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Session 7: Air traffic Control an Essential Service for Airlines and Insurers

As Air Navigation Service Providers (ANSPS) have been privatised and corporatized they have turned to insurance coverage. Traditionally, Air Traffic Control was a self-insured risk. This session discussed the air traffic control insurance needs and the future developments in this dynamic industry that has to deal with the problem of the increasing capacity by 25 percent within the next five years, solve the problem of the continually increasing airport delays and at the same time maintain air safety at the highest level.

The first speaker of this session, Dieter Kaden, chairman and CEO, DFS, said that his company’s premium bills for aviation liability increased by nearly 100 percent between 2001 and 2002, as well as between 2002 and 2003. Total premium bill amounted to €3,9 Mio for 2004 – this corresponds to nearly 0,5 percent of DFS total cost base.

Eric Kroese, Chairman of the Board of Directors and CEO of another air traffic control company, the Netherlands (LVNL) mentioned that total insurance premium bill amounted to € 1.470.185,00 in 2003, which corresponds to 1percent of cost base to be charged to airline customers. Insurance premiums are up 307 percent from 2001 and nearly doubled from 2002 to 2003, against essentially identical coverage. Aviation liability premium rose from 62 percent in 2001 to 79 percent in 2003 of total premium. He expressed the opinion the risk assessment used by insurers in relation to ANSP’s is inappropriate. The risk assessment currently applied seems to be a derivative of airline risk profiles while ANSPs are, not only service providers but also, designers, builders, maintainers and operators of high value aviation infrastructure.

What this conference has shown clearly is that aviation insurance needs to be redesigned and restructured to deal with the new economic environment, the new safety demands and threats. This conference provided a forum for the different players to present their often-conflicting views and may mark the beginning towards a consensus on insurance and contribute to the prosperity of the aviation industry in general.

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.