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Airport Insurance Requirements (2023) / Chapter Skim
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From page 7...
... 7   This chapter presents the insurance-related risks most commonly faced by U.S. airports and discusses how airports address them.
From page 8...
... 8 Airport Insurance Requirements • Cyber or privacy breach, • Threat of shutting down operations, • Employee injuries, • COVID-19 and pandemic recovery, • Ramp traffic and congestion, • Vehicular risks, • Liability arising out of construction and third parties, and • Aging infrastructure and systems. Top uninsurable risks: • Economic risk, including changes in the economy or market conditions; • Regulatory and compliance risk; • Employee turnover; and • Loss of airline contracts.
From page 9...
... Risks Faced by Airports 9 2.1.2 Natural Disasters Risk managers from airports of all sizes indicated in the survey that a top risk was natural disasters such as hurricanes, tsunamis, tornados, floods, or earthquakes. Thirty-seven percent of the responding airports indicated that natural disasters or weather-related events are on their list of top risks facing the organization.
From page 10...
... 10 Airport Insurance Requirements concern about cyber incidents is not surprising, given some of the high-profile cyber incidents that have been reported over the past several years: • Cleveland Hopkins International Airport (CLE) , April 2019: Airport flight and baggage information screens as well as email systems were disrupted following a malware attack on the city's servers (Naymik 2019)
From page 11...
... Risks Faced by Airports 11 costly in terms of loss of revenue, extra operating expenses, or atypical costs required to operate the airport until it restores normal operations. Because airports are fairly resilient, they are often able to restore operations within a matter of hours.
From page 12...
... 12 Airport Insurance Requirements 2.1.5 Employee Injuries Airports, which employ thousands of people year-round, are usually one of the larger employers in any given region. A large employment base can be the cause for employmentrelated injuries.
From page 13...
... Risks Faced by Airports 13 and customer illnesses that could cost large hub airports millions of dollars per day. Like other organizations, airports across the United States are concerned about exposure to lawsuits, not only as a result of COVID-19 illness (which may have been contracted while on airport premises)
From page 14...
... 14 Airport Insurance Requirements While the full financial impact of the COVID-19 pandemic on U.S. airports is still unknown, there are some estimates regarding how much the industry may lose as the pandemic and its effects linger.
From page 15...
... Risks Faced by Airports 15 the FAA Safety Team, noted the following steps that can be taken to prevent or reduce vehicle accidents on the ramp (Foster 2006) : • Enhanced training procedures and policies.
From page 16...
... 16 Airport Insurance Requirements For additional information on construction-related legal issues, readers are referred to ACRP Legal Research Digest 38: Legal Issues Related to Large-Scale Airport Construction Projects (Shrestha et al.
From page 17...
... Risks Faced by Airports 17 2.2 Other Risks Not Addressed Through Insurance or Contractual Risk Transfer The risks discussed above are usually managed through insurance or a contractual risk transfer process. There are, however, other risks that airports face that cannot generally be passed on or transferred to another entity.
From page 18...
... 18 Airport Insurance Requirements FAA, the Occupational Safety and Health Administration (OSHA) , and the Environmental Protection Agency (EPA)
From page 19...
... Risks Faced by Airports 19 could affect operational labor needs (Cronin et al.
From page 20...
... 20 Airport Insurance Requirements Many small airports are called to diversify their offering of services to address this risk, for example, by offering general aviation services among other tactics to ensure revenue stability. ACRP Synthesis 19: Airport Revenue Diversification, notes several general sources of nonpassenger revenue as important for contributing to airports' business bottom line (Kramer 2010)
From page 21...
... Risks Faced by Airports 21 passenger service and consolidating routes, which affects airline and airport revenue. In these circumstances, airports rely on different sources of revenue (Spitz et al.
From page 22...
... 22 Airport Insurance Requirements in an interview that it has recently seen a shift in its passenger profile from business travelers to leisure travelers and that, as a result, slip and fall accidents on moving walkways and stairs have increased substantially. Like the nonhub and small hub airports surveyed, the medium hub airports named natural disasters and weather-related catastrophes as a top risk.
From page 23...
... Risks Faced by Airports 23 Regarding the risk of a cyberattack, it is possible that large hub airports are more concerned with this risk because this size of airport has been a more frequent target of cyberattacks than smaller airports. As indicated earlier, cyberattacks have taken place at three major U.S.
From page 24...
... 24 Airport Insurance Requirements Source: Adapted from map at FAA website https://www.faa.gov/about/office_org/headquarters_offices/arc/. Figure 2-7.
From page 25...
... Risks Faced by Airports 25 Source: FAA (2021d)
From page 26...
... 26 Airport Insurance Requirements 2.4.1 First-Party Property Risks by Airport Region Most risks discussed in this section pertain to risks associated with first-party property damage that can be addressed through an insurance policy. In contrast to traditional property risks, most would agree that general liability risks at airports tend to be very similar, and so there is not a need to differentiate general liability risks by region.
From page 27...
... Risks Faced by Airports 27 Interviews with commercial aviation insurance brokers and insurance underwriters provided context for the unique set of risks faced by the aviation community in Alaska as well as their airports. One insurance carrier mentioned that airport runway incursions involving wildlife are often a common daily occurrence.
From page 28...
... 28 Airport Insurance Requirements Hail is a more prominent risk in the Great Lakes and Central regions and puts airports in those regions at a higher risk of property damage. According to the 2021 hail hazard report published by Verisk, of the top 10 states that had the largest losses related to hail from 2018 to 2020, six (in boldface below)
From page 29...
... Risks Faced by Airports 29 Airport risk managers can transfer this risk through property insurance, which is discussed in Chapter 3. According to NOAA, the United States experiences an average of 1,000 tornados per year.
From page 30...
... 30 Airport Insurance Requirements 2.4.1.4 Southwest and Southern Regions Like the Great Lakes, Central, Eastern, and New England regions, the Southwest and Southern regions experience extreme weather events that have posed risks to airports over the past several years. The Southwest region consists of New Mexico, Texas, Oklahoma, Arkansas, and Louisiana.
From page 31...
... Risks Faced by Airports 31 from those in rural areas, and airports need to take that into consideration in managing their portfolio of risks. For example, an interview with a leading commercial aviation insurance company underscored the unique risk of operating an airport in a large, densely populated metropolitan area: "Airport location can certainly play a significant role in the risk focus of an operator.

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