Citation

Lin YH, Chang YH. Risk Anal. 2008; 28(2): 453-461.

Affiliation

Asia University, Department of Leisure and Recreation Management, Taichung County, Taiwan. yhlin1218@asia.edu.tw

Copyright

(Copyright © 2008, Society for Risk Analysis, Publisher John Wiley and Sons)

DOI

10.1111/j.1539-6924.2008.01036.x

PMID

18419661

Abstract

Aviation insurance premiums have become a heavy burden for the airline industry since September 11, 2001. Although the industry must constantly balance its operations between profitability and safety, the reality is that airlines are in the business of making money. Therefore, their ability to reduce cost and manage risk is a key factor for success. Unlike past research, which used subjective judgment methods, this study applied quantitative historical data (1999-2000) and gray relation analysis to identify the primary factors influencing ratemaking for aviation insurance premiums. An empirical study of six airlines in Taiwan was conducted to determine these factors and to analyze the management strategies used to deal with them. Results showed that the loss experience and performance of individual airlines were the key elements associated with aviation insurance premiums paid by each airline. By identifying and understanding the primary factors influencing ratemaking for aviation insurance, airlines will better understand their relative operational strengths and weaknesses, and further help top management identify areas for further improvement. Knowledge of these factors combined with effective risk management strategies, may result in lower premiums and operating costs for airline companies.

Language: en