Aviation Insurance – Major Insurance Covers

1. Hull "All Risks"
2. Hull "War Risks"
3. Liability Insurance

1. Hull "All Risks"

As the name specifies “Hull All Risks” Covers only the physical loss or damage to the aircraft.

General Exclusions.

• Wear, tear and gradual deterioration
• Ingestion damage - caused by stones, grit, dust, sand, ice, etc.
• Mechanical Breakdown

2. Hull War Risks

Since Hull All Risks policies are not covering the War / Terrorism Hull War Risks Policy Covers the following:

• 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.

3. Liability Insurance :

Liability can be divided basically into two categories

• Liability in respect of Passengers, Baggage, Cargo and Mail carried on the aircraft.
• Aircraft Third Party Liability

Source Courtesy: wikipedia

Normal Landing Mangalore “Table Top” Air port

Air India Boeing 737 Crash ( May 22 - 2010 ) – Some Insurance Facts

• Primary Insurer - Four private companies consortium led by Reliance General. The other general insurers include Bajaj Allianz, HDFC Ergo and Iffco Tokio.

• This was reinsured by Japanese insurer Mitsui Sumitomo and General Insurance Corporation of India together ( Re Insurance arrangement is not ending there – there may be several more re insurers behind the screen )

• Air India's total loss stands at USD 750 million. Air India can hull entire insurance worth USD 50 million. The entire insurance includes passenger and third party liability.

• The upcoming renewal of Air India Fleet Insurance is due on September 2010 – this year the rate may raise significantly due to the tragic accident .

Offshore drilling platforms

• Massive source of premium to the Insurance companies

• The premium figures are booming.

Do you think the historic supply and demand curve is the only price fixing factor on this particular sector of business?

I don’t think so-.

There is a high competition among insurance providers

Yes - Pricing is highly depend on the risk probability

Oil rigs in the calm ocean are highly exposed to risk.

Some of the key risk factors:

* Tremendous volume of fuel (Crude)

* Massive electromechanical activities which can create      ignitions

* Tough accessibility of rescue

* Worst ecological impacts

My friend Mr. Ranjith who is working as the Electrical Instrumentation Engineer for Bapco Baharin pointed out that any of the oil rigs are constructed and maintained by state of art technologies. Utmost care is giving to each and every minute activities. Still the risk factor is high - Friction, Electrical Spark, exposure to the burning sun - all these can cause a disaster.

Deepwater Horizon Drilling Rig

which caught fire, burned for two days, then sank in 5,000 ft of water in the Gulf of Mexico

The insurance industry is forecasting a loss of up to $3.5bn (£2.4bn) from the growing oil spill in the Gulf of Mexico. This will be the biggest energy insurance loss in more than 20 years, and could drive up premiums.

Facts and Figures :

- The rig belongs to Transocean, the world’s biggest offshore drilling contractor

- Builder: Hyundai Heavy Industries

- Cost : 350 Million

As per Reinsurers and Lloyd's of London it is the biggest loss in energy market since Piper Alpha ( Oil Rig Fire on July 6, 1988) will trigger rate rises

Ref : Lloyd's London , Wikipedia.

• • 
    

Three Golden Principles Of Insurance

• Indemnity

The insurance company indemnifies, or compensates the insured in the case of certain losses only up to the insured's interest

• Insurable interest

The insured typically must directly suffer from the loss

• Utmost Good Faith

The insured and the insurer are bound by a good faith bond of honesty and fairness

- Information Courtesy – Wikipedia - 

Insurance Horizons

I have Insurance !!

Photograph Abu Dhabi Cornish

( April 2010 )

A humble trial to archive some of my thoughts about Insurance Industry .

Let us start ..??