Australia Domestic Carriage By Air – Increases to Mandatory Insurance Levels for Carriers

Following on from preliminary reviews of the Civil Aviation (Carriers’ Liability) Act 1959 (the Act) undertaken by the Australian Government in 2018, new mandatory levels of liability insurance are expected to come into effect from 1 October 2019.

The proposed changes follow consideration by the Department of Infrastructure, Transport, Cities and Regional Development of submissions received on their Discussion Paper released in April 2018 and an Exposure Draft of the proposed regulations released in July 2019.

The proposed regulations would increase the liability caps as follows:

Liability limits relating to passengers

  • A change to the liability limits relating to passengers on a domestic carrier under Part IV of the Act, by reason of injury or death resulting from an accident, to $925,000.
  • A change to the liability limits relating to passengers on a carrier other than domestic carrier under Part IV of the Act, by reason of injury or death resulting from an accident, to 480,000 SDRs.

Liability limits relating to baggage

  • A change to the liability limits relating to baggage of passengers under Part IV of the Act that is registered in respect of its destruction, loss or injury, to $3,000.
  • A change to baggage that is not registered baggage of passengers under Part IV of the Act in respect of its destruction, loss or injury, to $300.

Once these changes are in effect, carriers will need to be covered by insurance policies that reflect these increased liability limits.

As always Aerosure will continue to review insurance considerations in conjunction with our clients, however should you have any immediate queries please do not hesitate to contact us.

 

Latest BA IT Failure Threatens Willis CyFly Cyber Programme

An IT failure which affected more than 500 British Airways (BA) flights in August threatens to erode the lower layers of its cyber insurance programme, industry publication The Insurance Insider understands.

Sources told this publication that BA buys Willis Towers Watson’s CyFly product, an insurance solution specifically designed to address airline cyber exposures – in particular the failure of critical IT systems.

AIG is understood to lead the product, and the rest of the tower is largely written in the London market. Sources said the 2018 programme had EUR200mn ($222mn) of limit, but it is not clear whether BA had chosen to increase the amount of protection it purchased for the 2019 programme.

The loss quantum from the August event at this stage is not clear, as there are understood to be waiting times in place in the wording for the business interruption (BI) element of the coverage.

However, market sources have speculated that the lower layers were likely to be eroded due to resulting legal costs alone.

The BA loss hit the market just less than two weeks after Capital One disclosed a severe data breach, which could exhaust the limit of the firm’s $400mn cyber placement.

If the full $400mn Capital One limit is exhausted – which, given the scale of the breach, sources speculate is a possibility – it would be a new record claim for the cyber market. Axis, AIG and Axa XL have the largest gross exposure to the loss.

BA, which is owned by International Airlines Group, has experienced at least one IT failure or cyber security incident a year since 2016.

The most recent IT failure on 7 August, which lasted from 9.30am UK time until around 4pm, led to more than 500 flights being cancelled or delayed. The airline said the outage had only affected London airports but others in the UK and Europe had experienced knock-on disruption.

The August failure followed a breach of BA’s security systems in 2018, which was first disclosed on 6 September but is believed to have begun the previous June.

In the hack, details of around 500,000 customers were stolen and the incident led to a record £183mn ($222mn) fine – or 1.5 percent of turnover – by the Information Commissioner’s Office.

Sources said the cyber market is still debating the insurability of the fine.

In 2017, a global system failure forced BA to cancel all flights out of London on 27 May, with thousands of cancellations racking up over the following two days.

At the time, Insurance Insider reported that it was pursuing its property insurers for a sizeable BI claim in relation to the outage, as it had no standalone cyber insurance cover in place.

Prior to this, BA also experienced a number of system outages and delayed flights during 2016, at least one of which was attributed to a new check-in system installed that year.

AIG, Willis Towers Watson and International Airlines Group declined to comment.

Swiss Re Corporate Solutions exits general aviation and space markets

Although Swiss Re has just posted its half-year results for 2019, reporting strong overall growth across the group, Swiss Re Corporate Solutions reported a net loss of USD403 million and a combined ratio of 132.8% in the first six months of 2019 as a result of decisive management actions to reposition the business together with losses stemming from natural catastrophes and man-made losses including those seen in the aviation and space sectors.

In news released overnight, The Insurance Insider has learned Swiss Re Corporate Solutions is withdrawing from the general aviation and space markets globally. Swiss Re have subsequently confirmed this to be the case and as a consequence they will be closing the local arm of their Aviation business here in Australia.

As always Aerosure will continue to keep our clients fully informed of further updates and solutions already being developed where required, however should you have any immediate queries please do not hesitate to contact us.