Introduction
Protocols
Protocols
- We shall
examine a few covers available in the aviation market.
·
Mention some
conventions.
·
Examine Claims
Procedure
·
Discuss Some
Recent major disasters
Covers Review
- Hull All Risk
·
Passenger &
Passenger baggage legal liability insurance
·
Third Party Legal
Liability
·
Aviation Cargo
·
Crew Personal
Accident
·
Hull All Risks
May be effected by an air operator or Airline or owner of an aircraft or anybody in whose custody or in control of
the aircraft. Policy Indemnify against
accidental loss or damage to the aircraft subject to exclusions whilst the aircraft
is on ground, taxying or is moored.
·
Passenger and Passenger
baggage Legal Liability Insurance
This type
of cover is effected by an air operator or Airline to protect itself against
any sum or
sums which
they would be liable to pay in respect of any accidental bodily
injury/Death/Loss of baggage to any person being a passenger and holding a
ticket.
These
liabilities applies when the person is entering into, is being carried in or is
alighting from the
aircraft.
The
insurer indemnifies the insured against all sums he is legally liable to pay
whether
according
to international law or local legislation. Subject to a maximum limit of
liability
agreed at inception of the policy.
Standard
exclusions include the crew which are normally covered under a separate policy.
·
Third Party Legal Liability
This is effected by an aircraft operator to indemnify himself against
all sums the insured would become legally liable to pay in respect of
accidental injury/Death or accidental
Property damage to third parties or to the public caused directly by the
aircraft or falling of objects there from.
The limit of liability is usually agreed at inception of the policy.
Various countries have set minimum
limit for aircraft that would overfly their air space.
This type of insurance is sometimes referred to as public legal liability
insurance
·
Aviation Cargo
This insurance normally indemnifies an operator for loss or damage
(including delays) to goods shipped by him. The document under which the goods
are transported is called the Airway Bill
(AWB). Acceptance of cargo with a poorly executed airway bill or
incomplete can impose
unlimited liability on the carrier.
·
Crew Personal Accident
Policy provides capital sum in the event of death. Thispolicy provides
indemnity for the air operators crew e.g. Pilots, Air Hostesses etc. The policy
covers members of the crew against death/Permanent Disability/Temporary Total
Disability resulting from an accident whilst on board the flight.
Death by illness is not covered. Policy can be issued on flight risks
only or on 24hours basis.
·
WARSAW 1929/Montreal/Hague
Conventions
There was a convention in 1929 which set the stage for the future
development of all international treaties. The convention has had a profound
and lasting effects on the rights of
passengers and obligations of air carriers. At this convention, participating countries endorsed an Agreement/Protocol for the
unification of certain rules relating to international carriage
by air. It dealt with the carriers liability to passengers and goods including
baggage.
The various conventions are domesticated by member countries by passing
appropriate
legislation.
·
Uniform set of rules
Warsaw- Balance interest between carriers and Passengers
·
Montreal – Favours consumer
interest and need for equitable compensation based on principle of restitution
entered into.
Features:
Applies only to “international” carriage by air, presumption of
liability.
Warsaw/Hague limited liability except in certain situations, limited
defenses.
Montreal-unlimited liability for passenger death/bodily injury International
carriage means between two contracting parties e.g Nigeria/Uk.
Carriage within territory of one contracting party with an agreed
stopping place in another state, e.g, Lagos, Accra-Lagos
·
NCAA Act 2006.
Relevant sections relating to passenger liability is of interest to us.
The Act prescribe a minimum legal liability of US$100,000 per passenger on the domestic route.
Prior to this Act, the limit was US$10,000 per passenger on the domestic
route.
The minimum combined single liability for insurance (CSL) for domestic
operation only is specified based on Aircraft maximum takeoff weight (MTOW
(kg), number of passenger seating capacity and baggage and third party limit.
·
Claims Procedure
(a) Passenger Legal Liability
(a) Passenger Legal Liability
Immediate notification to the airline who in turn will inform the
insurance company.
Obtain the passenger manifest together
with the Nationalities of the passengers.
Specimen Air ticket, passenger flight coupons Obtain statement of claim Names
of injured passengers
Obtain medical report in case of bodily injury/Hospitals were treated.
Copies of any correspondence with the next of kin or passenger legal
representative.
Death/Burial Certificate Name and addresses of the next of kin and the
Passengers.
Limit of liability is governed by applicable local/international laws or
convention.
Insurers in handling liability claims employ the services of experts to
assist.
They may include External Solicitors, Surveyors, Quality Surveyors,
Engineers, Medical Personnel
etc.
Passenger liability claims fall under two main
categories:
·
Claims for death, injury, loss
or damage to property or delay arising out of carriage under a contract of
carriage with a commercial carrier.
·
Claiming arising for death etc
occurring on flights where the passengers are guests in a private aircraft or
their is no contract of carriage.
Further subdivision under carriage under contract will include:
·
Carriage subject to
international laws
·
Carriage subject to statutory
conditions imposed by a state e.g. NCAA Act 2006.
·
Carriage subject to IATA
conditions of carriage
·
Carriage subject to such
conditions as the operator may impose.
Passengers flying on an international flight enters into a contract of
carriage governed by international laws and conventions.
Claims under a contract of carriage forms the bulk of the passenger
liability claims.
·
(b) Passenger Baggage Claims
Passenger baggage is divided into two separate
categories-:
·
Checked (Registered) baggage
·
Unchecked (or unregistered )
baggage
Checked baggage is handed over to the carrier, weighted and a receipt
issued (luggage tag)
Unchecked (hand baggage) is retained by the passenger and taken into the
aircraft (max.
10kg) and consist of small items, brief cases, Hand bags, coats etc.
The warsaw convention holds the carrier liable for loss or damage to
baggage including damage
occasioned by the delay of checked baggage unless the carrier is able to
prove that
·
He took all necessary steps to
avoid the loss
·
That there was contributory
negligence on the part of the passenger
·
That the loss or damage was
caused by the negligence of the aircrew.
All checked in luggage must be weighted.
When insurers deal directly with claimants, the first tasks is to
establish the main cause of the
claim which may be due to Mis handling
·
Pilferage
·
Delivery to wrong destination.
The NCAA act prescribes for loss of baggage claim at US $20 per kilo.
The total weight multiply by US $20 gives themaximum liability For
unchecked luggage it is limited to 10kg
Maximum liability.
Usually, items of value e.g. cameras, telecoms equipment etc are valued
separately and an All
Risk insurance is taken to cover loss or damages.
Claims for temporary loss of baggage necessitating purchase of essential
clothes, toilet articles etc for
use until the mislaid baggage is recovered are usually accepted by
insurers.
The carrier has unlimited liability if it is established that the
carrier failed to issue a properly completed
baggage check or there has been willful
misconduct on the part of the carrier or his employees.
·
Notices On Passenger Legal
Liability
International passengers are advised to read the section relating to advice
to international passengers on limitation of liability. A typical ticket will
contain the following notice:
Passengers on a journey involving an ultimate destination or a stop in a
country other than the country of origin are advised that the provisions of a
treaty known as the Warsaw Convention may be applicable to the entire journey
including any portion entirely within the country of origin
or destination.
Liability for death of or personal injury to passengers is limited in
most cases to proven damages not to
exceed US$75,000 (inclusive of legal fees) per passenger and that this
liability up to the limit shall not depend on negligence on the part of the
carrier.
Passenger are advised to read the Notice of baggage liability
limitations on their tickets.
A typical section of the notice will be:
Liability for loss, delay or damage to baggage is limited unless a
higher value is declared in advance and additional charges are paid
1. For most international travel (including domestic portions of
international journeys) the liability limit is approximately US $20 per kilo
for checked baggage and US $400 per passenger for unchecked baggage.
2. For travels wholly between
U.S. points federal rules require any limit on an airlines baggage liability to
be at least US$ 1250 per passenger Excess valuation may not be included
Some carriers assume no liability for fragile, valuable or perishable articles.
·
(c ) Third Party Legal
Liability Claims
The carrier is indemnified against liability incurred by him for any sums
he is held liable to pay as compensation for bodily injury or damage to
property of a third party.
The current legislation in Nigeria is the NCAA act 2006. The limit of liability
is stated based on the gross weight of the aircraft.
The insured is indemnified against any liability for compensation for
bodily injury, or damage to property of a third party.
All aircraft s must have a third party liability insurance before they can operate in Nigeria.
The limit could be per occurrence or for a period with/without reinstatement.
Separate financial limits can be set for both bodily injury and Property
damage.
Most common forms of third party liability claim arises from
taxying accidents.
·
It could be for cost of damage repairs
·
Loss of use of damaged
aircraft
·
Combination of 1 & 2.
Damage to properties on the ground e.g, houses, power lines and other
aircrafts.
Items blown about by propeller or jet engine blast.
Legal costs incurred with insurers consent is also covered
This limit of liability is agreed at inception of the policy.
For claim above the limit, the insurers will only pay up to their limit
per single occurrence/period of indemnity.
·
Important Features
Immediate notification to insurers of any event likely to give rise to a
claim
·
Notice of baggage liability
limitations must be conspicuous & readable
·
Notice on advice to
International passenger on limitation of liability
·
Passenger ticket must contain
all the necessary particulars e.g Place and date of issue, place of departure
(destination, name and address of the carrier, a statement that the carriage is
subject to the rules relating to liability, conditions of carriage.
·
·
When tickets are not issued,
the carrier is denied the protection of those sections of the convention which
limit or exclude liability.
·
Liability of the carrier for
luggage is liable for loss, damage or delay to registered luggage.
·
A damage claim must be lodged
within 3 days of receipt of the luggage
and in case of delays within 14 days
·
Claims must be in writing
Practical Examples
·
A passenger who checked in 2
Baggage from London to Lagos and only one arrived destination. After a thorough
check and several visits to the carrier, the baggage could not be traced and
declared loss.
Action by Airline: -
·
Notification to insurers
·
Cargo Manifest
·
Compensation based on US$ 20
per kilo
(ii) A lady checked in her jewelries, camera, laptop and cash and the
baggage was not found. What remedy would she have
·
Basically the above items are
standard exclusion and should be properly stated in the condition of carriage.
However, cover is provided under an All Risk Policy
and all items must be declared and the
appropriate premium payable.
(iii) In case my baggage is damaged, what is expected of the owner
·
Complain must be made
immediately and in writing to the carrier, provide evidence of your baggage tag
and ticket
·
Complete property irregularity
report
·
Excess baggage receipt
Maximum time to report is 7 days and in case of
Delay not to exceed 21 days from the date baggage is delivered.
(iv) Is it compulsory for Airlines to insure their passengers in
Nigeria.
This is compulsory and the minimum limit is US$100,000 per passenger on
the domestic route.
Few Terms
Wet Lease = Lessor Supplies Aircraft and crew
Lessee: Supplies Load (Cargo/Passengers)
Dry Lease: Operational lease. Entered between
two carriers.
Engine & Airplane can be leased.
What happens with a major Disaster
2 areas of immediate concern for both operators and insurers
·
Well being of survivors and
relatives of the deceased
·
Establish cause
Immediate Response
Surveyor to crash site
Lawyer & Broker to Head office
Response to families
Response to media
Adjust interim report
Relatives Requirement
·
Few Incidents:
(1) Dana Airline
(1) Dana Airline
Dana Air
Flight 992 Reg. SN-RAM
Date of
incident: 3rd June 2012
A/C: MC
Donnell Douglas MD-83
Manufactured
1990
Acquired
by Dana February 2009
Crashed
into a furniture & Printing Press building at
Iju-Ishaga-Lagos
Cause:
Dual Engine failure (loss) on final approach to land
No on
Board 147 Passenger
6 Crew
Total Fatality 153
Survivors None
Local
Flight: Abuja-Lagos
Last
Maintenance: 2 days to incident
20Km from
Airport (11 Nautical Miles)
Response Hotlines for Relatives
Banned the
Airline from Flying & MD-83
3 days
National Mourning
·
(2) The September 11 Incident
2977
People Killed (Excluding 19 hijackers)
·
Destruction of World trade
centre 1,2,3,4,5 & 7 and
damage to
numerous nearby Buildings
·
Overall payout on 1st
party insurance was in excess of
US$
30billion
·
WTC properties – the lessee of
the WTC and WTC 7 has
asserted $
13.7 billion in claims
·
Damage to US Pentagon
·
11,000 Respiratory Claims
filed in Court against the city
of New
York and its contractors
·
Approximately $ 24.5b in
property damage and business
interruption
claims.
·
96 wrongful death and personal
injury claims
(3) Air
Algeria/Swift
Loss Date:
24/07/14
Loss
Location Rep of Mali
Aircraft
Details:
Manufacturer: McDonnell Douglas
Type: MD
83 same as Dana
Reg:
EC-LTV
Year of
Build: 1996
No of
Passenger: 110
No of
crew: 7
Total: 117
Type of
Loss: Total
Fatalities:
110 + 7= 117
Insurance
Details
Max. Hull
Value: USD 25M
Aircraft
Insured Value: $4M
Gross Hull
Reserve: $4M
Net Hull
Reserve: $4M
Deductible:
N/A
(4)
Malaysian Airline Flight MH 370
Date of
Loss: 8/3/14
Event
Country: Vietnam
Departure:
Malaysia
Destination-
China-International
Aircraft-Boeing
777-220
Built:
2002
No. of
Passenger: 227
Crew:
12
Total: 239
Location
of incident: South of Vietnam
Insurance
Details
Inception
Date: 1/12/2013
Max Hull
Values: $ 350M
A/C
Insured Value: $ 110.10M
Gross Hull
Reserve: $ 110.10M
Deductible:
N/A
Net Hull
Reserve: $110.10M
Altitude
35,000 feet
Foot Note:
Still Missing .The where about is
still a mystery 6 months after
(5)
Malaysia Airline Boeing 777-200 MH – 17
From
Amsterdam (Netherlands) to Kuala Lumpur (Malaysia) disappeared from radar as it
flew over
Ukrainian airspace.
Loss Date: 17/7/2014
Loss
Location: Ukraine
Departure
Country: The Netherlands
Destination
Country: Malaysia
Aircraft
Details
Manufacturer: Boeing
Aircraft
Type: B777-200
Registration: 9M-MRD
Build
Year: 1997
No. of
Pax: 283
No. of
Crew: 15
Loss Type: Total
No. of Pax
Fatalities: 283
No. of
Crew Fatalities: 15
No. of
other Fatalities: 0
Theme: The Media and the Promotion of Insurance Culture in Nigeria
Being a Paper Delivered by
Mr. Sunny O. Adeda at Joint Industry Media Retreat
Date: 10th September, 2014.
Insurance
Details
Malaysia
Airlines
Inception
Date: 01/12/2013
Max Hull
Value: USD350,000,000
Aircraft
Insured Value: USD97,335,000
Gross Hull
War Reserve: USD97,335,000
Net Hull War Reserve: USD97,335,000
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