Recent Developments in the Aviation Insurance Industry |
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| Authors: | Triant Flouris Paul Hayes Kuntara Pukthuanthong-Le Dolruedee Thiengtham Thomas Walker |
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| Institution: | Triant Flouris, AC117, School of Aviation Sciences, Daniel Webster College, 20 University Drive, Nashua, NH 03063-1300;phone: 603-577-6101;fax: 603-577-6177;e-mail: . Paul Hayes, Ascend Worldwide, 505 East 82nd Street, Suite 6D, New York, NY 10028;phone: 212-286-1692;fax: 212-551-1001;e-mail: . Kuntara Pukthuanthong-Le, SSE3400, Department of Finance College of Business Administration, San Diego State University, 5500 Campanile Drive, San Diego, CA 92182-8230;phone: 619-594-5690;fax: 619-594-3272;e-mail: . Dolruedee Thiengtham, GM300-84, Department of Finance, John Molson School of Business, Concordia University, 1455 de Maisonneuve Boulevard West, Montreal, QC H3G 1M8, Canada;phone: 514-848-2424, ext. 2792;fax: 514-848-4500;e-mail: . Thomas Walker, MB 12-315, Department of Finance, John Molson School of Business, Concordia University, 1455 de Maisonneuve Boulevard West, Montreal, QC H3G 1M8, Canada;phone: 514-848-2424, ext. 2789;fax: 514-848-4500;e-mail: . This article was subject to double-blind peer review. |
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| Abstract: | The aviation industry has been hard hit in recent years. While there are numerous factors that have contributed to the industry's dilemma, rising and volatile insurance premiums—particularly after the events of 9/11—have posed a particular problem for many airline managers. Despite a general trend for accident rates involving commercial passenger airplanes to decrease as aviation technology has advanced over the years and airplanes have become safer, the aviation insurance market has been far from stable. This article provides an overview of how the aviation insurance industry works and how it has changed in recent years. We take a look at how the risk is spread between insurers, how insurers treat deliberate acts of violence, and lastly, how insurers price the risk. Our article shows that the aviation insurance market has undergone considerable changes in recent years and that it has adjusted to the post-9/11 aviation insurance realities being reasonably ready to handle events of an even more catastrophic magnitude. |
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