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Company News

15 December 2004

Aeroflot to introduce amendments into insurance coverage in 2005

Before 2005, the year of changes of air risk insurance system, Aeroflot is to introduce a number of amendments into insurance coverage concerning responsibility to passengers and third parties.

Under the recent conditions in the aircraft industry when military risks including terrorism risks have become the most urgent and pose a real threat for passenger carriages the international market of aviation insurance is to introduce a new amendment AVN48C that excludes risks with hostile use of radioactive contaminants, chemical and biological materials and/or electromagnetic pulse appliances from insurance coverage concerning responsibility to passengers and third parties.

The afore-mentioned amendment is to be introduced as aviation insurance policies become effective after the official announcement of the community of aviation underwriters. In spite of the necessity to meet the requirements of international aviation authorities and leasers on providing insurance protection the current insurance coverage is to be cut as regards to the afore-mentioned risks.

In 2005 Decrees of the European Parliament and the Council of the European Union of April 21, 2004, on mandatory execution of the requirements on insurance of air carriers and aircraft operators are coming into effect; this is to result in significant increase of responsibility limits of the Russian carriers making flights to EU countries.

Aeroflot current policies of aviation insurance meet all the requirements of aviation authorities of the countries included into the airline company’s route system and in compliance with the requirements of Montreal Convention on increase of insurance responsibility of air carriers to passengers. Aeroflot responsibility limits meet also requirements of airline companies-partners on Code-Sharing Agreements; this has become especially significant on the background of the airline company joining Sky Team Global Alliance.

However as a result of changing requirements of the aviation authorities of European countries and changes on the international insurance market in 2005 most Russian airline companies may appear in a complicated state. Significant increase of responsibility limits to passengers and third parties (in several times for many companies) is to cause significant growth of the value of insurance protection and, as a result, air fares rise.

Aeroflot shares the opinion of International Civil Aviation Organization (ICAO) that acts of terrorism are pointed toward states, and airline companies and air traffic system are just used as a means. In this situation Russia’s Government is to pay attention to the necessity of Russian air carriers’ support providing them with the state guarantee on liability insurance on terrorism risks. Development and financial stability of the Russian civil aviation depends on RF Government decision.

Public Relations Department