Study On Aviation War Risk Liability Insurance

After the terrorist attack in the U.S. on the September 11, 2001, the world aviation war risk liability market corrupted and a high insurance rate and low liability product become substitute. However, this product can't meet the need of the normal demand of the airline companies. To avoid its own airline companies shutting down for not meeting the legal insurance requirement. There are over 60 countries in the world provide government guarantee for their airlines. After six years hard working, aviation war risk liability insurance market just can't recover effectively. Why such an event would turn the whole market up side down, and how to understand and solve this problem is worth of study and analysis.Using the basic insurance principle, the article did a deep analysis to the insurable risk of the aviation war risk liability. From certainty of the loss , moderation of the loss, and independence of the risk, this article concludes that aviation war risk liability are none insurable, and this is a deep level reason which leads the commercial insurance market to corrupt. In this article, the related acts of "Limitation of Liability for Maritime Claims" are used for references to give out some suggestions to limit the responsibility of the aviation war compensation, which is to combine Principle of the package limitation and Global limitation. It is order to create certain conditions for the recovery of the commercial insurance market through certain technical methods to reduce or delete the non-insurable factor in the aviation war risk liability insurance field.This article also did the analysis of the cost, surface, and status of the aviation insurance market, and points out that pure commercial market operational system can't solve the long-term risk and stability of the aviation war risk liability insurance. Later, using probability statistics and game theory to prove that the market exist the possibility of selecting and moral risk in the opposite direction. They are not the direct results of the market corruption, but from another point that the market operational system is not long-term and stable. Since commercial insurance organization has evident positive externality effect under this system, therefore it is difficult to help the recovery of the market. The above reasons postpone the speed of the market recovery.Regarding the short come of the none insurable risk, this article provide a policy insurance method to solve the problem after setting up the policy insurance company, deciding its business range, and constructing its inside operating system. Meanwhile, the policy insurance is only a dynamic concept and survives in certain economic environment, and it won't fit every situation. When conditions become mature, the policy insurance should quit the market in order to utilize the limited resource more efficiently.Last, this article jump out the traditional analysis framework and the positioning of problem-solving by simply rely on insurance policy, by introducing of the market power, specifically analyzed the possibility of issuing aviation war risk liability insurance bond to diversify the risk of such kind of disasters. Through detailed analysis of the operating system, specialty, influence of the aviation war risk liability insurance bond, and by providing related suggestions to the influence factor, the airlines should reduce limited terms during the negotiation process with the related part such as the lessor; on the other side, the government should provide necessary support and help to the airline companies. Also, the government could consider offering certain tax reduction or policy support to insurance companies and its related parties to encourage it to share the responsibility of the nation using a business method. At the end of the article, it also hints that the related supervision and management methods should follow up before the start of a new trading mode, so that the market could develop continually and more healthy.