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CHAPTER 5

INDIAN GOVERNMENT ON AVIATION INSURANCE


Indian Aviation Insurance Market Overview 2008 Anant Pawar
The author is the Vice President & Head Aviation at Aon Global Insurance
Brokers Pvt. Ltd.
Insurers on aviation growth path Indian Insurers have come a long way in developing the market
capacity for aviation insurance business and as Indias growth story continues, Insurers have
kept pace with the growing demand from buyers in India. Today the Indian market is playing a
key role in supporting not only buyers in India but also buyers in the sub-continent, including
major support to the SAARC region. As the Indian aviation industry continues to grow, many
new buyers have entered the insurance market with requirement for different types of products.
Apart from traditional airline and aircraft related insurances, Insurers are now covering different
verticals of aviation industry ranging from airports to aircraft manufacturers with bigger risks
appetite. The year 2008 has seen heightened level of competition amongst both Public and
Private Sector Insurance Companies in an attempt to retain the current market share and to fulfill
an ever increasing desire to participate in the aviation growth story.

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This is more so in the General Aviation (generally aircraft with less than
61 seats) segment where the sum insured limits are within the capacities of
many Indian Insurers. General Aviation buyers in India have enjoyed
substantially lower premium payouts in 2008 compared to their world and
regional peers, as buyers have bargained hard taking advantage of the soft
market conditions and excess market quite a few buyers have switched their
insurers. On the Airline front, pricing continues to be driven by leading
international markets especially in London, as Indian Insurers continue to off
load major risks to international companies mainly in the European sub
continent, with insurance brokers playing a very important role in the entire
process.
Market Potential For 2008, Aviations direct premium income in India is
circa INR 3,750 million and this includes buyers from all segments including
airlines, general aviation, aerospace, airports, ground handlers, catering
companies etc but excluding satellite.
Over 75% of the total premium comes from the airline segment with
another 23% from General Aviation. A very small portion of 2% is contributed
by airport, ground handlers, catering segment etc. In addition, capacity. In
the process, National Reinsurer, GIC Re writes substantial international
aviation business (mainly by way of inward reinsurance) coming into the
country and gradually other insurers are following suit, but with caution.

Three aviation marketing giants

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Over the last 10 years GIC Re has emerged as one of the largest
aviation reinsurer in the international market and is playing a key role in
supporting Indian Insurers. Currently there are over 200 buyers of aviation
insurances in the country who need aviation products in one form or other.
Many new buyers have entered the market in 2008 and the trend is
expected to continue in 2009 albeit at a slow pace. For the airline sector,
customer base and number of aircrafts has increased significantly in the past
three years but current economic situation is taking a toll on its future
growth.

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Claims Scenario
Each Insurer will have its own underwriting experience to show and can
vary from its peers considerably depending on their participation on the policies that has
produced losses. General Aviation claims in 2008 are expected to exceed Rs. 500 million and
2009 has started on a bad note with claims in first five months exceeding Rs.350 million. As
against this, past 10 years average general aviation losses are hovering around Rs.400 million.
When we compare these claim figures against the total general aviation premium in India, one
may come to a conclusion from the insurers perspective that general aviation is profitable over
the last 10 years period. This may not be true for all insurers, especially considering the fact that
10 years average loss figure consists of two or three major losses in each year. Insurers
participating on these losses would have been hit hard. Majority of the losses in the last 10 years
are on account of aircraft damages and liability claims forma a very small portion of it. However,
by no means does this give any indication into the future considering the catastrophic nature of
aviation business.

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Montreal Convention
The Indian Government ratified Montreal Convention 1999 in March 2009 and currently it
applies to international travel. There is nothing on record at this stage to show that the revised
liability limits are applicable to domestic sectors. In brief, the Convention has increased
compensation levels for international passengers in the event of death or bodily injury and
damage and delay to the passenger baggage and cargo. While the compensation for death or
bodily injury has increased almost 7 times from the existing levels of approximately USD 20,000
to around USD 140,000, the compensation for damage to the checked baggage has increased
from approximately USD 20 per kg to around USD 1,400 per passenger. The compensation for
damage to cargo has increased from USD 20 per kg approximately to USD 24 per kg. The
Warsaw System, which is in force in India by way of Carriage by Air Act, 1972 had allowed four
choices of jurisdiction for filing of a claim by the passenger, namely, place of issue of ticket,
principle place of business of the carrier, the place of destination of the passenger and the place
of domicile of the carrier. Through the Montreal Convention a fifth jurisdiction is added which is
the place of domicile of the passenger, provided the airline has a presence there. Therefore an
Indian would be able to file claim in India even if the journey was undertaken outside India.
Liability Limit for domestic passengers in the event of death or bodily injury continues to be at
the old level of Rs.750, 000 for passengers above 12 years of age and Rs.350, 000 for below 12
years. As regards damage and delay to the passenger, baggage compensation is Rs.4, 000 per
passenger for hand baggage and Rs.450 per kg for registered baggage. So far, Insurers have
responded very positively by covering their customers based on the revised limits for
international travel and it remains to be seen whether new limits will be applicable for domestic
travel as well and its impact on the liability claims scenario.

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CHAPTER 6

IMPACT OF AVIATION INSURANCE ON TOURISM INDUSTRY


Tourism industry has contributed enormously in the flourishing graph of
India's economy by attracting a huge number of both foreign and domestic
tourists traveling for professional as well as holiday purpose.
The tourism industry in India witnessed a stupendous growth in 2006. The
growth in the inflows in India's tourism industry is calculated both in terms of
business and vacations.
The number of foreign tourists arriving from all over the world rose from 0.37
percent to 0.53 percent as has been stated by UN World Tourism
Organization (UNWTO) in the year 2006. This remarkable growth in the graph
of tourism industry in India popularized the entire South Asia as one of the
most spectacular tourist terminal. Indian tourism industry contributes to
around 5.9 percent of the country's GDP and it provides employment to
around 41.8 million of inhabitants.
Some of the most significant features of India's tourism industry or the Role
of Tourism Industry in India GDP have been listed below:
the percentage of foreign tourists in India has increased by 12.4 percent in one year, that is,
from 2006 to 2007. In 2006, Indian tourist industry witnessed a growth of 14.3 percent, which
reached around 3.89 million in 2007
the foreign tourists arrival led to a robust growth in the foreign exchange earnings that
increased from USD 5.03 billion during January-October 2006 to USD 6.32 billion during
January-October 2007, which is apparently a 25.6 percent rise.
deeming the growing rate of the tourists arrival in the country, the Indian tourism industry
designed a wide spectrum of holiday packages and cheaper airfares to attract more tourists.
Nonetheless, the outgoing graph of tourism industry in India is in no way lagging behind from
the inbound one. People traveling from India to abroad or states within India have increased by
25 percent.
The United Nations World Tourism Organization (UNWTO) has estimated the outgoing
tourists to reach around 50 million by the year 2020.

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According to the European Travel Commission, the average expenditure per trip of Indian
tourists traveling abroad has increased from USD 611 in 2000 to USD 822 in 2006
the booming success of Indian tourism industry has led to a drastic change in the hospitality
department as well. The increase in the ratio of tourists resulted in the increase of room rates and
also setting up of a wide range of hotels and other residing areas.
a number of international hotels such as the Hilton, Accor, Marriott International, Berggruen
Hotels, Cabana Hotels, Premier Travel Inn (PTI) and Inter Continental Hotels groups have
professed about making some large-scale investments to append 65,000 additional rooms to
suffice the needs
India is most likely to set up forty hotels of global brands by 2011. The hospitality segment in
India is assumed to reach USD 11.41 billion in the coming two years.

Following are the few benefits ensured by the tourism industry in India GDP in order to
boost up the GDP of India:

The Indian tourism industry offers online booking system, one of the basic proofs of
technological advancement in this sector. These online bookings are applicable for booking the
air tickets via Internet by logging on to the website and also booking the hotel room of the place
to be visited

The online tourism industry has accounted for a turn over of USD 800 million which is
apparently 14 percent of the entire travel and tourism industry

The Role of Tourism Industry in India GDP also features medical tourism that includes
traditional therapies like yoga, meditation, ayurveda, allopathy and other conventional systems of
medicines is currently estimated at USD 333 million and is most likely to reach USD 2.2 billion
by the year 2012.

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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.

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BIBLIOGRAPHY

WWW.WIKIPEDIA.COM
WWW.SCRIBD.COM
Www. business.mapsofindia.com India-gdp Industries
www.google.com

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