CONCLUSION

I started this Project by asking the question Why Aviation Insurance is

Required?In the course of the analysis various trends and developments in the
aviation industry were discussed that provide partial answers to this question. Air-
lines employ a wide variety of business Models while taking an aviation insurance
contract. For example, some companies like Kingfisher Airlines take policy with
high premium while others like Air India take an aviation insurance contract with
low premium. The aviation insurance market is highly volatile due to the inherent
nature of the risk and the underwriting cycle of insurance. Historically, the market
wide premium appears to be almost as volatile as the claims, suggesting a lack
of consistency in underwriting this business. The aviation insurance market, by its
own nature, is highly volatile. There are many causes including the overall insur-
ance underwriting cycle, the major accident risk, the short-term memory of the in-
surance market, and the long tailed nature of determining responsible parties.
However, the increasing involvement of analytical professionals such as actuaries
should introduce more effective methods for pricing airline insurance and this
should help stabilize the premium component of the loss ratio equation.