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Abstract
Aviation accidents have the potential to result in large property damages and losses of human
life. This paper provides an overview of how the airline insurance industry works. We will
take a look on how the risk is spread between insurers, how insurers treat deliberate acts of
violence and, lastly, how insurers price the risk. Our paper shows that the way the aviation
insurance market is structured reveals highly sophisticated risk management practices. To
minimize their risk exposure, large potential liabilities are shared by means of a complicated
system among several insurers. Furthermore, the paper shows that the insurance market has
adjusted to the post 9-11 aviation insurance realities being reasonably ready to handle events
of an even more catastrophic magnitude.