How airlines can be exposed to personal injury lawsuits

Slips and falls are not just an exposure for property managers and landlords. They are also a concern for aviation insurers.

“Generally, aviation insurers are exposed to liability claims from passengers both while they are inside the airplane and also while they are at the terminals of departure or arrival. The carriers insure both operators and service providers such as airports, exposing them basically from the time the passenger arrives at their departure terminal until the time the passenger leaves the terminal after arriving at their destination airport,” said Alex Barker, Calgary-based head of specialty and aviation for AXA XL Canada.

He joined AXA XL in December. He was most recently with Marsh & McLennan Companies as the senior vice president of the aviation business.

In a recent interview with Canadian Underwriter, Barker was asked about major risks in aviation. Aviation claims can arise both from first-party property damage and third-party liability. Liability losses in aviation are driven not only by large accidents with hundreds of victims, but by attritional losses or multiple small losses, said Barker.

Examples include slips and falls, wheelchair incidents at airports, plaintiffs who claim they were scalded because they spilled a hot drink on themselves or those who claim they were injured in a cabin because a bag landed on them after falling out of an overhead storage bin.

“Anything you could think of that could happen to a passenger in an airport terminal or on a plane could result in a liability claim against insurers. Where this loss falls would depend on who is responsible for the passenger at that time and considered liable for the injury including the airport, ground handlers or air carriers,” Barker said.

In aviation insurance, the cost of first-party property damage claims is rising. “Aircraft, over past 20-30 years, have substantially increased in value. Claims have gone up in proportion to that,” said Barker.

One driver is newer airframe materials. For example, composite material tends to cost more to repair, as compared to traditional materials such as aluminum alloy, Barker pointed out.

Traditionally on an older aircraft type, you could change, for example, one panel or one aileron, and that would essentially fix the aircraft, reports Barker. (An aileron is the component on the back of the wings that allows the pilot to control the roll of the airplane.)

“Now, damage to one small piece of an airframe can generate a larger claim. You can’t just fix one small piece. You have to essentially fix an entire airframe,” said Barker.

Feature image via iStock.com/guvendemir