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From page 32... ... 32 Airport Risk Management Practices This chapter highlights general airport risk management practices, including important lessons learned, insurance purchasing practices of U.S. airports, and contractual risk transfer practices. Read the entire page →
From page 33... ... Airport Risk Management Practices 33 These studies will help an airport identify the most likely financial loss from identified property and casualty risks, including catastrophic risks such as wind, hail, and earthquake. These studies also assist an airport in purchasing the appropriate amount of insurance limits to finance losses. Read the entire page →
From page 34... ... 34 Airport Insurance Requirements Leading airport liability insurers interviewed for the development of this guide indicated they do not provide specific discounts for adoption of SMS or ERM programs. Rather, adoption of these programs will likely lead to a culture of safety and risk abatement. Read the entire page →
From page 35... ... Airport Risk Management Practices 35 • Do not conduct a broker selection process every year. Give the broker time to implement changes that reduce your airport's cost of risk. Read the entire page →
From page 36... ... 36 Airport Insurance Requirements limits of insurance purchased the previous year, the airport's loss history, results of a cost–benefit analysis, recent court awards and judgements, what the market will bear, and industry benchmarks of similarly sized airports in the region. While some airports determine their insurance limits on the basis of what the market will bear, many airports are experiencing reduced limits simply because of the current hard insurance market. Read the entire page →
From page 37... ... Airport Risk Management Practices 37 Employer's liability is usually connected with a workers' compensation insurance policy. It covers the employer's liability that usually falls outside workers' compensation statutory benefits. Read the entire page →
From page 38... ... 38 Airport Insurance Requirements demands because of a ransomware attack. Some property policies include limited first-party coverage for cyberattacks. Read the entire page →
From page 39... ... Airport Risk Management Practices 39 3.2.1.6 Pollution Legal Liability Pollution legal liability covers an airport for most pollution-related incidents arising out of airport operations. Specifically, coverage can be tailored to cover liability arising from below- or above-grade fuel tank and hydrant systems, pollution on land owned by the airport, storage tanks on airport property, heating oil, pollution arising from deicers, and underground storage tanks. Read the entire page →
From page 40... ... 40 Airport Insurance Requirements Large airports may have the capability to accept significant risk through higher deductibles or administratively managing a large, self-insured retention. Smaller airports, though, may lack these resources and gravitate toward a model in which dealing with risk transfer costs through insurance premiums and lower deductibles best fits their needs. Read the entire page →
From page 41... ... Airport Risk Management Practices 41 quota share insurance arrangements are commonplace within liability and property placements. These arrangements were nonexistent during previous soft insurance markets. Read the entire page →
From page 42... ... 42 Airport Insurance Requirements 3.2.6 Claim Trends Affecting Purchasing Behaviors In recent interviews conducted with leading airport aviation underwriters, insurance brokers, and airport risk managers, trends in airport claims were discussed along with whether these trends were affecting insurance purchasing behavior. The overwhelming response was that trends in the number and magnitude of claim payouts due to social inflation as well as higher jury awards is affecting the way insurance is purchased at airports. Read the entire page →
From page 43... ... Airport Risk Management Practices 43 Finally, several airports viewed the ride-sharing industry as an emerging risk that has forced airports to reroute traffic patterns to minimize third-party bodily injury risks. In addition to common emerging risks, several uncommon but important emerging risks were noted during recent interviews: • Pollution from the application of PFAS continues to be an emerging risk. Read the entire page →
From page 44... ... 44 Airport Insurance Requirements • Different insurance coverages and limits may apply to vendors that are conducting operations in prescreening areas or landside. • Careful attention should be given to identifying any pollution-related exposure from vendor operations, which may necessitate a requirement for environmental liability insurance. Read the entire page →
From page 45... ... Airport Risk Management Practices 45 medium-sized airports. Eighty-seven percent of the small and medium hub airports surveyed obtain updated insurance documentation upon expiration of their vendors' insurance policies, while the balance of the airports surveyed only obtain insurance documentation at contract execution and do not monitor their vendors' expired insurance policies. Read the entire page →
From page 46... ... 46 Airport Insurance Requirements Seventy-five percent of the airports interviewed reported difficulty obtaining contractual compliance with requirements for pollution liability coverage in hangar agreements. The requirement for contractual pollution liability coverage is designed to protect the airport in the event the tenant's aircraft (or other operations) Read the entire page →

From page 32...

... 32 Airport Risk Management Practices This chapter highlights general airport risk management practices, including important lessons learned, insurance purchasing practices of U.S. airports, and contractual risk transfer practices.