By Ebere Nwoji
In the past seven months of this year, 2021, precisely the
months of February, May and July, Nigeria's air space has witnessed three major
air mishaps involving military aircraft that claimed eminent people's lives
including the former Chief of Army Staff, Lieutenant-General Ibrahim Attahiru
who died at age 54 in a fatal plane crash which occurred on May 21,2021,four
months after his appointment. Attahiru, died in the crash along 10 others
including top military officers, aids and crew.
On February 22, Nigerian military plane, King Air350, took
off from Abuja Airport but reported engine failure, according to media reports,
while trying to return back to the airport on account of the failure, it
exploded killing all seven people on board.
The two fatal crashes, if not that they involved military
aircraft, would have required huge compensations in form of claims from
insurance companies because of the status of the victims and the fact that
aviation insurance is such a compulsory requirement that regulators hardly wink
at in the discharge of their duties.
But military aircraft are not handled by insurance
companies; rather, government takes care of the dependents of the deceased.
But this has not and cannot immune insurance operators from
huge claims that emanate when commercial aircraft is involved in a crash.
For the commercial aircraft, claims from air crash is so
enormous and often very controversial that it rakes up emotions and endangers
the goodwill of the insurance companies involved if the compensation for the
relatives of the victims of the accident is not well managed.
The claims are so huge that if the business is not
adequately spread by the lead insurer among other insurers, the claim is
capable of bringing down the insurance company, not withstanding its financial
strength.
Where the victims are not adequately compensated, the
criticism from the public is also capable of sending the airline operator out
of business.
Expectations from Victims
Indeed, aviation insurance is one class of insurance
business that has so much exposed the insurance sector and its operators to
public criticism erroneously or constructively.
This is because aviation risk, when it occurred, attracts
much public concern and sympathy. The public could be curious and anxious to
know the outcome. The empathy it attracts is overwhelming. It appeals to
people's emotion who would want to know if the relatives of the victims of the
crash are well compensated for the loss of the lives of their loved ones. In
the case of fatal accidents, the relatives of deceased often inundate the
airline operator and its insurers with huge claim filings.
Both the airline operator and the accident victims'
expectations on insurance company concerned are always very high. In the past,
there has not been accident claim in Nigeria that was amicably settled. The
settlements were usually dogged by controversy because of the high expectation
of the relatives of the victims of the crash. But there are standard
compensation enshrined in the International Civil Aviation Organisation (ICAO)
regulations. But sometimes some relatives of the crash victims sue to kick
against the claim, considered to be less than what could compensate for the
death of their loved ones.
Regulation on Claims and Travellers Ignorance
Experts in aviation business said as emotional as any air
mishap is, there are both local and international regulations that guide
aviation insurance contract just like every other contract and these regulations
cannot be violated in demanding for or paying for damages incurred during the
course of air trip.
They noted that contrary to this, most times, when there is
air crash, the passengers are ignorant of limit of their claims and quantum of
claims, which the premium they paid can give to them.
Similarly, industry observers said in most cases, the
insurance companies, take advantage of the ignorance of the passengers on their
claims right to underpay them perhaps having charged very low premium from the
airline operator in order to grab the business from other insurers racing for
the same business.
According to the observers, the problem stems from the fact
that air passengers, neglect reading these aviation insurance rules and
regulations written at the back of their passenger tickets and the result is
that when the unforeseen happens, argument follows either because the victims
or their relatives in case of death are making wrong claims or some mischievous
airline operators and their insurers want to take advantage of ignorance of the
victims to short pay their claims.
Insurers' Perspective
Insurance experts said aviation insurance is one of the
technical classes of insurance business.
According to them, it is so technical that insurance
managers themselves regard it as not for all comers in the business and that
requires well experienced, highly technical and thorough breed professionals
who specialise in the business to handle it.
According to them, insurance claims and compensation is part
of aviation business, which is mainly international in nature. Aviation
insurance is effected in the international market more than any other branch of
insurance.
"This is why knowledge of laws governing air transport
and aviation insurance in various countries both locally (Nigeria) and
internationally is important to keep abreast of changes in this class of
business.
"People fly both locally and internationally and
therefore the question now is in the event of loss or death of a passenger,
which law will be applicable for purposes of jurisdiction," one of the
insurance experts who spoke to THISDAY asked.
They noted that since after the First World War, there was
very rapid advancement in aeronautical engineering. According to them, today,
the size and type of aircraft in operation is unimaginable.
They are of the view that the recent advances in aircraft
manufactured today in terms of number of passengers, load carried and distances
covered when compared to some 20 years ago is also unbelievable. This means
that these aircraft are highly valued and therefore value at risk is when
accident occurs is quite high.
The experts said there is therefore need for an insurer with
a lot of financial strength to play in this class of business adding that even
locally, strict regulations by the insurance regulator is in place for any
operator that wants to participate in aviation business.
Enforcement
Here in Nigeria, among all the classes of insurance that are
made compulsory for the protection of the third party's interest, enforcement
of aviation third party liability insurance is much more serious than any other
of its sort.
The regulators are alive to their duties in this regard
while government is much more interested in seeing the law obeyed to the last
letter. This is because of risky nature of air transport and high premium
associated with air travel, which is considered the safest means of moving from
one place to another.
Industry observers noted that in Nigeria, after the tragic
accidents involving two major passenger bound aircraft in 2005 and 2006,
aviation industry regulators became much more critical in assessing insurance
status of every aircraft that flies out of Nigerian airports.
They said the situation became tougher since January 1,
2013, when the National Insurance Commission (NAICOM) began enforcement of 'no
premium no cover' policy among insurance underwriters.
Airline Operators' Effort
These have put airline operators in tight corner insurance
in terms of obtaining insurance cover for their equipment.
Recent observations show that currently due to huge premium
involved in aviation insurance and refusal by underwriters to grant cover on
credit, airline operators buy their insurance cover monthly instead of
annually. This has exposed them to risk of being grounded by their regulators
once there is little mistake or omission in their aviation insurance.
Industry observers noted that this risk was almost suffered
by Arik Air few years back when on account of a public holiday that delayed
renewal of its insurances by one day after expiration, the airline was stopped
from flying and the passengers discharged by the officials of the Nigerian
Civil Aviation Authority (NCAA) until NAICOM confirmed that it has put its
insurance package in order.
According to the observers, these strict regulations by both
NCAA and NAICOM are put in place for security, safety and interest of the
passengers,
Air crash Damages
A study of a number of air crashes that have occurred in
recent past shows that often when it occurs it claims lives of all the
passengers on board, including the cabin crew and at the same time causes
damages to the ground where it crashes.
Insurance experts said insurance by its nature is there as a
risk bearing mechanism that indemnifies victims of such huge losses as losses
from plane crash is usually so huge that no airline can bear it alone.
According to the experts, even among the insurers who bear
the risk, no insurance firm singly carries any aviation risk.
They said the risks are undertaken by the lead insurer who
shares it among some other insurers tagged co-insurers, each taking according
to its retention capacity while the excess is insured abroad.
According to them, both the lead insurer and the co-insurers
also reinsure the risk with indigenous and foreign reinsurers. These are done
to ensure that in the event of risk occurrence, claims are contributed by all
who participated in the business to ensure that victims are adequately
indemnified.
According to the observers, most times, claims from air
crash is of two fold as the insurance companies involved are not only paying
for damages incurred by the passengers but also those of ground victims where
the accident occurred.
Findings
THISDAY observed that in the past, and even at present,
where airlines fail to get their insurances right, they often play on the
ignorance of the passengers on their rights to adequate compensation and they
underpay the relatives of the victims of the accident because even the victims
themselves, if they were alive, were often ignorant of their insurance rights
let alone their relatives.
This being the case, airline operators and their insurance
companies often take advantage of ignorance of the passengers on their legal
insurance rights to shirk the claims or what to pay, eventually the passengers'
relatives are poorly compensated.
Findings by THISDAY also showed that in most of the plane
crashes that occurred in Nigeria in recent past, only few of the airline
operators and their insurance companies can today, lift up their faces to say
that the victims received adequate compensation as in each case, you still hear
relatives of the victims grumbling after receiving claims from the insurance
companies. Some of these complaints were right some were wrong.
For instance, findings by THISDAY revealed that relatives of
96 victims of Sosoliso Airlines flight 1145 flying from Abuja to Port Harcourt
in 2005 which crashed 15 minutes to landing were poorly compensated by the
insurance companies concerned.
According to the insurance experts, whereas legally,
passengers on board a crashed aircraft is entitled to minimum of $100,000
claims payable to relatives of dead victims, the 96 passengers on board the
Sosoliso crashed plane were all together paid N100 million claims. The legally
stipulated figure due to each victim, if converted to Naira at the prevailing
exchange rate of Naira to dollar then is far above the N100 million paid to the
relatives of the 96 passengers on board the crashed plane.
Commenting on this, aviation insurance expert, Sunny Adeda,
who was also former president of Chartered Insurance Institute of Nigeria
(CIIN) blamed this on the failure by the airline to adequately insure the
aircraft.
He also blamed it on the regulator, which failed to ensure
that the airline's insurance certificate was up to standard then.
Present Situation
He however said today, the situation has improved with the
passage of the Nigerian Civil Aviation Act 2006 into law, which now empowers
airline passengers to boldly ask the operator about their insurance status.
He further said the enforcement of no premium no cover
insurance law by NAICOM has to a reasonable extent helped to compel airline
operators to get their insurances right.
On its part, the NCAA, after the enactment of the 2006 Act,
which obviously was facilitated by the uproar among aviation stake holders
against federal government on account of the two plane crashes recorded by the
country within two months in 2005, has girded itself to ensure that no aircraft
lifts passengers from Nigerian airports without adequate insurance cover.
Given this effort, records have shown that since then no
passenger bound plane crash involving such crowd of people has been recorded
except the military helicopter associated airline helicopter and Bristow
helicopters that crashed few years back.
As the regulators and airline operators try to put their
houses in order regarding adequate regulations and insurances to ensure that
passengers are adequately covered, the importance of passengers on board
aircraft to get adequate information on their rights before embarking on any
trip cannot be overemphasised.
Insurance Information and Passenger Behaviour
Airline ticket attendants said every information on
passengers' rights, conditions for travel including insurance cover and the
insurance legislation under which the airline insured the aircraft is written
at the back of the tickets including passengers cargoes and insurance
liabilities.
They however regretted that passengers hardly take time to
read these.
According to them, the result is that in the event of air
mishap, or even misplacement of luggage, some of the claims made by the
passengers especially in case of misplaced or delayed luggage arrival are not
covered by the contract stated at the back of passengers ticket and when the
claims are not paid as demanded, the passengers involved begin to grumble.
They cited the case of the crashed plane, saying that often
relatives of passengers on board the plane assemble for compensation and when
the airline operator concentrate on settling only the passengers in the
manifest while ignoring any other person who may have entered the flight either
by exchanging his tickets, the relatives will begin to grumble because of lack
of adequate information. But such incident doesn't occur anymore because no
passenger can board a flight in Nigeria without his name appearing in the
manifest.
Defenses by Air Passenger Carriers
Enquiries by THISDAY showed that there are defenses
available to the airline when air accident happens. There is no liability if
the carrier proves his servant or agent took all necessary measures to avoid
the damage or that it was impossible for him or them to take such measures.
Carrier proves contributory negligence on the part of the injured person. Time
barred, that is no right of action lies two years after the date of arrival at
the destination or date of accident. If the airline proves that the loss or
damage did not occur on the aircraft or in the course of the operations of
embarking or disembarking. However, the carrier is still liable at common law
if he is shown to have been negligent.
Findings also show that some deviant airline operators
vehemently insure their aircraft abroad despite the local content law. Reasons
given by such airline operators is that aviation insurance premium in Nigeria
is highest in the world. But Managing Director, Consolidated Hallmark Insurance
and former Managing Director Nigeria Insurers Association, Mr. Eddie Efekoha,
faulted this claim saying such airline operators failed to put into
consideration the level of insecurity in Nigeria airports, including the
roughness of the runways which are capable of causing frequent air crashes.
He said the security of Nigerian airports when compared to
those other countries the airline operators run to obtain their insurances is
nothing to write home about. However, insurers say premium is determined by the
operating environment of the aircraft.
He said considering the level of insecurity in Nigerian
airports, Nigerian insurers are charging less.
He said aviation passengers in Nigeria should be patience
and careful enough to find out insurance status of aircraft they board before
embarking on any trip.
The findings also revealed that what such airline operators
who obtain their insurance abroad do when accident occurs is to underpay the
victims. It was also discovered that often they go free because NAICOM has no
power to compel the foreign insurer to pay adequate claims to the victims'
relatives. This was exactly what happened when one of the aircraft of
Associated Aviation Limited crashed.
Efforts by THISDAY to ascertain how the victims were
compensated did not yield result, as the airline was not ready to open up on
its insurance status and claims payment and when NAICOM was approached, the
commission said the airline was insured abroad therefore it lacked powers to
compel the foreign insurer to pay claims.
Air Passengers' Rights and Basic Covers
Against this backdrop, it has become necessary for aviation
passengers to know their rights while boarding any aircraft as well as various
insurance covers the airline operators supposed to put in place before leaving
the shores of any country they are operating in.
According to aviation experts, the passengers have the right
to reject any airline that ignored the local content law and decides to insure
abroad knowing well that in the event of any thing, Nigerian regulators have no
power over the foreign insurers.
Unfortunately, passengers are such in hurry that they hardly
care until the unforeseen happens.
Aviation sector watchers said the basic covers in aviation
insurance which every airline operator suppose to put in place for its
passengers are: Passenger and Passenger baggage Legal Liability Insurance
This type of cover is effected by an airline to protect
itself against any sum or sums, which it would be liable to pay in respect of
any accidental bodily injury/Death/Loss of baggage to any person being a
passenger and holding a ticket.
These liabilities, apply when the person is entering into,
is being carried in or is alighting from the aircraft.
The insurer indemnifies the insured against all sums he is
legally liable to pay whether according to international law or local
legislation.
Subject to a maximum limit of liability agreed at inception
of the policy. They said standard exclusions include the crew, which are
normally covered under a separate policy.
Third Party Legal Liability
This is effected by an aircraft operator to indemnify
himself against all sums the insured would become legally liable to pay in
respect of accidental injury/death or accidental property damage to third
parties or to the public caused directly by the aircraft or falling of objects
there from.
The limit of liability is usually agreed at inception of the
policy.
Various countries have set minimum limit for aircraft that
would overfly their air space. This type of insurance is sometimes referred to
as public legal liability insurance.
Aviation Cargo
This insurance normally indemnifies an operator for loss or
damage (including delays) to goods shipped by the company.
The document under which the goods are transported is called
the Airway Bill (AWB). Acceptance of cargo with a poorly executed airway bill
or incomplete can impose unlimited liability on the carrier.
These liabilities were established at various global conventions
instituted by international aviation committees for international trip but have
been adopted by various countries for their domestic operations some of the
liabilities regimes were adopted from agreements at conventions such as Warsaw
Convention 1929,the Hague Protocol 1955,Montreal Agreement 1966,Montreal
Protocols 1,2,4 1975, IATA Inter Carrier Agreement, Montreal Convention 1999,
European Legislation, National Law e.g. NCAA.
Aviation experts said the purpose of the regime/Convention
is for the unification of certain rules of international carriage by airline
operators.
Aviation manager in Nigeria told THISDAY that regulators
mainly adopt the Montreal convention 1999 regime for international flights
while currently, the NCAA Act 2006, is used as legislation regulating local
flights.
According to them, under this, the minimum combined single
liability insurance (CSL) for domestic operations are clearly stated by the
insurers and their airline clients.
For instance, NCAA act prescribes for loss of baggage claim
at $20 per kilo. The total weight multiply by $20 gives the maximum liability
for unchecked luggage it is limited to 10kg maximum liability.
The managers said usually, items of value e.g. cameras,
telecoms equipment and others are valued separately and All Risk Insurance is
taken to cover loss or damages.
They also said claims for temporary loss of baggage
necessitating purchase of essential clothes; toilet articles others for use
until the mislaid baggage is recovered are usually accepted by insurers.
They however said the carrier has unlimited liability if it
is established that the carrier failed to issue a properly completed baggage
check or there has been willful misconduct on the part of the carrier or his
employees.
Conclusion
Apparently, knowledge and awareness of these will equip an
average traveller from Nigeria on his insurance rights and enable him or her
get his claims rights in the event of the unforeseen.
It will as well equip every Nigeria with the right knowledge
to make claims when the unforeseen that took the life of his relative happens.
But since this has not been the case because of passengers'
continued neglect of information at the back of their tickets, industry
watchers said insurers and their aviation clients should take up the
responsibility of educating the public on their insurance rights especially on
the need to read the rules on insurance written at the back of their air
passenger tickets.
The passengers have been advised not to see the information
at the back of their ticket as mere fulfillment of righteousness but to see it
as readable document that will keep them abreast of their rights as aircraft
passenger.
The Passengers are even advised to share this information with their family members for knowledge sake to equip them with knowledge of their rights when the unforeseen happens.
Read the original article on This Day.
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