Aviation Insurance in India 航空保险在印度

AVIATION INSURANCE
INTRODUCTION
INTRODUCTION TO SERVICE SECTOR

INSURANCE INDUSTRY
AIRLINE INDUSRTY
INDIAN AIRLINE INDUSTRY
AVIATION INSURANCE
AVIATON INSURANCE IN INDIA
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N. G. Acharya & D. K. Marathe College, Chembur
AVIATION INSURANCE
INTRODUCTION TO SERVICE SECTOR
The service sector accounts for more than half of India's GDP: 51.16
percent in 1998-99. This sector has gained at the expense of both the agricultural
and industrial sectors through the 1990s. The rise in the service sector's share in
GDP marks a structural shift in the Indian economy and takes it closer to the
fundamentals of a developed economy (in the developed economies, the industrial
and service sectors contribute a major share in GDP while agriculture accounts for
a relatively lower share).
The service sector's share has grown from 43.69 per cent in 1990-91 to 51.16
per cent in 1998-99. In contrast, the industrial sector's share in GDP has declined
from 25.38 per cent to 22.01 per cent in 1990-91 and 1998-99 respectively. The
agricultural sector's share has fallen from 30.93 per cent to 26.83 per cent in the
respective years.
Some economists caution that if the service sector bypasses the industrial
sector, economic growth can be distorted. They say that service sector growth must
be supported by proportionate growth of the industrial sector; otherwise the service
sector grown will not be sustainable
Within the services sector, the share of trade, hotels and restaurants increased
from 12.52 per cent in 1990-91 to 15.68 per cent in 1998-99. The share of
transport, storage and communications has grown from 5.26 per cent to 7.61 per
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AVIATION INSURANCE
cent in the years under reference. The share of construction has remained nearly
the same during the period while that of financing, insurance, real estate and
business services has risen from 10.22 per cent to 11.44 per cent. The fact that the
service sector now accounts for more than half the GDP probably marks a
watershed in the evolution of the Indian economy.
Customer satisfaction predominates the success of an enterprise. In the

service industry where intangibles are marketed, the importance of customer
satisfaction is all the more significant. Service is said to be the sharpest edge of
marketing strategy. Sales and service are the two important wings of service
industry like LIC, ITI and the post office. If one of the wings turns weak the
organization cannot rise because the weaker wing will hamper its flight. Hence the
emphasis should not be concentrated only on the sales but on service aspects too.
Besides a supportive role in promoting sales effort, servicing influences the
institutional image. Prompt and effective service boosts the morale of the sales
force to present a bold form and hold their prospects. Service encompasses the
service rendered to clients before, during, and after sales. A few examples of
services are the Hotel industry, Airline industry, Insurance industry, Transportation
industry, etc.
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AVIATION INSURANCE
INSURANCE INDUSTRY
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 in the modern form originated in the Mediterranean during 13/14th
century. The earliest references to insurance have been found in Babylonia, the
Greeks and the Romans. The use of insurance appeared in the account of North
Italian merchant banks who then dominated the international trade in Europe at
that time. Marine insurance is the oldest form of insurance followed by life
insurance and fire insurance. The patterns that have been used in England followed
in other countries also in these kinds of insurance. The origin and growth of
Marine Insurance, life Insurance, Fire Insurance and miscellaneous insurance.
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AVIATION INSURANCE
AIRLINE INDUSTRY
In Airline Industry Aviation Insurance is a type of miscellaneous

insurance, concentrating on each and every aspect of aviation insurance and how it
has affected the service sector in recent times. Aviation is the most expensive
industry means of transport today. This sector gained importance and created
awareness after the 9/11 attack on the twin towers of America. After this attack lot
of changes took place in the aviation sector and also lot of amendments were made
by the law to regulate the aviation insurance contracts. So let us see what these
changes are and how aviation insurance forms one of the important parts of any
countrys insurance sector.
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AVIATION INSURANCE
INDIAN AIRLINE INDUSTRY

The Indian aviation industry is one of the fastest growing aviation
industries in the world. The government's open sky policy has led to many
overseas players entering the market and the industry has been growing both in
terms of players and number of aircrafts. Today, private airlines account for around
75 per cent share of the domestic aviation market.
India is the 9th largest aviation market in the world. According to the Ministry of
Civil Aviation, around 29.8 million passengers traveled to/from India during 2008,
an increase of 30 per cent on previous year. It is predicted that international
passengers will grow upto 50 million by 2015. Further, due to enhanced
opportunities and international connectivity, 69 foreign airlines from 49 countries
are flying into India.
Growth
The Indian Civil Aviation market grew at a compound annual growth rate (CAGR)
of 18 per cent, and was worth US$ 5.6 billion in 2008. Airlines recorded a doubledigit growth in air traffic in August 2009, according to data released by the
industry regulator Directorate General of Civil Aviation (DGCA).
Domestic airlines flew 3.67 million passengers in August 2009, as against 2.92
million in the corresponding period last yearan increase of 26 per cent.
The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic traffic will
increase by 25 per cent to 30 per cent till 2010 and international traffic growth by
15 per cent, taking the total market to more than 100 million passengers by 2010.
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AVIATION INSURANCE
By 2020, Indian airports are expected to handle more than 100 million passengers
including 60 million domestic passengers and around 3.4 million tons of cargo per
annum.
Moreover, significant measures to propel growth in the civil aviation sector are on
the anvil. The government plans to invest US$ 9 billion to modernize existing
airports by 2010. The government is also planning to develop around 300 unused
airstrips.
India ranks fourth after US, China and Japan in terms of domestic passengers
volume. The number of domestic flights grew by 69 per cent from 2005 to 2008.
The domestic aviation sector is expected to grow at a rate of 9-10 per cent to reach
a level of 150-180 million passengers by 2020.
The industry witnessed an annual growth of 12.8 per cent during the last 5 years in
the international cargo handled at all Indian airports. The airports handled a total of
1020.9 thousand metric tons of international cargo in 2006-07.
Further, there has been an increase in tourist charter flights to India in 2008 with
around 686 flights bringing 150,000 tourists. Also, there has been an increase in
non-scheduled operator permits 99 in 2008 as against 66 in 2007.
Low cost services
Major full-service carriers have converted around half their capacity into low-cost
services, which has resulted in bringing down the average fares of airlines as a
whole by about 30 per cent and thereby increasing demand from the domestic
passenger market.
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AVIATION INSURANCE
Kingfisher Airlines and Jet Airways have converted around half their capacity into
low-cost services. While, government carrier Air India plans to launch a low-cost
model in the domestic skies. It already has a low-cost airline called Air India
Express which operates on international routes.
Jet Airways has also increased the number of low-cost seats in the system by
around 50 per cent.
Low cost carriers (LCCs) such as Indigo and SpiceJet have increased the total
number of seats by 40 per cent and 53 per cent, respectively, in the past year.
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AVIATION INSURANCE
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 realizing that there should be a specialist industry sector the

International Union of Marine Insurance (IUMI) 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 (IUAI) 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
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AVIATION INSURANCE
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.
AVIATION INSURANCE IN INDIA

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
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AVIATION INSURANCE
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 the Indian Airlines
Corporation (IAC) to cater to domestic air travel passengers and Air India
International (AI) for international air travel passengers. The assets of the existing
airline companies were transferred to these two corporations. This Act ensured that
IAC and AI had a monopoly over the Indian skies. A third government-owned
airline, Vayudoot, which provided feeder services between smaller cities, was
merged with IAC in 1994. These government-owned airlines dominated Indian
aviation
industry
till
the
mid-1990s.
In April 1990, the Government adopted open-sky policy and allowed air taxioperators to operate flights from any airport, both on a charter and a non charter
basis and to decide their own flight schedules, cargo and passenger fares. In 1994,
the Indian Government, as part of its open sky policy, ended the monopoly of IA
and AI in the air transport services by repealing the Air Corporations Act of 1953
and replacing it with the Air Corporations (Transfer of Undertaking and Repeal)
Act, 1994. Private operators were allowed to provide air transport services. Foreign
direct investment (FDI) of up to 49 percent equity stake and NRI (Non Resident
Indian) investment of up to 100 percent equity stake were permitted through the
automatic FDI route in the domestic air transport services sector.
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AVIATION INSURANCE
THE RISK
THE RISK
EXCLUSION
GENERAL LIABILITIES
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AVIATION INSURANCE
THE RISKS
Hull "All 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
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AVIATION INSURANCE
"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 "preloss" 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.
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AVIATION INSURANCE
EXCLUSIONS
Wear, tear and gradual deterioration - in common with most non-marine
policies these perils are thought to be a trading expense and not a peril to be
insured.
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.
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" budget.
Spares
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,
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AVIATION INSURANCE
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).
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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AVIATION INSURANCE
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.
War Definition:
War - this includes civil war and war where there is no formal
declaration.
The detonation of a weapon of war employing nuclear fission or fusion.
Strikes, riots, civil commotions and labour disturbances.
Political or terrorist acts.
Malicious or sabotage acts.
Confiscation, nationalization, requisition and the like by any
government.
Hi-jacking or any unlawful seizure or exercise of control of the aircraft
or crew in flight.
The exclusion also applies to any loss or damage occurring whilst the aircraft is
outside the control of the operator by reason of any of these "war" perils.
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.
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AVIATION INSURANCE
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: 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)
Any debt, failure to provide bond or security or any other financial cause
under court order or otherwise;
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;
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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AVIATION INSURANCE
Liability Insurance
Liability can be divided basically into two categories:

Liability in respect of Passengers, Baggage, Cargo and Mail carried on the
aircraft. These liabilities result from the operations the airline is set up to
perform and are normally the subject of a contract of carriage like a ticket or
airway bill, which provides some possibility of limiting the airline's liability.
Aircraft Third Party Liability - the liability for damage done to property or
people outside the aircraft itself.
Every airline will arrange liability insurance for these two categories, normally in a
single liability policy. In many countries there are requirements laid down
imposing minimum limits of liability that are a prerequisite to obtaining an
operator's licence. Elsewhere limits are specified for an aircraft to be allowed to
land. The size of limit required is often related to the size of the aircraft concerned
(and its potential for causing damage). A small aircraft operating only in remote
regions and using small airstrips incurs considerably less potential exposure than
an aircraft flying into and out of major airports.
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AVIATION INSURANCE
GENERAL LIABILITIES
The other category of liability covers premises, hangarkeepers and
products liability and is called "Airline General Third Party" - being the liability
for damage done to property or people arising from other than the use of aircraft.
Many airlines cover their "Airline General Third Party Liability" within their main
liability program.
It is called "Airline General Third Party Liability" these days since

the insurers took steps specifically to exclude all non aviation activities (for
example hotel ownership or management) from "Aviation" Policies a few years
ago. Basically for a risk to be considered as "Airline General Third Party Liability"
it must arise from what are described as "aviation occurrences" being those
involving aircraft or parts relating thereto, or arising at airport locations or arising
at other locations in connection with the airline's business or transporting
passengers/cargo or arising out of the sale of goods or services to others involved
in the air transport industry.This means that there is a definitive language detailing
what is considered as "aviation exposure" such that any other (non-aviation)
exposure is excluded.
Most policies are placed on a Combined Single Limit Basis. This

means Bodily Injury and Property Damage combined. In the past, personal injury
was included but now this has been separated. It should be mentioned, however,
that these days the term "bodily injury", in addition to bodily injury, sickness and
death resulting at any time, will include shock and mental anguish. "Personal
Injury" on the other hand is defined as "offences against the person", such as false
arrest, malicious prosecution, invasion, libel or slander and the like.
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AVIATION INSURANCE
In respect of Personal Injury the full policy limit, whatever that may be, is not
available and is usually limited to US$25,000,000 any one offence and in the
annual aggregate.
What are excluded from liability insurance are such things as: Damage to the Insured's own property. (It is after all a third party liability
policy).
War and Allied Risks although these are "written back" by a device called
"The Extended Coverage Endorsement - AVN 52".
Radioactive Contamination.
Noise and Pollution - unless caused by or resulting in a crash, fire, explosion
or recorded "in flight" emergency.
Both the Aircraft and General Liability policies usually includes the "war and
allied perils" exposure by way of a "write back" and will probably provide for such
things as search and rescue expenses, first aid and other humanitarian expenses and
also defence costs.
Hull Total Loss Only Cover

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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AVIATION INSURANCE
BUYING AVIATION INSURANCE

CONTRACT
SELECTION OF A BROKER
WHAT DOES YOUR BROKER DO FOR YOU?
WHAT TO GIVE YOUR INSURANCE BROKER
RENEWING AVIATION INSURANCE
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AVIATION INSURANCE
BUYING AVIATION INSURANCE CONTRACT

As with many specialized service or commodity purchasing, the use of an
experienced intermediary or middleman is usually prudent for the transaction
process. Although this middleman may not be required in all facets or industries
for successful purchases, in the Aviation Insurance Industry, with only one
exception, it is required. The middleman we are discussing is often referred to as
a Broker; it is quite frankly the only way to accomplish this need. All the Aviation
Insurance companies or groups require the use of a Broker to secure insurance on
behalf of the consumer. So what is this Aviation Insurance Broker we need to
utilize and access most of the companies providing insurance?
Well, the term broker refers to an independent insurance person who is licensed
by the State to represent and work for the consumer in the insurance purchasing
and service process. Unlike an insurance agent who represents an insurance
company and represents that insurance companys interest, a broker is
independent of the insurance company and represents the needs and interest of
the client. This independence allows the broker the freedom and opportunity to
deal with multiple aviation insurance companies and is considered to be working
the client. The brokers compensation is paid by a percentage of premiums, which
comes from the consumer. This commission structure keeps the brokers attention
to represent the best interest of the client/consumer and places a responsibility
that the broker provides a continuous service and handling of the insurance needs
or requirements.
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AVIATION INSURANCE
SELECTION OF A BROKER:
The selection process of a broker should be more involving for the consumer,
than which insurance company to buy the coverage from. That is a process
consumer and the broker decide upon. The selection of a broker should take
several considerations, such as the experience the broker has in the consumers
segment of aviation or operation, the infra-structure or team support behind the
broker to achieve the demands of technical service and document handling, the
market relationship and credibility with underwriters (the insurance company),
and the overall reputation in the aviation community.
Just as an extensive interview process in conducted to select an employee for a
company, so should the hiring process involve searching for, and selecting the
aviation insurance broker. This can be conducted by an interview process where
the broker sells themselves and the organization they represent as well as a check
upon their credentials with a client list of references. Once this process is
complete and the consumer feels comfortable with the selection, the long-term
relationship the consumer develops with his broker will provide the consumer
years of professional service.
If, however, the client believes his choice was not good or the broker service does
not meet his expectations for a variety of reasons, the client can always change
the broker as in the original selection process by writing a "Broker of Record"
letter which is provided to the current insurance company. This letter will replace
or fire the current broker with the clients new selection, which is based on his
criteria and not that of any insurance company. Whatever the process by which
the client select or remove the broker representation is controlled by the client.
WHAT DOES YOUR BROKER DO FOR YOU?

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AVIATION INSURANCE
Understanding the brokers job should help the client during the selection
process. The broker will gather the "underwriting" information on the clients
"risk", the aircraft or operation, and submit this information to the insurance
company. This gathering of information can be as simple as a one-page
application for small risk such as private aircraft usage or as complex as booklets
of information for large commercial operations. In any event it is important that
the broker knows what information to secure, how to present it and understands
completely its context. Thats because the next important part of the brokers
responsibility to the client is to negotiate the best combination of coverage and
price for clients risk. This can only be achieved with a brokers level of
understanding of clients risk, their experience in this area, and for larger risk
having a support mechanism the underwriter can relate to. It is in this process the
brokers skill is utilized to create the competition between insurance companies to
obtain best industry prices at the current time.
Once the broker has negotiated the clients insurance program, they will continue
to advise the client from the purchasing process through the coverage issues that
may arise during the policy period, usually one year. This expertise in service can
deal with changes in your policy during its term to the most important reason the
client bought the policy in the first place and that is handling a claim should one
occur during the policy term. This service process from the client broker may not
involve just one person, but multiples of support personnel depending on the size
and complexity of your risk. As stated earlier, this is why the selection process is
important and should involve understanding the structure of the entire brokerage
firm for which to represent the client.
WHAT TO GIVE YOUR INSURANCE BROKER:
AIRCRAFT INFORMATION
Report year, make, model and acquisition value,

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AVIATION INSURANCE
plus tail and serial numbers and information about

passenger and crew seating.
Give details about home airport, hanger space and
BASE INFORMATION
ground handling.
Supply drafts of usage, ownership and storage
CONTRACTS
agreements.
LIABILITY LIMITS &
Report average passenger load and profile and
PROVISIONS
review insurance provisions, deductibles and war

risk perils.
MAINTENANCE DETAILS
Explain whether youll outsource it, use an inhouse mechanic or do a little of both.
MISSION INFORMATION
Detailed purpose of use, territory of operations and

anticipated annual hours of operations.
PILOT HISTORY FORMS
Submit signed forms (which are obtainable from

your broker) for all pilots.
RENEWING AVIATION INSURANCE

If you're like most owners and pilots, you simply renew your aviation insurance
policy every year. If it was good enough last year it will be good enough this year.
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AVIATION INSURANCE
Then you probably don't give it another thought until next year. And this pattern
often repeats itself for many years.
There are two very big problems with this scenario. First, things change. Your
aircraft, where you fly, who you fly with, how much you flymany of these
things can change over the years, and they should be reflected in your policy.
Second, and even more serious, it is quite possible that your policy wasn't the
right one for you to begin with! In that situation, you are simply renewing your
mistake year after year. In either case, your aviation insurance policy deserves a
little bit of your time once a year. Here are the five things you should do to make
sure you are adequately protected.
1. Choose your broker

When you insure your home or your business, a broker can choose from dozens
and dozens of insurance companies. As a result, shopping around with a few
brokers can make sense. Chances are, they may not even approach the same
companies for your quote.
In the case of aviation insurance, however, there are only four or five companies in
Canada to choose from and even fewer that specialize in light aircraft. Obviously,
it doesn't matter how many brokers you go to, the odds are that they will be
approaching the very same companies on your behalf. This can actually be a
serious disadvantage for you, as some companies will simply refuse to quote in
these circumstances in order to avoid the feeding frenzy that can result when a
number of brokers vie for the same account.
So, as you can see, choosing your broker is the first step. But how do you choose?
And are there any alternatives to a broker?
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AVIATION INSURANCE
Let's look at alternatives first. The only alternatives to a broker are the direct
sellers and special programs. In these cases you are dealing with a salesperson
who can only offer you the one product they represent. As a result, these options
tend to be promoted on the basis of cheap ratesbut like bargains anywhere,
they do so by cutting coverage and often leaving you seriously underinsured. If
you really want to know what they can offer you, check them out. But before you
make your decision; be sure to talk to a broker who works for you and not any one
company.
So how do you choose the right broker? Start by finding an aviation specialist.
Although any general insurance broker can sell you aviation insurance, they
simply do not have the experience or familiarity with the field to be your best
choice. Even more importantly, they usually can't get you the best rates.
If the insured is an aviation specialist, he may deal with the companies and
underwriters every single day. He gets to know them personally and may place a
lot of business with them. Now compare that to the average general insurance
broker who maybe places one or two policies a year with that company. Who do
you think will get you the better results? Finally, make sure that you are
comfortable with the broker you choose.
2. Confirm the value of your aircraft

Neglecting to keep up with the market value of your aircraft is one of the most
common renewal mistakes. If you do this year after year, you could be in for a rude
awakening. Aircraft values have soared in recent years, with many doubling in
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AVIATION INSURANCE
price over the last decade.
Unlike home or auto insurance, aviation insurance is a stated value policy. That
means that the owner is responsible for declaring the value of the insured aircraft.
If you undervalue your plane, you risk losing it after even a minor accident. As I
have explained many times in this column, the stated value is the maximum the
insurance company will pay out and they will keep the plane as salvage.
So whether you have simply neglected to increase the value on your policy at
renewal time or have tried to save a few bucks on the premium by insuring for a
lower amount you are taking a very big gamble. Make sure you resolve this issue
at your next renewal.
3. Review your liability

Make sure your policy doesn't have passenger or family member restrictions. This
is the most common way that companies offer bargain policies. It is also the
most common way owners lose everything they own when courts award large
injury settlements that are not covered by their bargain policy. I regularly see
people with limits of only $100,000 per person. You'd never consider such a low
amount for your home or auto insurance, so why allow it on your aviation policy?
With the high court settlements being awarded today, one to two million dollars
should be the least you consider.
4. Get the right coverage for your needs
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AVIATION INSURANCE
At every renewal, you should discuss your flying habits with your broker. Many
companies have territorial restrictions to the and some have restrictions for dirt or
grass landing strips. Make sure your policy covers the kind of flying you do.
If you have madeor are planning to makeany upgrades or changes to the
configuration of your aircraft, you may need to make some adjustments to your
policy. Otherwise, you may find yourself out of luck in case of an accident.
5. Protect your interests

Finally, you should discuss any other unusual circumstances regarding your
aircraft. You may need to arrange for special coverage to protect your interests.
One common example I run into is an owner who has his aircraft on lease to a
flying school or commercial operator. If the lessee commits an illegal act or
omission, your aviation policy could be nullified. In these situations, you should
obtain Breach of Warranty coverage which will pay a lien holder's interest
despite the policy being otherwise invalidated.
Following these simple steps once a year at renewal time is an easy way to make
sure that your aviation insurance policy continues to protect you. So don't take the
easy way outdon't just say renew it as is for another year.
AVIATION INSURANCE PROVIDED BY VARIOUS

INSURANCE COMPNYS
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AVIATION INSURANCE
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AVIATION INSURANCE
KINGFISHER AIRLINES LTD

HISTORY
STATISTICS
FLEET
AVIATION INSURANCE OF KING FISHER

AIRLINES
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AVIATION INSURANCE
Kingfisher Airlines
Kingfisher Airlines Limited is a major Indian airline. Kingfisher

operates more than 400 flights a day and has a network of 80 destinations, with
regional and long-haul international services. Kingfisher Airlines, through one of
its holding companies United Breweries Group, has a 50 percent stake in low-cost
carrier Kingfisher Red.
Kingfisher Airlines is one of six airlines in the world to have a five-star
rating from Skytrax, along with Asian Airlines, Malaysia Airlines, Qatar Airways,
Singapore Airlines and Airways. In May 2009, Kingfisher Airlines carried more
than a million passengers, giving it the highest market share among airlines in
India. Kingfisher has its registered office in the UB Tower in Bangalore and its
head office in the Kingfisher House in Mumbai.
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AVIATION INSURANCE
History
Kingfisher Airlines registered office at the UB Group
Towers in Bangalore, India The airline started operations on 9 May 2005,
following the dry lease of four new Airbus A320-200 aircraft. Its first flight was
from Mumbai to Delhi. At the launch of the airline, Dr. Malaya said that he is
"committed to achieving our ambition of making Kingfisher Airlines India's largest
private airline both in capacity and market share by 2010."
Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems
on every seat even on domestic flights. All passengers were given a "welcome kit"
consisting goodies such as a pen, facial tissue and headphones to use with the IFE
system. Initially, passengers were able to watch only recorded TV programming on
the IFE system, but later an alliance was formed with Dish TV to provide live TV
in-flight.[8] And in a marked departure from tradition, Kingfisher Airlines decided
to have an on-screen safety demonstration using the IFE system.
On 14 July 2008, Kingfisher unveiled its first ever Wide-body aircraft, a Airbus
A330-200 (registered VT-VJL) at the 46th Farnborough Airshow held in July
2008. Kingfisher's first Airbus A330-200 was widely billed (according to the
airline's press release) as the best A330-200 ever built by Airbus
On 3 September 2008, Kingfisher started its international operations by connecting
Bangalore with London. On 15th September 2009 the London service was
withdrawn.
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AVIATION INSURANCE
Statistics
Kingfisher Airlines Statistics
Year
Ended
April 7 March 8
April 8 March 9
Passengers
Carried
Average Load factor
Change
(%)
12,414,336
10,850,359
12.6%
60%
Destinations
Kingfisher Airlines serves over 60 domestic destinations and 7
international destinations in 7 countries across Asia and Europe.
Fleet
Airbus A320-200
ATR 72-500
Airbus A330-200
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AVIATION INSURANCE
Kingfisher Airlines' fleet currently consists of ATR 42, ATR 72 and Airbus A320
family aircraft for domestic and short haul services and Airbus A330-200s for
international long-haul services. The average age of its fleet as of January 2009
was 2.3 years.
Kingfisher's fleet consists of the following aircraft as of 18 January 2010:
Kingfisher Airlines Fleet
Passengers
Aircraft
In
Service
Orders Options
(Kingfisher
First/Kingfisher
Notes
Class)
ATR 42500
ATR 72-
17
500
Airbus
A319-100
Airbus
A320-200
Airbus
38
20
10
3
67
leased.
15 new aircraft
72 (0/72)
to be dry leased
144 (0/144)
All 3 dry leased.
174 (0/174)
180 (0/180)
Both aircraft dry
66 (0/66)
134 (20/114)
10
48 (0/48)
151 (32/119)
9 dry leased.
Deliveries
through 20102012.
2 dry leased.
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AVIATION INSURANCE
A321-200
Airbus
A330-200
Airbus
A350-800
Airbus
A380-800
Total
199 (0/199)
Deliveries
15
217 (30/187)
through 20102012.
TBD
TBD
66
130
25
Deliveries
starting 2014.
Deliveries
starting 2014.
Kingfisher Airlines has a commitment for 35 Airbus A320 family aircraft and 15
Airbus A350-800s which was announced at the 2007 Paris Air Show.[12]
Services
This article is written like an advertisement. Please help rewrite this article from
a neutral point of view. For blatant advertising that would require a fundamental
rewrite to become encyclopedic, use {{db-spam}} to mark for speedy deletion.
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AVIATION INSURANCE
Cabin classes
Domestic
Kingfisher First
The domestic Kingfisher First seats have a 48 inch seat pitch and a 125 degree seat
recline. There are laptop and mobile phone chargers on every seat. Passengers can
avail of the latest international newspapers and magazines. There is also a steam
ironing service on board Kingfisher First cabins. Every seat is equipped with a
personalized IFE system with AVOD which offers a wide range of Hollywood and
Bollywood movies, English and Hindi TV programmes, 16 live TV channels and
10 channels of Kingfisher Radio. Passengers also get BOSE noise cancellation
headphones.
Domestic Kingfisher First is only available on selected Airbus A320 family
aircraft.
Kingfisher Class
The domestic Kingfisher Class has 32-34 inch seat pitch with footrests. Every seat
is equipped with personal IFE systems with AVOD on-board the Airbus A320
family aircraft. As in Kingfisher First, passengers can access the latest movies,
English and Hindi TV programmes, live TV and Kingfisher Radio.
On-board the ATR 72-500s there are 17 colour LCD drop-down screens mounted
along with loudspeakers for audio in the cabin overhead, a head-end unit to handle
CDs and DVDs, and a crew control panel. The screens measure 12.7 cm by 9.3 cm,
weigh 0.2 kg each and are spaced every two or three seat rows along both sides of
the cabin.
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AVIATION INSURANCE
Economy class meal on-board a Kingfisher Airlines domestic flight

Kingfisher Red
After Kingfisher Airlines acquired Air Deccan, its name was changed to Simplifly
Deccan and subsequently to Kingfisher Red. Kingfisher Red is Kingfisher Airline's
low-cost class on domestic routes. Passengers are given complimentary in-flight
meals and bottled water. A special edition of Cine Blitz magazine is the only
reading material provided.
Kingfisher Airlines is the first airline in India to extend its King Club frequent
flyer program to its low-cost carrier as well. Passengers can earn King Miles even
when they fly Kingfisher Red, which they can redeem for free tickets to travel on
Kingfisher Airlines or partner airlines.
International
Kingfisher First
The international Kingfisher First has full flat-bed seats with a 180 degree recline,
with a seat pitch of 78 inches, and a seat width of 20-24.54 inches.[13] Passengers
are given Merino wool blankets, a Salvatore Ferragamo toiletry kit, a pyjama to
change into, five-course meals and alcoholic beverages. Also available are in-seat
massagers, chargers and USB connectors.
Every Kingfisher First seat has a 17 inch widescreen personal television with
AVOD touch screen controls and offers 357 hours of programming content spread
over 36 channels, including Hollywood and Bollywood movies along with 16
channels of live TV, so passengers can watch their favorite TV programmes live.
There is also a collection of interactive games, a jukebox with customisable
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AVIATION INSURANCE
playlists and Kingfisher Radio. Passengers are given BOSE noise cancellation
headphones.
The service on board the Kingfisher First cabins includes a social area comprising
a full-fledged bar staffed with a bartender, a break-out seating area just nearby
fitted with two couches and bar stools, a full-fledged chef on board the aircraft and
any-time dining. A turn-down service includes the conversion of the seat into a
fully-flat bed and an air-hostess making the bed when the passenger is ready to
sleep.
Both Kingfisher First and Kingfisher classes feature mood lighting on the Airbus
A330-200 with light schemes corresponding to the time of day and flight position.
Kingfisher Class
The international Kingfisher Class seats offer a seat pitch of 34 inches, a seat width
of 18 inches and a seat recline of 25 degrees (6 inches). Passengers get full length
mod acrylic blankets, full size pillows and business class meals. There are in-seat
chargers and USB connectors.
Each Kingfisher Class seat has a 10.6 inch widescreen personal television with
AVOD touchscreen controls. The IFE is similar to that of the international
Kingfisher First class.
In-flight entertainment
Kingfisher's IFE system is the Thales TopSeries i3000/i4000 on-board the Airbus
A320 family aircraft, and Thales TopSeries i5000 on-board the Airbus A330
family aircraft provided by the France-based Thales Group.[14]
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AVIATION INSURANCE
Kingfisher Lounge
Kingfisher Lounges are offered to Kingfisher First passengers, along with King
Club Silver and King Club Gold members. Lounges are located in:
India
Bangalore
Chennai
Delhi
Hyderabad
Mumbai
King Club
The Frequent-flyer program of Kingfisher Airlines is called the King Club in
which members earn King Miles every time they fly with Kingfisher or its partner
airlines, hotels, car rental, finance and lifestyle businesses. There are four levels in
the scheme: King Club Base, Red, Silver and Gold levels. Members can redeem
points for over a number of schemes. Gold and Silver members enjoy access to the
Kingfisher Lounge, priority check-in, excess baggage allowance, bonus miles, and
2 Kingfisher First upgrade vouchers for Gold membership.
Accidents and incidents
On 10 November 2009, Flight 4124, operated by ATR 72-212A VT-KAC

skidded off the runway after landing at Chhatrapati Shivaji International
Airport. The aircraft suffered substantial damage but all 46 passengers and
crew escaped unharmed.
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AVIATION INSURANCE
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 Mallyas 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 75:25 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
Industries 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.
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AVIATION INSURANCE
INFORMATION
FLEET DETAIL
AVIATION INSURANCE OF AIR INDIA
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AVIATION INSURANCE
AIR INDIA
Air India is India's finest flying Ambassador. The urge to excel and the
enthusiasm, which characterised Air India's first flight, way back on October 15,
1932, is quintessential even today - thanks to Air Indians who have kept alive the
tradition of flying high.
The recent merger of Air India and Indian, the country's leader in the domestic
sector, has helped the airline to emerge as a major force in the airline industry. The
re-branding exercise is currently underway and passengers are getting to see the
unified face of the new invigorated Air India. The merged entity, which presently
has a fleet of 148 aircraft offers passengers seamless travel across domestic and
international routes.
FLEET DETAILS
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AVIATION INSURANCE
Aircraft Type
Owned
Leased
Total
B777
10
14
B747
A310
A319
14
A321
10
10
A320
30
18
48
A330
B737-800
13
20
ATR
CRJ 700
B737-800
B737 Freighters
A310 Freighters
TOTAL
90
58
148
Aircraft on order include eight B777-200LRs, fifteen B777-300ERs, twenty seven

B787 Dreamliners, eighteen B737-800s, nineteen A319s, twenty A321s and four
A320s. Of the 111 aircraft ordered, twenty three Boeing (five B777-200LRs, five
B777-300ERs, thirteen B737- 800s) and nineteen Airbus (ten A321s and nine
A319s) have been in the fleet so far.
45
AVIATION INSURANCE
AVIATION INSURANCE OF AIR INDIA

(Primary data)
New India Assurance Company participated in the Aviation Insurance of Air

India way back in 1946. New India Assurance Company provides professional
aviation insurance advice and solutions to the needs of small aircraft operators as
well as scheduled airlines.
The aviation portfolio of New India Assurance Company 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,
equipments 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.
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AVIATION INSURANCE
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. The capital
sum insured varies according to the status of the insured or earning capacity
and fixed by the insurers.
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.
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AVIATION INSURANCE
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
CURRENT SCENARIO OF AVIATION INSURANCE
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AVIATION INSURANCE
The magic of multiplier effect is now working for the aviation ancillary industry.
Reaping the benefits of the aviation boom is not only maintenance, repairs &
overhaul (MRO) operations but also the insurance sector. In fact, the spiraling
growth in the aviation sector has given an upshot to the insurance segment.
As per an airline risk management survey - commissioned by international

magazine Airline Business and global airline insurance broker Aon - airlines are
spending no less than $8.36 bn a year on risk management, with around 70%, or
$5.86 bn, spent on insurance premiums. Aviation premiums are, on an average,
growing by 15.5% post-9/11, the survey reports. It further states that while the
industry's loss record has been respectable in the last four years, traffic and
passenger numbers have risen significantly, increasing the exposure to risk.
In India, a majority of the private players, including Bajaj Allianz, ICICI Lombard,
Reliance and the four public sector general insurance companies - Oriental, New
India Assurance, United India, National Insurance - offer aviation insurance in the
market.
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," says T A Ramalingam, head,
underwriting, Bajaj Allianz.
Bajaj Allianz is one of the most active players in the market and a co-insurer with
Kingfisher Airlines, Go Air, Indigo Air and Air India among the scheduled airlines
and also insured aircraft owned by India companies such as Bajaj Auto consortium,
49
AVIATION INSURANCE
Force Motors, Ranbaxy group, Shamanur Sugar group, Orient Flight school, Asia
Aviation, a part of the BILT group, Mundra Port and SEZ Ltd, an Adani group
company.
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.
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.
"Predictions for aircraft deliveries to meet the increasing demand for air travel,
particularly in Asia, mean that some 4,000 new airliners are on order, with this
region at 1,242 leading the way. Growth in purchasing power of passengers and
entry of low cost airlines has driven the upward movement of the airline industry
both in terms of equipment and staff and opening new opportunities for this niche
segment," believes Kartik Jain, head, marketing and e-channel, ICICI Lombard.
The company has insured more than 75 aircraft till date.
The shot in the arm for this industry has further come from the fact that aircraft are
becoming bigger in size with large seating capacity. This, in turn, increases the risk
for insurers, sometimes even catastrophic. With the emergence of bigger aircraft
such as Airbus A 380 and Boeing 777 Dream liners, the values of the aircraft as
well as the liability are slated to increase tremendously. The severity of each loss is
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AVIATION INSURANCE
also expected to go up proportionately. Currently, at least 10-15 re-insurers

participate in an airline insurance programme. However, with the introduction of
larger aircraft, the number of re-insurers participating would increase to 25.
The total premium figures for aviation insurance in India for 2006-07 stood at Rs
417.29 cr. Reliance, which does not hold a major share in the airline business till
now, is counting on its experience of handling major risks pertaining to energy/
off-shore risks/ package policies of large clients and strong network of
international underwriters. "National reinsurer, GIC, leads our reinsurance treaties.
As reinsurance support is essential in getting competitive quote in aviation

insurance, we aim to increase our share considerably in this financial year," says K
A Somasekharan, CEO, Reliance General Insurance. 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.
Future of Aviation Insurance
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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
FBOs 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.
Insurance and the Future of Aviation 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 problems that must be solved before the industry can go to the
next level.
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AVIATION INSURANCE
As the industry enters into the millennium, the insurance industry must look at
several problems that face the aviation industry. Legal concerns, in many cases,
theyre influenced by our society. The court system plays a big part by their
decisions that are passed down. Its rare when an aviation case goes to court,
because insurance agencies know theyll lose when the jury hears the case. Its just
too easy to prove pilot negligence; most aviation accidents result from pilot error.
Also, when they do go to court, they very seldom mount a defense due to the
unreasonable verdicts, and ridiculous awards. These practices has forced aircraft
owners to stay away from new policies and let their insurance coverage lapse.
Aircraft owners pay three to five times the amount for adequate liability coverage
than their counter parts elsewhere in the world. Survival for the small business
operators is getting harder each day due to the General Aviation Revitalization Act
(GARA); the threat of financial devastation is real when it comes to lawsuits. The
(GARA) defects lawsuits from manufacturers to aviation service providers.
FBOs insurance rates are skyrocketing because of this, which

contributes to the cycle by causing higher repair cost. Many small business
operators really dont want to take the chance and cant afford the rising cost thats
associated with liability insurance. As of February 2000 at least three aviation
insurance under writers ceased writing coverage for the small business operators,
saying its a major risk. One of the main reasons is the cost to the underwriters.
Aviation insurance companies have paid out a dollar and quarter for every dollar
theyve taking in, for each of the last several years. No wonder so many are closing
down, merging, or getting out of the historically riskier aviation activities, General
aviation may be forced to change its way of doing business and become more like
the military and commercial airlines. Maintenance problems may be identified by
computers, and then repaired by the manufacturers. The industry is coping with the
53
AVIATION INSURANCE
mounting cost associated with liability insurance. Remove and replace

maintenance is the attitude the industry must lean towards. The manufacturers
would set up new factory service centers and repair facilities for the general
aviation customers. This system wouldnt help the rising cost of insurance, but
maintenance and ground liabilities would rest on the shoulders of the manufacture.
The market itself is shrinking, weve had a generation of pilots from
WWII, Korea, and Vietnam that was introduced to aviation and trained at the
governments expense. Because of modern technology, well never again have the
numbers that we once had. The ageing fleet and pilots cant 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.
During a telephone interview with Darrel Hyde of CS&A Insurance, he
stated; Aircraft hull and liability insurance for the senior pilot has become such a
concern that the insurance industry should develop a special task force to help deal
with this problem. The need to extend the insurable age of the senior pilots and to
introduce new blood in to the cockpits will only help matters with the attempt to
lower insurance cost for the industry.
Insurance cost for the industry remains high, with the shrinking fleet
of aircraft, means that the training cost will increase. The value of airplanes is
soaring; the high cost of new replacement aircraft for training isnt feasible. The
FBOs are facing insurance thats inadequate and expensive, and its forcing
companies to reduce their operations or even cut them all together. Owners of
flight schools are having a hard time just staying in business. The shortage of
qualified instructors has slowed the flow of new pilots, which in turn is putting a
hardship on the industry. The future of the industry could hold a brighter out-look.
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AVIATION INSURANCE
One can only hope that society will change their attitude towards litigation, this
would hopefully drive down cost of liability coverage insurance.
The industry hopes that with the use of simulators at all levels of
training will increase the number of bettertrained 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, remember buying cheap insurance
isnt always the best way to go, and its 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. When shopping you can ask your friends
who they do business with and ask them their feelings on that company, and are
they treated well. Looking in one of the aviation trade magazines for information
dealing with aviation insurance companies is a great source; get a phone number or
a web address so you can make contact.
Saving money is the key when shopping for insurance. Only buy the
needed coverage; if you dont fly passengers, why pay for the protection against
them? You can always change your coverage when the need arises. Most people
pay for coverage in the winter even if theyre not flying. In the winter paying for
in flight liability insurance can be a waste. Why not store the aircraft in the winter,
and change to storage coverage for that period of time.
CONCLUSION
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AVIATION INSURANCE
I started this Project by asking the question Why Aviation Insurance is

required? 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.
RECOMMENDATIONS
56
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.
Legal concerns are the biggest threat. Its rare when an aviation case goes to
court, because insurance agencies know theyll lose when the jury hears the
case. Its just too easy to prove pilot negligence; most aviation accidents result
from pilot error. Hence, today there is a strict need that the legal authorities
should be lenient and should also listen to the airline. Every time its not the
fault of the pilots. Unbiased decision can really enhance and improve the
working of airlines and also the efficiency of the pilots gets boosted.
57
AVIATION INSURANCE
The average age of both our pilot population and the fleet (both commercial
and general aviation) is increasing. Aircraft hull and liability insurance for
the senior pilot has become a serious concern. The underwriters are very
worried about the age of both the pilots and the aircraft. Hence, the
insurance industry should develop a special task force to help deal with this
problem. The insurable age of the senior pilots should be extended and new
blood should be introduced in the cockpits to lower insurance cost for the
industry.
The airline should only buy the needed coverage; if they dont fly
passengers, why pay for the protection against them? They can always
change the coverage when the need arises. Most people pay for coverage in
the winter even if theyre not flying. In the winter paying for in flight
liability insurance can be a waste. Rather they should store the aircraft in the
winter, and change to storage coverage for that period of time.
To keep insurance cost under control in this difficult environment, aircraft
and aviation business owners will have to make some changes in the way
they purchase and think about insurance. Buying cheap insurance isnt
always the best way to go, and its not heavily regulated by the government.
The airline should find an insurance player which takes low premiums and
has plenty of coverage options.
BIBLIOGRAPHY
BOOKS:
58
AVIATION INSURANCE
Insurance in India
-P.S. Palande
-R.S. Shah
Insurance (Fundamentals, Environment and Procedures)
-B.S. Bodla
-M.C. Garg
Fundamentals of Risk and Insurance
Emmett J. Vaughan
Therese M. Vaughan
Insurance Chronicle- The ICFAI University Press (September, 2004)
WEBLIOGRAPHY
www.irdaindia.com
www.google.com
www.avbuyer.com
www.flykingfisher.com
www.airindia.com
59

Aviation Insurance in India 航空保险在印度

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Aviation Insurance in India 航空保险在印度

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AVIATION INSURANCE

INTRODUCTION TO SERVICE SECTOR

INTRODUCTION TO SERVICE SECTOR

Customer satisfaction predominates the success of an enterprise. In the

Insurance may be described as a social device to reduce or eliminate

In Airline Industry Aviation Insurance is a type of miscellaneous

INDIAN AIRLINE INDUSTRY

In 1929 the Warsaw convention was signed. The convention was an

By 1933 realizing that there should be a specialist industry sector the

AVIATION INSURANCE IN INDIA

Hull "All Risks"

"all risks" policy because in such circumstances there is no PHYSICAL loss or

Hull War Risks

Liability can be divided basically into two categories:

It is called "Airline General Third Party Liability" these days since

Most policies are placed on a Combined Single Limit Basis. This

Hull Total Loss Only Cover

BUYING AVIATION INSURANCE

RENEWING AVIATION INSURANCE

BUYING AVIATION INSURANCE CONTRACT

WHAT DOES YOUR BROKER DO FOR YOU?

Report year, make, model and acquisition value,

N. G. Acharya & D. K. Marathe College, Chembur

plus tail and serial numbers and information about

Give details about home airport, hanger space and

Supply drafts of usage, ownership and storage

LIABILITY LIMITS &

Report average passenger load and profile and

review insurance provisions, deductibles and war

Detailed purpose of use, territory of operations and

PILOT HISTORY FORMS

Submit signed forms (which are obtainable from

RENEWING AVIATION INSURANCE

1. Choose your broker

2. Confirm the value of your aircraft

price over the last decade.

3. Review your liability

4. Get the right coverage for your needs

5. Protect your interests

AVIATION INSURANCE PROVIDED BY VARIOUS

KINGFISHER AIRLINES LTD

AVIATION INSURANCE OF KING FISHER

Kingfisher Airlines Limited is a major Indian airline. Kingfisher

Average Load factor

All 3 dry leased.

Both aircraft dry

N. G. Acharya & D. K. Marathe College, Chembur

Economy class meal on-board a Kingfisher Airlines domestic flight

On 10 November 2009, Flight 4124, operated by ATR 72-212A VT-KAC

AVIATION INSURANCE OF KINGFISHER AIRLINES

Two private sector general insurance companies, ICICI Lombard General

Aircraft on order include eight B777-200LRs, fifteen B777-300ERs, twenty seven

AVIATION INSURANCE OF AIR INDIA

New India Assurance Company participated in the Aviation Insurance of Air

The aviation portfolio of New India Assurance Company encompasses following

Hull/Spares War Risk Insurance: Indemnity is provided to the aircraft as

Aviation Personal Accident (crew member) Insurance: This cover is

Loss of License Insurance: Operating crews of the aircraft are required to

Claims: In case of claims following are illustrative documents that are

Documents in connection with aircraft details

CURRENT SCENARIO OF AVIATION INSURANCE

As per an airline risk management survey - commissioned by international

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

also expected to go up proportionately. Currently, at least 10-15 re-insurers