Bounce me, nah...

This past week the press widely reported the accident at the airport where a service vehicle did extensive damage to a BWIA aircraft and at first blush the ordinary man in the street is likely to view this as a claim falling under a motor vehicle insurance policy. While it is dangerous to come to any definite conclusion without knowing all the facts as well as the circumstances surrounding the accident, it is very possible that the loss will not fall under a motor vehicle third party insurance policy. Firstly, the airport apron, the tarmac and such facilities will in all probability not be deemed a public road. All motor vehicles are required by law to have third party risks insurance in place as evidenced by the insurance certificate that you keep in your vehicle to be produced upon request by a police officer.

However, this third party risks insurance covers you against liabilities in the event you are in the wrong in an accident in accordance with the law while on a public road. Since the airport facilities are not deemed a public road, it follows that the third party insurance will not be applicable. In addition, the service vehicle may be used exclusively at the airport and therefore may not even carry any third party risks insurance as there is no need for the cover. However, there are rights and responsibilities under contract as maybe required for all service providers at the airport as well as common law liability where everyone has a duty of care. In simple language the entity that did the damage has a responsibility to make good and in this case the owners/operators of the service vehicle will be expected to pay for the cost of repairs to the aircraft.

However, BWIA’s losses may not only be the repair costs but given the nature of its operations, it would have scheduling problems and may even incur additional expenses in providing meals and accommodation to passengers resulting from cancellations and delays. The presentation of a claim for an accident of this kind is not a simple matter and loss adjusters will require full supporting documents and explanations before agreeing amounts. As far as the airline is concerned, any damage to the hull is a serious matter and the repairs must be carried out in a manner that will meet the satisfaction of the regulatory authorities so that the aircraft can be certified to return to service. Since the insurance is placed in the international market as this is a specialised class, it is not surprising that international loss adjusters will be appointed by the insurers and they will have to be flown in to assess the extent of the damage and approve the repair methodology and the costs. Insurance and risk management strategies are indispensable in today’s world.

Insurance is the mechanism to transfer risks to insurance companies so that they could spread them across a wide spectrum of risk takers while risk management strategies can be implemented in terms of safety and work practices in order to reduce risks. This is where the developed countries are way ahead of the developing world since they are able to inculcate a culture of safety from birth in their people whereas safety is of low priority in countries like ours. It is for this reason that matters of security and safety are issues that the general population pays little attention and they only do so “kicking and screaming.” Much can be learnt from the attitude and practice of foreign multi-nationals and clearly if we want to achieve developed country status within 20 years, we would do well to take a leaf from their book.

They do not tolerate substance abuse — drug and alcohol and part of their operating procedure is random testing neither are employees permitted in heavy industries to be seen without hard hats and boots. Too often, employees are not trained to appreciate the consequences of their actions or inactions and therefore they carry out their jobs unaware or disinterested in the financial or human costs. The insurance industry understands Murphy’s Law where if anything can go wrong, it will go wrong! Insurance is the only known way to transfer and spread risks without which commerce and business could not flourish but it also requires responsibility to minimise claims and this can be done by adopting safe working practices. However, insurance is also a complex business and it requires practitioners to be knowledgeable in understanding legal concepts, risks and how they can be managed in a cost/benefit strategy and the best way businesses can use the insurance system so that in the unlikely event that a major loss occurs, the business will survive.

As the business environment becomes more competitive in the face of globalisation, new issues will arise and therefore insurance advisers will have to increase their knowledge of risks and the treatment of those risks in new industries in order that they can be relevant to their clients. We must continue to learn every day and to keep abreast of developments here and elsewhere as the world around us changes at an alarming rate. It is for this reason that the insurance professional bodies have been advocating continuing studies and certification and this is applicable to all areas of life whether it is medicine, law or engineering as we must be abreast of new knowledge and information. Insurance is tied to the law and insurance companies always having to interpret circumstances to decide whether their policies provide the coverage so that they can respond to the claim. The population should seek professional advice at all times and so minimise the risk of not having the appropriate insurance coverage when a loss occurs.

E-mail: daquing@cablenett.net