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Insurance and security issues in the agenda of IATA`s conference in Munich

REPORT FROM MUNICH – The IATA Conference `Insurance Rendez-vous 2004`, began yesterday in Munich, with…

REPORT FROM MUNICH – The IATA Conference `Insurance Rendez-vous 2004`, began yesterday in Munich, with 200 participants and 40 airlines.

In his keynote address, Dr Karl – Ludwing Kley, CEO, Lufthansa, which marked the opening of the conference, stated that, security issues will be important for the macropolitical agenda for the next 30-50 years and that insurers cannot solve the problem of airlines but can be of great assistance`.

The first session of the conference focusing on what the customer wants and what the customer needs has given the opportunity to the airlines customers to voice their own views and concerns, as well as to address some of the fundamental issues within the industry. Speaker, Ignacio de Torres Zabala, finance Director, Iberia mentions that, insurance market needs to be changed and renovated. British Airways, BA, speaker Geoff R. Want, Director, Safety, Security and Risk Management said that the industry is safer than ever, and stressed that BA policy is: BA don`t take the risks – if in doubt cancel the flight.

The second session, The true value of airline insurance aimed to convey an understanding of the insurance product, the real value of insurance, the capital needed to cover huge liabilities and what it takes to create a sustainable insurance market for the benefit of the airlines industry. In his speech the moderator, David Gasson, Secretary General, International Union of Re Insurers, referred to the current issues of airline insurance: EC court (2002) 521 Insurance requirements for air carriers and aircraft operators, as well as the modernization of the Rome Convention (1952). Jacques Mercier, Managing Director, Allianz, presented that net premiums extended the incurred losses in 2003. He also, added that there has been a significant increase on average cost per passenger in recent years. Andreas Peter, Global Head Aviation and Space, Swiss Re, stated that there is a need to produce an adequate return for exposure.

In the last session of the first day: Practical Realities – A 380 Case Study, Simon Harker, Deputy Chief Executive, Marsh Aviation, Airline broker supported that A 380 is first, a challenge from both risk transfer and a risk management respective, second, an opportunity for aviation insurers to prove that they can respond to the industry needs, and third, present an opportunity for all risk specialists. Finally, Brian McBride, Executive Vice President, Global Aerospace, argued that A 380 would present peak exposures in both hull value and seating capacity in a single aircraft substantially above typical large exposures by approximately 30%. The issues to be discussed today are:

  • How an airline would deal with crises like SARS

  • The legal issues facing risk managers,

  • The role of the insurance buyer in airline risk management

  • Air traffic control as an essential service for airlines and insurers

Theodore Koumelis
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