AVIATION INSURANCE

BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER VI
(2011 – 12)

Submitted by:
ANANDNARAYAN SINGH
ROLL NUMBER – 44

Under the guidance of

SIVABHAGYAM NALLASEKHARAN

SIES COLLEGE OF COMMERCE AND ECONOMICS,

Plot No. 71/72, Sion Matunga Estate
T.V. Chidambaran Marg,
Sion (East), Mumbai – 400022
 AVIATION INSURANCE
BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER VI
(2011 – 12)

SUBMITTED
In partial fulfillment of the requirement for the award of Degree
of Bachelor of Commerce – Banking and Insurance

Under the guidance of

SIVABHAGYAM NALLASEKHARAN

SIES COLLEGE OF COMMERCE AND ECONOMICS,

Plot No. 71/72, Sion Matunga Estate
T.V. Chidambaran Marg,
Sion (East), Mumbai – 400022
 SIES COLLEGE OF COMMERCE AND ECONOMICS,
Plot No. 71/72, Sion Matunga Estate
T.V. Chidambaran Marg,
Sion (East), Mumbai – 400022

CERTIFICATE
This is to certify that Mr. / Mrs. ANANDNARAYAN SINGH
Of B. Com – Banking and Insurance, Semester VI (2011-12) has successfully
completed a project on AVIATION INSURANCE
Under the guidance of Mrs. SIVABHAGYAM NALLASEKHARAN

Course Coordinator Principal

Project Guide/ Internal Examiner

External Examiner

DATE:

PLACE:
 DECLARATION

I ANANDNARAYAN SINGH, student of B. Com – Banking and

Insurance, Semester VI (2011-12), hereby declare that I have completed the project
on
The information submitted through this project is true and original to the
best of my knowledge.

DATE:
PLACE:

SIGNATURE
ANANDNARAYAN SINGH
Roll number –44
 INDEX
Sr.no. Particulars Page
No.
1 Introduction to Aviation Insurance 3

2 History of aviation industry 4-6

3 Risk covered in Aviation Insurance 7 – 21

3.1 Normal Risk
3.2 Liabilities

4 Future of Aviation Insurance 22 – 29

5 Aviation Insurance in India 30 – 33

6 Indian Government on Aviation Insurance 34 – 41

7 Effect of 9/11 on Aviation Industry 42 – 44

8 Case Studies 45 – 47

9 Recommendation & Conclusion 48

10 Bibliography 49
EXECUTIVE SUMMARY
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.
Aviation accidents are serious accidents, especially those that happen while the
plane is in flight. Aviation or plane accidents do not only mean pilot error. It could
also be caused by malfunctioning gauges as a result of product liability or failure
of maintenance. Also, aviation accidents do not only connote plane crashes or
mishaps.
Aviation insurance is different from other forms of insurance in that it is very
subjective. Due to the vast array of aircraft types, uses and pilot experience,
policies should always be specifically tailored to suit the unique requirements of
each individual applicant. For this reason it is recommended that a broker,
specializing in aviation insurance be engaged to arrange cover.
The Indian aviation industry has witnessed remarkable growth in recent years, with
key drivers being positive economic factors, including high GDP growth, good
industrial performance, and corporate profitability and expansion. Other factors
include higher disposable incomes, growth in consumer spending, and availability
of low fares.
Aviation insurance business is a high severity loss business and in the future you
could see a lot of Indian insurance companies joining hands to manage airline
accounts. Aviation has come a long way the last 100 years. The industry is still
developing. With growth comes a problem that must be solved before the industry
can go to the next level.
AN INTRODUCTION TO INSURANCE

With the insurance sector in full bloom, today, it would not be wrong to say that in
the present market scenario, there is an insurance available for just about anything
and everything. With even a bourgeois family man opting for various insurance
schemes, the question today is not whether you have insurance or not. Instead it is,
whether you need a particular insurance or not?
Insurance is no doubt an area of immense importance in regards to the financial
and monetary sectors of every individual. The whole idea behind Insurance as a
financial security tool was to design something which could secure the financial
well-being of an individual as well as his/her dependents, in case he/she undergoes
an unforeseen loss. These losses could be related to health, property, assets or life
in general.
Insurance helps people manage monetary risks and losses related to investments,
liabilities for wrong financial actions, and risks for inability to earn income at any
stage of life. Insurance generally covers all these risks. Insurance may be described
as a social device to reduce or eliminate risk of loss to life and property. Under the
plan of insurance, a large number of people associate themselves by sharing risks
attached to individuals. The risks, which can be insured against, include fire, the
perils of sea, death and accidents and burglary. Any risk contingent upon these,
may be insured against at a premium commensurate with the risk involved. Thus
collective bearing of risk is Insurance.
―Insurance is a contract between two parties’ viz., the insurer and the insured,
whereby the insurer agrees to compensate the insured in the event of any loss, in
return for consideration (premium) from the insured‖. In short, the insurance
company promises to make good the loss, in the event of occurrence of any
incidence.
1.INTRODUCTION TO AVIATION INDUSTRY

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 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, Jagsons 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, GoAir, SpiceJet etc, who
have made air travel affordable.
THE AVIATION SECTOR
India is one of the fastest growing aviation markets in the world. The Airport
Authority of India (AAI) manages a total of 127 airports in the country, which
include 13 international airports, 7 custom airports, 80 domestic airports and 28
civil enclaves. There are over 450 airports and 1091 registered aircrafts in the
country. The genesis of civil aviation in India goes back to December 1912 when
the first domestic air route between Karachi and Delhi became operational. In the
early fifties, all airlines operating in the country were merged into either Indian
Airlines or Air India and, by virtue of the Air Corporations Act 1953, this
monopoly continued for the next forty years.
In 1990s, aviation industry in India saw some important changes. The Air
Corporations Act was abolished to end the monopoly of the public sector and
private airlines were reintroduced. With the liberalization of the Indian aviation
sector, the industry has witnessed a transformation with the entry of the privately
owned full service airlines and low cost carriers. In 2006, the private carriers
accounted for around 75% share of the domestic aviation market. The sector has
also seen a significant increase in the number of domestic air travel passengers.
Some of the factors that have resulted in higher demand for air transport in India
include the growing middle class and their purchasing power, low airfares offered
by low cost carriers like Air Deccan, etc.
Increasing liberalization and deregulation has led to an increase in the number of
private players. The aviation industry comprises of three types of players:
 Full cost carriers
 Low cost carriers (LCC)
 Other start-up airlines
REASONS FOR BOOM IN THE AVIATION INDUSTRY
1. Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-
Resident Indian) investment up to 100 per cent is permissible in domestic airlines
without any government approval. However, the government policy bars foreign
airlines from taking a stake in a domestic airline company.

2. Low entry barriers: Nowadays, venture capital of $10 million or less is enough
to launch an airline. Private airlines are known to hire foreign pilots, get expatriates
or retired personnel from the Air Force or PSU airlines in senior management
positions. Further, they outsource such functions as ground handling, check-in,
reservation, aircraft maintenance, catering, training, revenue accounting, IT
infrastructure, loyalty and programme management. Airlines are known to take on
contract employees such as cabin crew, ticketing and check-in agents.

3. Attraction of foreign shores: Jet and Sahara have gone international by starting
operations, first to SAARC countries, and then to South-East Asia, the UK, and the
US. After five years of domestic operations, many domestic airlines too will be
entitled to fly overseas by using unutilised bilateral entitlements to Indian carriers.

4. Rising income levels and demographic profile: Though India's GDP (per
capita) at $3,100 is still very low as compared to the developed country standards,
India is shining, at least in metro cities and urban centres, where IT and BPO
industries have made the young generation prosperous. Demographically, India has
the highest percentage of people in age group of 20-50 among its 50 million strong
middle class, with high earning potential. All this contributes for the boost in
domestic air travel, particularly from a low base of 18 million passengers.
5. Untapped potential of India's tourism: Currently India attracts 3.2 million
tourists every year, while China gets 10 times the number. Tourist arrivals in India
are expected to grow exponentially, especially due to the open sky policy between
India and the SAARC countries and the increase in bilateral entitlements with
European countries, and US.

6. Glamour of the airlines: No industry other than film-making industry is as

glamorous as the airlines. Airline tycoons from the last century, like J. R. D. Tata
and Howard Hughes, and Sir Richard Branson and Dr. Vijay Mallya today, have
been idolized. Airlines have an aura of glamour around them, and high net worth
individuals can always toy with the idea of owning an airline. All the above factors
seem to have resulted in a "me too" rush to launch domestic airlines in India.
CHALLENGES FACED BY THE AVIATION INDUSTRY
The growth in the aviation sector and capacity expansion by carriers has posed
challenges to aviation industry on several fronts. These include shortage of
workers and professionals, safety concerns, declining returns and the lack of
accompanying capacity and infrastructure. Moreover, stiff competition and rising
fuel costs are also negatively impacting the industry.

1. Employee shortage: There is clearly a shortage of trained and skilled

manpower in the aviation sector as a consequence of which there is cut-
throat competition for employees which, in turn, is driving wages to
unsustainable levels. Moreover, the industry is unable to retain talented
employees.

2. Regional connectivity: One of the biggest challenges facing the aviation

sector in India is to be able to provide regional connectivity. What is
hampering the growth of regional connectivity is the lack of airports.

3. Rising fuel prices: As fuel prices have climbed, the inverse relationship
between fuel prices and airline stock prices has been demonstrated.
Moreover, the rising fuel prices have led to increase in the air fares.

4. Declining yields: LCCs and other entrants together now command a market
share of around 46%. Legacy carriers are being forced to match LCC fares,
during a time of escalating costs. Increasing growth prospects have attracted
& are likely to attract more players, which will lead to more competition. All
this has resulted in lower returns for all operators.
5. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure
is inadequate to support growth. While a start has been made to upgrade the
infrastructure, the results will be visible only after 2 - 3 years.

6. Trunk routes: It is also a matter of concern that the trunk routes, at present,
are not fully exploited. One of the reasons for inability to realize the full
potential of the trunk routes is the lack of genuine competition. The entry of
new players would ensure that air fares are brought to realistic levels, as it
will lead to better cost and revenue management, increased productivity and
better services. This in turn would stimulate demand and lead to growth.

7. High input costs: Apart from the above-mentioned factors, the input costs
are also high. Some of the reasons for high input costs are:-
Withholding tax on interest repayments on foreign currency loans for
aircraft acquisition. Increasing manpower costs due to shortage of technical
personnel.
2.HISTORY OF AVIATION INSURANCE

Aviation Insurance was first introduced in the early years of the 20th Century. The
first aviation insurance policy was written by Lloyd's of London in 1911. The
company stopped writing aviation policies in 1912 after bad weather and the
resulting crashes at an air meet caused losses on many of those first policies.
It is believed that the first aviation polices were underwritten by the marine
insurance Underwriting community.
In 1929 the Warsaw convention was signed. The convention was an agreement to
establish terms, conditions and limitations of liability for carriage by air, this was
the first recognition of the airline industry as we know it today.
By 1933 realising 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.
The London insurance market is still the largest single centre for aviation
insurance. The market is made up of the traditional Lloyds of London syndicates
and numerous other traditional insurance markets. Throughout the rest of the world
there are national markets established in various countries, this is dependent on the
aviation activity within each country, the US has a large percentage of the world's
general aviation fleet and has a large established market.
No single insurer has the resources to retain a risk the size of a major airline, or
even a substantial proportion of such a risk. The Catastrophic nature of aviation
insurance can be measured in the number of losses that have cost insurers hundreds
of millions of dollars (Aviation accidents and incidents). Most airlines arrange
"fleet policies" to cover all aircraft they own or operate.
3.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:

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.
3.1 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.

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 effected to reduce the large "All Risks"
policy deductibles to a more manageable level. For example the US$1,000,000
applicable to a Boeing 747 can be reduced to say US$100,000.
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.

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.
The hull risks do not cover some risks whish are as follows;

Wear, tear and gradual deterioration - in common with most non-marine

policies (which includes aviation insurance) these perils are thought to be a
trading expense and not a peril to be insured.

1. 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.

2. 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".
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.
 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.
 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).
 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.
 HULL TOTAL LOSS ONLY COVER

The Aerocor (Aerolineas Cordeillra) DC-3 used in 60’s and 70’s

This is similar to Hull All Risks cover given above but will respond only to total
losses of aircraft, whether actual, constructive or arranged. This is particularly
given for old aircraft since the old aircraft are heavily depreciated and insured for
low sums and premium on such low sums would result in low premium, which
would be inadequate for the partial losses. The ratio of partial losses to total losses
in such old aircraft is distorted.
3.2 LIABILITIES

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

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

AIRCRAFT LIABILITY

PASSENGER 3RD PARTY BAGGAGE CARGO

AND
MAIL

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

Coverage for aircraft

operators in the event a
passenger is injured, killed or
disabled during an accident
while aboard an insured
aircraft. Aviation policies
divided liability coverage into
two parts--general liability
Passengers injured in 'Turkish Airlines Plane Crash in
Netherlands' Feb 25, 2009 (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 fare-paying 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.
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

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 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 occur. 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.
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.
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
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 airline baggage liability is capped at $3,300 per person.
On international trips, the liability limit may vary, as it is governed by various
international treaties, including the Montreal and Warsaw Conventions.
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).
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 at larger airports. Once you've left the baggage claim area, your claim is
no longer with the airline, but with the police.
5. Damaged Baggage
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.
 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.

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.

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

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 this policy additional parts to cover the specific needs of each operation.

HANGARKEEPERS
The larger operations, like a Bell service center 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 helo 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 let’s 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 Hangarkeepers 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 Hangarkeepers also tell you if the
coverage has been purchased.
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
NATA’s Safety
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 third-party liability.
Insurance objects:
The Insured’s 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.

Insurance period:
Period specified in the insurance policy – normally one year.
The cost of insurance is influenced by:
- number of takeoff and landing operations;
- types of aircraft based at the airport;
- passenger and freight flow volumes;
- structures comprising the airport;
- working conditions of air traffic control center.
Exclusions:
Standard: military risks; risks related to nuclear explosion effects and radiation
hazard.

Specific:
- liability to the Insured’s 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 owner’s liability also includes operations liabilities.
 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 are determined at the state level and
vary 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
4.FUTURE OF AVIATION INSURANCE

As the industry enters into the millennium, the insurance industry must look at
several problems that also face the aviation industry. Survival for the small FBO’s
is getting harder each day; the threat of financial devastation is real when it comes
to lawsuits. General aviation may be forced to change its way of doing business
and become more like the military and commercial airlines. One can only hope that
society will change their attitude towards the aviation industry and the litigation
that surrounds the industry. We all hope for a positive future for the community.

The aviation industry, as it is known today, has grown into a set of definable
industries. Modern aircraft range from military to commercial airlines to the most
diverse group, general aviation. Aviation has come a long way the last 100 years.
The industry is still developing. With growth comes a problem that must be solved
before the industry can go to the next level.
Because of modern technology, we’ll never again have the numbers that we once
had. The ageing fleet and pilots can’t help the situation that the industry is facing;
the average aircraft age is 15 to 20 years, and the post Indian pilot is now 50 to 60
years of age. The underwriters are very worried about the age of both the pilots and
the aircraft.

The future of the industry could hold a brighter outlook. The industry hopes that
with the use of simulators at all levels of training will increase the number of
better-trained pilots and hopefully lower insurance cost at the same time. Insurance
can be one of the most expensive elements in the fix cost of owning an aircraft. To
keep insurance cost under control in this difficult environment, aircraft and
aviation business owners are going to have to make some changes in the way they
purchase and think about insurance. There are ways to reduce your insurance cost,
buying cheap insurance isn’t always the best way to go, and it’s not heavily
regulated by our government. Companies can write policies pretty much the way
they want to, you must pick the right company for you and your aircraft.
Aviation has come a long way the last 100 years, and the future could hold a
brighter out-look for the industry. One can only hope that society will change their
attitude towards the aviation industry and the litigation that surrounds the industry.
In the future, this could drive cost down and make liability insurance affordable to
the private owners, and to the FBO’s. Aviation insurance business is a high
severity loss business and in the future you could see a lot of Indian insurance
companies joining hands to manage airline accounts.

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 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.
 5. AVIATION INSURANCE IN INDIA

The unbridled growth in the aviation sector has come as a bonanza for the
insurance sector. Thanks to capacity addition and the entry of new aviation players,
a host of insurance companies are eyeing this growing market t offer insurance
cover to new planes that are being brought to India.

Before the boom in the Indian aviation sector, the airline insurance market was
dominated by the four state-owned general insurance companies: New India
Assurance Company, Oriental Insurance Company, National Insurance Company
and United India. However, with the growth in the Indian aviation story, private
players like ICICI Lombard, Bajaj Allianz, Iffco Tokyo General Insurance and
Reliance General Insurance Company are also trying to muscle their way into this
lucrative sector. The unprecedented growth in this sector is also seeing private
players join hands with each other to bid for accounts. The latest such case is the
ICICI Lombard-Bajaj Allianz tie-up where they are jointly bidding for Air India’s
insurance account which includes providing cover for 50 planes valued over $3
billion.

In India, this segment is highly reinsurance-driven. A majority of the players have

re-insured the value of risk covered with foreign companies. Take the case of Air
India where almost 90% of the risk is insured overseas through reinsurance
arrangements, while the remaining cover rests domestically.
Indian insurance companies do not have the financial muscle to address claims of
airlines and generally go in for reinsurance which means sharing the risk of loss
with another insurance company.
The role of a reinsurer is important in the Indian context as most of the companies
do not have the requisite experience of handling a market of this size. The reinsurer
helps in providing the technical expertise, capacity to underwrite the business and
their ability to handle such large risks. National reinsurer, GIC, leads India’s
reinsurance treaties. Out of the eight private players, Bajaj Allianz General
Insurance Company and ICICI Lombard General Insurance Company Limited are
most active in this segment.

Although there are no official estimates, industry players put a ballpark figure of
the Indian aviation insurance market at somewhere around Rs 400 cr to Rs 500 cr.
With new aircraft being bought by new players entering the sky and the existing
one in expansion mode, this segment will only grow.

According to Ernst & Young, a global consultancy firm, Indian skies would have
over 700 aircraft - from 235 currently - by 2012, an increase of almost 200%. The
numbers speak for the potential of this segment in the market, which is one of the
fastest growing in the world. The total premium figures for aviation insurance in
India for 2006-07 stood at Rs 417.29 cr. Typically, the premium depends upon
underwriting factors such as age of the aircraft, experiences of the pilot flying the
aircraft, make and model and use of the aircraft. It is generally 1% to 3% of the
aircraft value.

The aviation insurance market is looking up and is currently at Rs 350 crore. But
with new aircraft being bought by new players entering the business and the
existing one on an expansion mode, the aviation market is set to take off.
MAJOR PLAYERS OF AVIATION INSURANCE
 6.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 India’s
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.

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, Aviation’s
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.

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.

When one compares the above limits to 2-3 years back it signifies a jump of over
200%-250% and majority of the capacity comes from National Reinsurer, GIC Re.
New capacity has entered Indian market especially during 2007, 2008 with Private
Insurers buying reinsurance programmes to support their direct underwriting. At
the same time existing Insurers have expanded their underwriting limits.
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.
Aviation Liability Insurance Limits in India:
Western European countries including countries in the Far East namely Hong
Kong, Singapore have adopted regulations specifying minimum liability insurance
limits for aircraft based on the ―maximum takeoff weight of the aircraft‖ and
―passenger seating capacity‖, however India is yet to adopt any such regulations.
Even neighboring countries like Sri Lanka and Nepal have minimum liability
insurance requirements for aircraft and it may not be too long before India adopts
such requirements.

While Airlines and Corporate Jet owners are buying liability limits in line with the
international trend, there is no similar trend when it comes to helicopter operators.
Like Airline policies, liability limits on Corporate Jets many times are driven by
financing /purchase agreements; however helicopter operators tend to buy low
limits.
 7.EFFECTS OF 9/11 ATTACK ON AVIATION
INDUSTRY
Following the September 11th attack in the United States, the subject of aviation
insurance attracted much attention in the media and elsewhere after aviation
insurers worldwide withdrew cover for the specific acts of war and terrorism. As a
result, many national governments stepped in to provide temporary insurance cover
to ensure that airlines continued flying.
 Short to medium term solutions
At the request of the airline industry the International Civil Aviation
Organisation established a special group on war risk insurance (―SGWI‖)
which, as a short and medium term measure recommended the setting up of
an international mechanism funded by insurance premiums to provide non-
cancellable third-party aviation war risk coverage through a non-profit
special purpose insurance entity (GLOBALTIME) with multilateral
government backing for the initial years. As a long-term solution the SGWI
recommended that an international convention be developed which would
limit the third-party liability of the aviation industry for losses arising from
war, hijacking and allied perils.
 Uncertainty ahead
Some four years on from 9/11, most governments have withdrawn
guarantees for hull and liability war cover to airlines and airport service
providers. Notable exceptions include the United States, China and
Singapore. The market has now responded with certain insurers offering
major airlines limited no cancellable third party coverage. However, with
other classes of catastrophe business, there remain underlying uncertainties
in the aviation insurance market that could dramatically change the
 environment. One of those uncertainties is the prospect of a catastrophic
event caused by dirty bombs, bio-chemical and electromagnetic devices or
weapons of mass destruction (―WMD‖). The fear is that the use of a ―dirty
bomb‖ at a major international airport could not only lead to immediate
multiple aircraft, passenger and third party losses, but also long term
contamination of sites preventing access and the uncontrolled spread of
diseases.
 Convention and statutory limits
The Montreal Convention 1999, which governs the liability of airlines in
relation to passengers and cargo interests, requires airlines to obtain
adequate insurance to cover their liabilities under the Convention. In
addition, airlines are required by many states to have minimum insurance
limits to cover such liabilities including third party surface damage.

After the September 11, 2001, terrorist attacks on the United States, the insurance
costs for commercial airlines and college aviation programs rose sharply. The
prevailing assumption is that increased aviation insurance costs are the result of an
increased risk of life and property loss from additional terrorist attacks. This
project questions the assumption and posits that the September 11, 2001, attacks
were a catalyst for and not the cause of increased insurance costs. Two alternative
explanations for the increased costs are offered. First, after September 11th,
insurance managers became aware that they had not been making the incremental
rate increases necessary to maintain acceptable profit margins. Second, sharp
declines in the value of the insurance company stock portfolios eroded profits.
Increases in aviation insurance cost will be compared to increases in other types of
insurance, such as medical insurance, to determine if the rate of increase in
aviation insurance cost is significantly higher than in other sectors of the economy.
 8.CASE STUDIES

AVIATION INSURANCE OF KINGFISHER AIRLINES

Two private sector general insurance companies, ICICI Lombard General

Insurance and Bajaj Allianz General Insurance, have bagged the insurance account
of Vijay Malaya’s Kingfisher Airlines.
This is for the first time that the private sector general insurance companies have
made major inroads into the aviation sector, which has mainly been the forte of the
public sector insurers.
Both ICICI Lombard and Bajaj General Insurance will share the Kingfisher
Airlines account in a 7.5:2.5 ratio. After a ―beauty parade‖ by the public sector and
private general insurance companies, the account was awarded to the two private
sector general insurance companies last week.
ICICI Bank, one of the promoters of ICICI Lombard, has also financed the aircraft
acquisition plans of the Kingfisher Airlines. The insurance deal will be executed
the moment Kingfisher Airlines acquires its fleet of aircraft. Kingfisher will be the
first private carrier to be launched with an all-new fleet. The airline has signed an
agreement with Airbus Industry of France for the purchase of three brand new
Airbus A319 aircraft. With this new purchase,
Kingfisher Airlines, which will launch its operations on May 7, has ordered a total
of 33 brand new aircraft. Of these, a total of 13 aircraft — 10 A320s and 3 A319s
— are on firm order, with options for buying a further 20 aircraft.
AVIATION INSURANCE SERVICE PROVIDER IN INDIA

In India the one company

which provides aviation
insurance as a service is
New India Life Assurance
Co. LTD
This company provides
this service as a
commercial product to the
aviation sector. Started in
1946 as Aviation
Insurance of Air India,
company provides
The logo of THE NEW INDIA LIFE ASSURANCE
professional aviation
insurance advice and
solutions to the needs of small aircraft operators as well as scheduled airlines.
The aviation portfolio encompasses following type of covers.

 Hull All Risk Insurance Policy

This policy is suitable for small aircraft operators belonging to flying

clubs, companies engaged in agricultural spraying operations, aircrafts
especially designed for VVIPs, business executives and for those engaged
in industrial aids. The policy scope includes all physical loss or damage
sustained by the insured aircraft including total loss, disappearance. All
losses are paid subject to deductibles.
 Spares All Risk Insurance Policy

Covers loss or damage to spares, tools, equipment and supplies owned by the
insured or the property for which the insured is responsible whilst on ground
or in transit by land, sea, air including in own aircraft or whilst on the
premises of others for storage only.

 Hull/Spares War Risk Insurance :

Indemnity is provided to the aircraft as well as spares caused by war,

invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution,
resurrection, martial law, strikes, riots, civil commotion, malicious acts,
sabotage.

 Hull Deductible Insurance:

Airlines at times have to bear a proportion of loss due to application of a

deductible under All Risk Policy, which may impose considerable financial
difficulty on the insured. Therefore the operators insure part of their
deductibles under this kind of insurance.

 Aviation Personal Accident (crew member) Insurance

This cover is designed to cover insured person against injury, disablement or

death arising as result of an accident that is generally granted on annual basis.
The cover operates while mounting or dismounting from and whilst traveling
an aircraft while the aircraft is being used within the geographical scope as
per its permitted usage. This cover can also be on 24 hours basis.
  Loss of License Insurance

Operating crews of the aircraft are required to have valid license. License
is liable to be suspended either temporarily or permanently on medical
grounds. Consequential financial loss is covered by the loss of license
policy. Cover provided is in respect of incapacity causing permanent total
disablement or temporary total disablement due to bodily injury or illness.

Besides the aforesaid general aviation policies New India Assurance

Company also provides various other tailor-made insurance as per specific
requirements of the insured.

Claims

In case of claims following are illustrative documents that are generally

called for from the insured.

 Documents in connection with aircraft details

 Documents in connection with flight details
 Documents in connection with the accident
 Certificate of airworthiness/registration
 Crew details
 Maintenance & engineering information
 Operational manual passenger documentation in case of claims.
 9.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.
 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.
HYPOTHESIS
―Premium rates in aviation insurance are highly volatile.‖

An interview with the Sr. Deputy Manager of The New India Assurance Company

Ltd, Mr. K.S.Kulkarni proves that premium rates can rise or fall sharply,

apparently without rhyme or reason. However, he explains that this specialist

market covers the enormous insurance risks of today’s airline operations, where a

single major accident might cost billions. Aviation insurance is one of the most

complex and specialized fields in the insurance industry. It is a much smaller

portion of the industry than home, auto, life, health and other general commercial

insurance sectors. In fact, in premium volume, aviation insurance makes up less

than 1 percent of the entire insurance industry.

 10.BIBLIOGRAPHY

 www.aviationresearch.com
 economictimes.indiatimes.com/Market
 www.economywatch.com
 www.business-standard.com
 indianaviationnews.net

Books
 Aviation Industry: Global and Indian Scenarios –
Amit Kumar Singh, Suresh K

 Indian Aviation Industry- Opportunities And Challenges -

Ravi Kumar V V