The Binder; October 2015

VOL. 40 NO.3

THE BINDER 2015 london reception The premier aviation insuraNce association networking event!

Risk Retention groups: Not the answer for everyone and

aia education committee presents CII award also

GAO Report: OBSERVATIONS RELATED TO LIABILITY INSURANCE REQUIREMENTS AND COVERAGE FOR AIRCRAFT OWNERS

AIAWEB.ORG

IN THIS ISSUE 02

President’s message

04

agent/broker’s division report

06

education foundation CII award

RISK RETENTION GROUPS: NOT THE ANSWER FOR EVERYONE

08

aviation history

10

attorney’s division report

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THE AIRPORT NOISE PROBLEM

GAO REPORT: OBSERVATIONS RELATED TO LIABILITY INSURANCE REQUIREMENTS AND COVERAGE FOR AIRCRAFT OWNERS

PERSONAL JURISDICTION IN A MONTREAL CONVENTION CASE

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20

RIDING THE WAVE

ADJUSTING FIRE LOSS CLAIMS: DON’T GET BURNED!

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30

Underwriters report

the right stuff:

claims division report

aia board of directors

back to basics:

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2015 London conference

32

Crossword puzzle

WHAT IS YOUR SMS MISSING?

Editor Nigel Wright

Catlin Underwriting Agencies, LTD nigel.wright@catlin.com

The ideas and opinions expressed by authors of articles published in The Binder are wholly their own and do not necessarily represent those of the Aviation Insurance Association.

WWW.AIAWEB.ORG

Published by the Aviation Insurance Association 7200 W. 75th St. Overland Park, KS 66204

PRESIDENT’S MESSAGE

david sales - CGNMB LLP

W

e are now entering the last quarter of 2015, the time of year when many of us in London, and elsewhere, of course, become particularly busy, manically so even!

Three quarters of the world’s airline renewals occur now, and in addition, there are a number of other major risks that elect to have a January 1st inception date.

The beginning of the year is also a popular time for reinsurance renewals just to add to the melee.

So whilst everyone else is out enjoying the seasonal festivities, many of us will be in meetings or stuck sitting at our desks, working our socks off and not having much fun.

I must admit; I cannot pretend that there is much to cheer about in the aviation insurance industry at the moment. The worldwide market remains an exceptionally tough environment for all.

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The prolonged soft market cycle, caused by the superabundance of capacity, means that the downwards market direction is likely to persist for some time to come. In addition, new entrants continue to clamber into the market as composite insurers seek to diversify further into other lines of specialty business, such as Aviation.

In the past, the airline sector of the market tended to set the tone for other aviation business lines, but as margins on the airline book have disappeared, insurers are increasingly altering their focus on to the Aerospace and General Aviation market segments, attracted by the prospect of better returns. Consequently, all aviation insurance sectors have been impacted by the over-supply of capital, and it seems that, in the absence of any major events, the market conditions will continue to be extremely favorable for buyers.

However, I do not think that anyone involved believes that this position is sustainable. An absence of catastrophes has benefited short-term profits, but the longer term outlook is gloomier. This, at some point, will inevitably lead to

more downsizing and consolidation of the number of units trading in the market.

Not that downsizing is new to the aviation market.

In recent years, brokers have been doing so with gusto, but up until now, any downsizing has largely been confined to the brokerage community.

However, with the premium base not forecast to rise significantly any time soon, insurers too will have to focus on reducing the direct costs that are within their control.

I do worry that another consequence of a soft market is, with a few exceptions, a temptation to scrimp on training anyone new coming into the industry. The basic training that does take place tends to be regulator led and is inclined to concentrate on mainly compliance type issues, such as the rules on money laundering, sanctions, bribery and corruption, data protection, etc. These are all important topics, I know, but I have a significant concern that aviation insurance specific technical knowledge is being overlooked, and this is detrimental for the future.

In addition we are seeing, in an effort to reduce costs and increase efficiency, many aviation classes of business being commoditized and placed under broker facilities. This can easily lead to a diminished need for technical input on a riskby-risk basis. The danger is that as more and more classes of business become commoditized in this way, the real expertise base will quickly disappear. We would all agree that the time of a claim is the wrong time to start focusing on the coverage detail.

Having a strong technical ability is even more necessary in a soft market as an important differentiator for brokers and insurers alike. Encouragingly, however, in the London market, the expectation now is that anyone coming into the business from college or university will take some kind of professional insurance qualifications, such as the Chartered Insurance Institute exams.

We now live in a regulatory and compliance environment where qualifications are becoming increasingly necessary to demonstrate a level of expertise. While there is no substitute for experience, the fact that you have been working in the industry for 20 years does not impress the regulator as proof of adequate proficiency.

This is obviously where our Aviation Insurance 101 courses and the CAIP qualification have a key role. The CAIP designation is gaining considerable support and approbation throughout the U.S. as the “must have” Aviation Insurance qualification, but I see absolutely no reason why its appeal should not be extended worldwide.

We should be extremely proud of our education initiatives, and I commend all those involved who are committing substantial time and energy in advancing them.

Even though it is coming into the busy time, I do hope that as many as possible have time to at least attend and enjoy one event: the AIA London Reception on November 5th.

The program is shaping up superbly. We are delighted to welcome Inga Beale, the Chief Executive of Lloyds of London, to open the reception and then to have a presentation from Nick Brown, CEO of Global Aerospace. Our third speaker is Mark Searle who is the Strategic Safety Programmes Lead for the UK Civil Aviation Authority. This will all be followed by the usual cocktail reception allowing for excellent networking opportunities.

The date of the reception this year coincides with ‘Guy Fawkes’ night in England, an annual commemoration of the foiling of the Gunpowder Plot to kill King James I in 1605. We traditionally celebrate by burning the effigy of Guy Fawkes, one of the plotters, on bonfires across England and by letting off fireworks.

I cannot promise any pyrotechnics at our November 5th reception, but hopefully that will not stop us from enjoying a sparkling event. So as the old English folk verse goes, “Remember, remember the fifth of November” and sign up now for the London reception!!!

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Risk Retention Groups = Not the Answer for everyone

Luke Uithoven - Kimmel Aviation Insurance Agency, Inc.

M

y name is Luke Uithoven, and I have been an agent in the aviation insurance business for the past eight years, working with Frank and Dorothy Kimmel at Kimmel Aviation Insurance Agency, Inc. In those years, I have joined the Aviation Insurance Association, served on the Education Committee within the AIA, and was selected as the Director-Elect of the Agents and Brokers Division at the AIA conference in May 2015. I am honored to accept this position and am very excited to take on this task of being a representative and voice for the Agents and Brokers group. I look forward to working with

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the current Director, Jon Doolittle, and the Board of Directors as a whole for the next couple of years.

After our Agents and Brokers meeting in May at the Broadmoor, one of the major takeaways from the meeting was, “How do we distinguish between Risk Retention Groups and real insurance?”

Obviously, we all like to save money.

However, is it worth it to try to save a

little more and place your livelihood with a Risk Retention Group that is not technically “real” insurance? These groups do not have billions, yet alone hundreds of millions, in reserves to pay claims. I am not a scientist, actually very far from it, but this does not seem like a wise investment.

Every couple of years, we see Risk Retention Groups pop up in order to

“How do we distinguish between Risk Retention Groups and real insurance?”

provide an “insurance solution” for certain facets of our industry. In the last 10 years, we have seen an Ag Aircraft Risk Retention Group and most recently a group for Repair Stations. Even though there are others out there, these groups are on the forefront of our minds. This Repair Station Group seems to be the one that is bothering us the most these days. The Ag Risk Retention Group vanished from the radar almost as fast as it appeared. When one of the agents in our group meeting brought up the repair stations, there was a resounding moan throughout the 30 or so agents in the room. We are all dealing with groups like this, unfortunately, more often than we would like.

The Risk Retention Groups are interesting, because even though they cost about the same, if not more, than a “real” insurance policy, they have more restrictive policies and coverage. They seem to promise the world.

First, when it comes to cost, these groups sell the idea of “control and ownership of liability insurance” to a potential insured. Sure, you own your policy when you are required to put in 30% of your initial annual premium as a joining fee. However, the annual premium would be approximately the same as

agent/broker division report

obtained from the commercial insurance marketplace. Where are the real savings in this situation? Second, take into consideration what may happen if there were multiple large claims in one year.

As a member, you could be “assessed” up to 100% of your annual premium on top of the premium that you already paid just to cover the claims and keep the group solvent.

Third, your client should consider the possibility of high legal and defense costs that follow potential claims. Those costs are inside the policy limit, not addition to as in typical markets, so the low limits of coverage that they are able to purchase are decreased at an expedited rate. Fourth, a group policy aggregate applies when a claim involves more than one insured in the group, hence another depletion of liability coverage. Lastly, but surely not the least, the Risk Retention Group policy states the following, “In consideration of payment of premium and in reliance upon the statements made in the application and its attachments and any materials submitted therewith, all of which are made a part hereof”. An incorrect or inaccurate answer on the application could ultimately lead to the group denying the claim.

These five points are serious substantial issues for our clients to think about before chasing after a “potential” cheaper premium.

While there are more points that can be made regarding Risk Retention Groups, the main issue to emphasize to our clients is that it is not real insurance. Regardless of the size of the repair station, a little over 1 million net surplus for the group is not enough to pay all of the potential claims.

Unfortunately, our industry will continue to see these impractical ideas thrown at our clients day after day. Some days it may be a struggle to reaffirm what “real” insurance is with our clients, but at least we know that this group will not have the ability to sustain solvency and will ultimately ride off into the sunset along with their predecessors. Since the May convention, I have received a flurry of emails and information on these specific types of groups and will be happy to share these points in a more bulleted format to any agent or broker who is dealing with this issue.

I would like to thank the agents who contributed information from their dealings with these Risk Retention Groups, and hopefully the rest of us will now be more equipped to fight that same battle.

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Jamie Laverick Earns AIA Prize for CII Exam The Aviation Insurance Association Education Foundation is pleased to award Jamie Laverick the 2015 AIA Education Foundation prize for earning the highest score on the CII aviation exam.

The prize is £1000 and is only open to candidates employed in aviation insurance who have passed unit P91 ‘Aviation and Space Insurance’.

In addition the CII Prize, the Foundation provides four (4) $2,500 scholarships each year to students who are currently enrolled in an accredited undergraduate or graduate degree program and who have completed or are completing an internship program within the aviation insurance industry. The scholarship was formed in order to help him or her alleviate financial strain while expanding their professional knowledge and education.

If you have interns who you feel would benefit from this scholarship, please complete the application located on the AIA Website or contact Mandie Bannwarth at AIA Headquarters at 913-627-9632.

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The Airport Noise Problem

alexander t. wells, ed.d - AIA Education Consultant

A

rguably, the most significant environmental impact associated with airports is that of the noise that emanates from aircraft operators. Conflicts between airports and their neighbors have occurred since the early days of aviation, but airport noise became a more serious issue with the introduction of corporate and commercial jet aircraft in the 1960s. Citizens living around airports often complain that airport-related noise is annoying, particularly during the spring and summer months when windows are open. Noise disturbs sleep, interferes with conversations, and generally distracts from the enjoyable use of property. There is increasing evidence that high exposure to noise has adverse psychological and physiological effects and that people repeatedly exposed to loud noises might exhibit high stress levels, nervous tension and inability to concentrate.

A trend that has intensified the noise issue in recent decades is the increased encroachment around airports. As more people come to live in noise impact areas, the opportunity for annoyance increases. Equally important, the public has become more sensitive to the issue, and it has become highly politicized. Airport neighbors have sued airports for mental anguish as well as the reduced property values related to noise exposure. The CGL, OLT and hull and liability policies do not cover bodily injury or property damage arising out of aircraft noise, which incidentally also includes sonic boom.

Even though aircraft are the source of noise at airports, aircraft operators are not liable for damage caused by noise.

The courts have determined that the sole legal liability for

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aircraft noise rests with the airport operator. Balancing their extensive exposure to liability claims and the bad publicity associated with it, airport operators have some authority, albeit limited, to control the use of the airports in order to reduce noise. Further, no airport may impose a restriction that unduly burdens interstate commerce. The term “undue burden� is not precise, and restrictions at individual airports must be reviewed on a case-by-case basis. Restrictions must be meaningful and reasonable; a restriction adopted to reduce noise should actually have the effect of reducing noise. Finally, local restrictions must not interfere with safety or the federal prerogative to control aircraft in the navigable airspace.

Airport operators have adopted noise abatement and mitigation measures so as to minimize their liability and protect themselves in legal proceedings. They can undertake noise compatibility studies to determine the extent and nature of the noise problem at a given airport. Noise exposure maps can be drawn indicating the contours within which noise exposure is greater than a permissible level. These maps allow identification of non-compatible land uses within those contours and assists in developing a plan for mitigating present problems and preventing future ones. Unfortunately, the operator’s ability to prevent future problems is very limited. Unless the airport actually owns the land in question, the authority to make sure it is reserved for compatible use is usually in the hands of a municipal zoning commission.

Many commercial and some larger reliever and general

aviation airports use noise monitoring equipment and towers off airport property to measure noise over designated flight paths. Low flying violators are sent a letter of reprimand at first, followed by stiff fines. This activity is monitored by a noise abatement officer.

Most of the following noise abatement programs allowed under current legislation are eligible for federal aid: • Take-off and landing procedures to abate noise and preferential runway use to avoid noise-sensitive areas which must be developed in cooperation with and approved by the FAA. • Construction of sound barriers and sound-proofing of buildings. This can include sound-proofing windows and doors in private homes and businesses off airport property.

• Acquisition of land and interests therein, such as easements, air rights, and development rights to ensure uses compatible with airport operations.

• Complete or partial curfews.

• Denial of airport use to aircraft types or classes not meeting federal noise standards.

• Capacity limitations based on the relative noisiness of different types of aircraft.

• Differential landing fees based on FAA-certified noise levels or on-time arrival and departures.

aviation history

The FAA provides assistance to airport operators and air carriers in establishing or modifying flight paths to avoid noise-sensitive areas. In some cases, aircraft can be directed to use only certain runways, to stay above minimum altitudes, or to approach and depart over lakes, bays, rivers, or industrial areas rather than residential areas. Procedures might be developed to scatter the noise over several communities through some “equitable” rotation program. These noise abatement procedures might have a negative effect on airport capacity at the large commercial airports. They might require circuitous routing of aircraft or use of a runway configuration that is less than optimum with respect to capacity.

In addition to noise abatement programs, airport management must maintain good public relations with the businesses and homeowners in the surrounding neighborhood. Keeping neighbors apprised of present and future airport construction and noise suppression developments can make the public feel that their concerns are being recognized. Some airports send newsletters to the community and attend homeowner meetings to alleviate public fears and concerns. These types of activities can naturally forestall or eliminate any possibility of a class action liability suit by disgruntled members of the community.

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GAO Report: Observations Related to Liability Insurance Requirements and Coverage for Aircraft Owners

Deborah Elsasser - Director- attorneys’ division

Y

ou may recall that earlier this year we disseminated a questionnaire from the U.S. Government Accountability Office (“GAO”) regarding a study the GAO had been asked to conduct by the U.S. Senate Committee on Commerce, Science and Transportation relating to a proposal for enacting a federal liability insurance requirement for GA aircraft owners. Several AIA members responded to the inquiry and the GAO has now released its report and analysis. The report discusses the responses GAO received from various industry stakeholders and the pros and cons of attempting to establish a federal insurance requirement.

owners – 11 states currently have some type of insurance or financial responsibility requirement with respect to aircraft owners and operators, but only Minnesota sets a minimum level of insurance for nearly all GA aircraft owners ($100,000 per passenger seat). As expected, the survey revealed that the most common types of coverages are $1 million per occurrence with a $100,000 passenger sublimit and $1 million “smooth,” and that premiums within each category vary depending on the characteristics of the particular aircraft, as well as pilot experience. The study found that policies with higher coverage amounts are not prevalent in the marketplace.

The GAO surveyed state aviation officials (particularly those states that impose an insurance requirement), aviation insurance brokers, insurance companies, GA industry associations, attorneys specializing in GA accident litigation, and FAA and NTSB officials. The following is a summary of the GAO’s study into the feasibility and costs associated with adopting federal liability insurance requirements for GA aircraft owners.

From the interviews conducted, the GAO identified the following key factors in considering whether to enact a federal GA liability insurance requirement: (1) costs borne

by GA aviation accident victims and the public; (2) the extent to which GA aircraft owners or operators do or do not have liability insurance; (3) the cost impact of a federal insurance requirement; (4) issues arising from the implementation and administration of a federal aviation insurance requirement; (5) potential public safety benefits.

The GAO concluded that the majority of states do not have mandatory liability insurance requirements for GA aircraft

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The driving force behind the study appears to be the

attorney’s division report

concern voiced by several aviation attorneys that there is often inadequate insurance to cover air crash victims’ medical expenses. The proponents of a federal GA insurance requirement argue that the additional insurance would help shift some of the costs currently borne by accident victims and the public. In examining the issue, the GAO was unable to collect sufficient data to quantify the extent to which GA aircraft owners and operators have insufficient (or no) insurance. The report notes that the prevailing view of industry representatives (based on interviews of GA associations and state aviation officials), is that the majority of owners and operators carry liability insurance. While the aviation attorneys interviewed did not disagree that many owners carry insurance, the attorneys argue that the passenger sublimits are often inadequate given the magnitude of injuries and property damage resulting from aviation accidents.

According to the report, the FAA does not collect GA accident data regarding the frequency of accidents with third-party damages and the magnitude of such damages. While such information would be helpful to the analysis, the report concludes that various suggested methods of collecting such information (i.e., through the FAA aircraft registration process, through annual surveys to GA owners/operators, or as part of GA accident investigations), would not be cost-effective or reliable.

Many expressed concern that mandatory insurance may drive individuals out of aviation. Aviation attorneys responded that mandatory insurance could positively impact safety, while NTSB officials questioned any direct link between liability insurance and safety. Finally, state aviation officials emphasized that any mandatory insurance program should be addressed and implemented on the state level.

In all, GAO spoke with 73 stakeholders in the GA community.

GAO’s report did not make any recommendations, but rather, simply reported the results of its interviews with GA industry stakeholders. GAO has sent the report to the Senate Committee on Commerce, Science and Transportation. The full report can be accessed here. (online version of the Binder only).

Update: Pilot Medical Reform Legislation (Pilot’s Bill of Rights 2) Gains Additional Support In the last issue of the Binder, we reported on the Pilot’s Bill of Rights 2 that was introduced in late February into both the House of Representatives (H.R. 1062) and the Senate (S. 571), to amend the Pilot’s Bill of Rights. At that time, the House Bill had 109 co-sponsors. In March, the Bill was referred to the Subcommittee on the Constitution and Civil Justice, and as of September 20, 2015, the House Bill has 140 co-sponsors (124 Republicans, 16 Democrats).

While most insurance providers expressed the view that insurance for GA owners and operators is generally available and there is capacity to offer additional liability insurance coverage if required, some stakeholders raised concern about the potential additional costs and impact on the GA community.

attorney’s division report

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Back to Basics:

Personal Jurisdiction in a Montreal Convention Case

Barry S. Alexander - Schnader Harrison Segal & Lewis LLP

Julie Randolph - Schnader Harrison Segal & Lewis LLP

O

ver dinner with the General Counsel for a major international carrier, the GC started discussing a Montreal Convention1 claim he expected would soon be placed into litigation. He anticipated that litigation would be brought in Indiana, and expressed consternation over the fact that litigation would proceed there, despite the fact that the claim had no relation to Indiana (or the United States in fact) other than that the plaintiff resided there. I asked whether he had considered seeking early dismissal based on a lack of personal jurisdiction; in response, he admitted that he had not because (1) personal jurisdiction is not a defense he generally thinks about in Montreal Convention cases, and (2) the airline flies to/from Indiana (although no flight to/from Indiana was related to the claim).

As we discussed at that meal, while a lack of personal jurisdiction historically has not played a major role in Montreal (or Warsaw) Convention cases, carriers should not forget the defense entirely and may even want to put it on their speed dial in light of recent Supreme Court precedent.

The jurisdictional inquiry in Montreal Convention cases begins with a determination of whether treaty/subject matter jurisdiction is proper, pursuant to Article 33 of the Convention.

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Like Article 28 of the Warsaw Convention before it, Article 33(1) of the Montreal Convention sets forth four fora in which any action may be brought: 1.

2.

3.

4.

The domicile of the carrier; The carrier’s principal place of business; A place of business through which the contract for transportation was made; and The destination of the transportation.

The Montreal Convention then adds the passenger’s principal residence as a fifth forum for injury/death actions, provided that the carrier operates flights and leases or owns premises there, or does so through another carrier with which it has an agreement. Art. 33(1), (2). If none of these locations are within the United States, a United States court “lacks treaty subject matter jurisdiction and must dismiss the case.” Weinberg v.

Grand Circle Travel, LLC, 891 F. Supp. 2d 228, 237 (D. Mass 2012).

A finding of treaty/subject matter jurisdiction does not, however, end the relevant inquiry. Rather, courts have held that there must be personal jurisdiction over a carrier even where treaty/subject matter jurisdiction is proper. See, e.g., Smith v.

Canadian Pacific Airways, Ltd., 452 F.2d 798, 801 (2d Cir. 1971); Bobian v. CSA Czech Airlines, 222 F. Supp. 2d 598, 602-03 (D.N.J. 2002). The question of personal jurisdiction is analyzed under domestic law. See, e.g., Bobian, 222 F. Supp.

2d at 603 (citing Romero v. Aerolineas Argentinas, 834 F. Supp. 673, 678 (D.N.J. 1993)).

Despite the requirement that personal jurisdiction be present, this defense has rarely been litigated in the context of a Convention case for a number of reasons. For one, the Convention’s jurisdiction provision permits litigation in the United States only where there is some relationship between the U.S. and the carrier (domicile, principal place of business, or place where carrier conducts services if the passenger resides there) or transaction (place where contract was made or destination of the transportation).

Moreover, cases generally are brought in the state where the plaintiff/passenger resides or purchased the ticket, or where the origin/destination of the transportation is located. Finally, even where there is no obvious connection between the transportation itself and the

industry news

state in which litigation is commenced, the idea of challenging personal jurisdiction has often been eschewed based on the carrier’s operations to/from the state, or maintenance of an office in the state, which historically might have been deemed sufficient to support a finding of general jurisdiction. See, e.g., Eck v. United Arab Airlines, 360 F.2d 804, 811 (2d Cir. 1966) (finding general personal jurisdiction in Warsaw Convention case based on carrier’s maintenance of a New York office that forwarded reservations it received to the home office, engaged in promotional activity, and issued tickets and collected fares); Luna v. Compania Panamena de Aviacion, 851 F. Supp.

826, 833-34 (S.D. Tex. 1994) (finding no general personal jurisdiction where carrier had contacts with state through travel agent and 1-800 telephone numbers, but did not have an office in, or fly to/from, Texas).

Despite the requirement that personal jurisdiction be present, this defense has rarely been litigated in the context of a Convention case...

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The recent change in climate for personal jurisdiction in the United States, however, suggests that airlines might want to revisit the viability of this defense in the context of Convention claims. In the past few years, the United States Supreme Court has issued a number of important decisions on the subject of personal jurisdiction. For example, the Court’s decisions in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011) stressed that general jurisdiction may be exercised “only when the corporation’s affiliations with the State in which suit is brought are so constant and pervasive ‘as to render [it] essentially at home in the forum State.’” Daimler, 134 S. Ct. 751, 758 n. 11 (quoting Goodyear, 131 S. Ct. 2851). The Court added in Daimler that, although it did not hold in Goodyear that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business, “it ... typed those places as paradigm all-purpose forums.” Id. at 760.

Many believe that these decisions reflect a purposeful shift by the Supreme Court to narrow the scope of general personal jurisdiction, although the Court’s decisions do not themselves indicate that they are meant to represent any change in the law. Regardless, there is a discernible trend of lower courts more frequently granting motions challenging general personal jurisdiction in the wake of these decisions than they did in the past. Accordingly, in the past a carrier’s operation of flights to/ from a state, or maintenance of an office in a state through which it issued tickets and collected fares, might have been deemed sufficient to support a finding of general personal jurisdiction.

That no longer is the case, and a personal jurisdiction defense should now be considered in these circumstances.

-there is a discernible trend of lower courts more frequently granting motions challenging general personal jurisdiction in the wake of these decisions than they did in the past.

Of course, even where there is no general personal jurisdiction, the carrier must also demonstrate that there is no specific personal jurisdiction. Where the plaintiff resides in the state where litigation was commenced, and traveled to/from that state, it may be difficult to succeed with a personal jurisdiction defense. Where the sole basis for specific personal jurisdiction is the purchase of tickets, especially an online purchase,

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industry news however, the law is not so clear.

The Supreme Court’s recent forays into specific personal jurisdiction do not set forth a clear standard to apply to online ticket purchases but, like the general jurisdiction decisions, they appear to evidence a march toward a more conservative approach to personal jurisdiction. In J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011), a plurality (four Justices, one fewer than the five needed for a majority) of the Court held that simply placing a product in the stream of commerce would not permit the exercise of specific personal jurisdiction, unless the defendant could be said to have targeted the forum; as a general rule, the plurality added, it would not be sufficient that the defendant might have predicted that its goods would reach the forum state.

By further narrowing the bases for personal jurisdiction, Walden encourages courts to err on the side of dismissal when faced with a defendant’s inadvertent or tenuous connection to the forum state.

Unfortunately, the impact of the Supreme Court’s fragmented decision in Nicastro is somewhat limited because a plurality’s decision does not constitute the holding of the Court. Rather, a more narrow (i.e., less impactful) concurring opinion serves as the formal opinion of the Court. Nevertheless, the opinion followed the Court’s recent trend of narrowing personal jurisdiction and certainly did not render manufacturers more susceptible to specific personal jurisdiction in the U.S. This trend continued with the Supreme Court’s subsequent decision in Walden v. Fiore, 134 S. Ct. 1115 (2014), which examined the “minimum contacts” required for a finding of personal jurisdiction under the Fourteenth Amendment’s Due Process Clause.

In Walden, the court explained that these minimum contacts “must arise out of contacts that the ‘defendant himself ’, creates with the forum State,” and that the contacts examined are those “with the forum States itself, not the defendant’s contacts with persons who reside there.” The Walden court, however, expressly declined consideration of “the very different questions whether and how a defendant’s virtual ‘presence’ and conduct translate into ‘contacts’ with a particular state,” leaving courts (and parties) without needed guidance in those situations.

Although the Court expressly declined to address the “very different questions” of internet transactions in Walden, this decision has important favorable implications for online and

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industry news out-of-state businesses alike. By further narrowing the bases for personal jurisdiction, Walden encourages courts to err on the side of dismissal when faced with a defendant’s inadvertent or tenuous connection to the forum state. It is in this context that the circumstances in which an airline can successfully assert a defense to specific personal jurisdiction in a Montreal Convention case should be analyzed.

The analysis of specific personal jurisdiction begins with the relevant state’s long-arm statute, and each state has its own body of case law governing the circumstances under which internet sales (i.e., online ticket purchases) can form the basis for specific jurisdiction. While the relevant analysis therefore varies somewhat state-by-state, some general guidance can be taken from the cases: • Where a passenger purchases tickets directly from a carrier’s website using a home computer, this likely will provide a sufficient contact between the carrier and the state. See Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997) (stating, in the leading case on internet contacts and personal jurisdiction, that “[a]t one end of the spectrum are situations where a defendant clearly does business over the Internet,” such as entering into a contract over the internet with the plaintiff, thus conferring personal jurisdiction). Even in this situation, however, all hope may not be lost, as at least one court has suggested that where the fact of a ticket sale did not give rise to the plaintiff’s injury (such as a death due to allegedly negligent aircraft maintenance and operation), the ticket sale does not embody the proximate cause necessary to confer specific jurisdiction. Luna v. Compania Panamena de Aviacion, 851 F. Supp. 826, 832-33 (S.D. Tex. 1994).

• Where a passenger purchases tickets online through a third party (e.g., Expedia, Orbitz), courts are less likely to find that there are sufficient “minimum contacts” to support specific personal jurisdiction. See, e.g., id. (finding that ticket sales by another airline pursuant to an interline agreement are insufficient to confer specific jurisdiction); Ragonese v. Rosenfeld, 722 A.2d 991 (N.J. Super. Ct. Law Div. 1998) (refusing to find personal jurisdiction over defendant Aerolineas Argentinas where the airline ticket was purchased from a travel agent and Aerolineas’s internet page did not sell tickets or otherwise direct itself at New Jersey residents); Rao v. ERA Alaska Airlines, 22 F. Supp. 3d 529 (D. Md. 2014) (finding that the plaintiffs buying tickets on the defendant airline through Expedia did not demonstrate that the defendant intended to engage in business in Maryland, and so

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industry news the Maryland District Court lacked personal jurisdiction over the defendant); but see Yaldo v. Homeric Tours, Inc., No. 13cv-13367, 2014 U.S. Dist. LEXIS 165680 (E.D. Mich. Nov. 26, 2014) (in a non-Convention case, suggesting that jurisdiction over the defendant cruise company may be appropriate in the state where the authorized third-party ticket vendor is based and sold plaintiff’s ticket).

Again, no definitive cases exist for when internet ticket sales confer specific jurisdiction in a Montreal Convention case. Nevertheless, based on the cases decided to date, in conjunction with the recent Supreme Court trend of narrowing personal jurisdiction, carriers should not assume that an online ticket purchase will be sufficient to support specific personal jurisdiction.

In sum, although the dinner referenced in the opening paragraph was highlighted by great food, it also included some food for thought: the defense of personal jurisdiction has largely been forgotten in the context of Montreal Convention cases, and it should not be. Recent case law has made personal jurisdiction an increasingly important tool for airlines, and it should be added to the checklist of defenses to be evaluated at the onset of all new cases.

1. (Convention for the Unification of Certain Rules for

International Carriage by Air, presented in Montreal on 28 May 1999, ICAO Doc. No. 9740 (entered into force November 4, 2003), reprinted in S. Treaty Doc. 106-45, 1999 WL 33292734 (hereinafter “Montreal Convention”)

About the Authors Barry S. Alexander is a partner in the New York office of Schnader Harrison Segal & Lewis LLP. Barry has been practicing for almost 20 years, and his aviation practice includes the representation of airlines and aircraft, engine and component product manufacturers in state and federal courts throughout the United States. Barry received his Bachelor of Science from Cornell University, and his Juris Doctorate from Duke University School of Law. Julie Randolph is an associate in Schnader’s Philadelphia office. She has been practicing for seven years, with a focus on aviation, products liability and class actions. She received a Bachelor of Arts and Master of Science from the University of Delaware and her Juris Doctorate from New York University School of Law.

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riding out the wave Ernest De SPAIN - W. Brown & Associates

I remember being caught in a mountain wave as a young novice pilot. I was flying a Cessna 182, which seemed to go only in one direction—down!

Fortunately, with a little altitude to spare, the downward air dissipated, and I was able to establish a positive rate of climb. Life and business can be filled with unexpected waves.

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underwriters report

Every industry experiences cycles of expansions, contractions, downward and upward movements. Our business is no exception.

Aviation insurance cycles tend to be unpredictable. Often, they do not follow the cycles and trends of other insurance lines or financial markets. Although no two cycles in aviation insurance are the same, they are generally placed into one of two categories, the soft or hard market. Trying to analyze the trends and theories as to when and why the cycles occur would make for a challenging business course.

A soft market includes broader coverage, increased competition and capacity between companies, lower insurance premiums, and reduced underwriting requirements.

Soft markets invariably lead to increased competition, as more companies enter into the market competing for the same risks.

Competition places pressure on pricing, causing premiums to decrease. To compete, companies provide broader terms and expand coverage. Ultimately, rate reductions and lower premium volume There are several identifying characteristics to each market. A hard affects a company’s bottom line. A company relies on the combination market includes reduced capacity, when a company limits the amount of premiums, and investments of those premiums, to make money. of exposure they have in a given line or type of risk; higher premiums; Soft market underwriting focuses on production volume to attain a less competition among carriers; and stringent underwriting market share. This pricing scenario becomes inadequate to justify the requirements. real cost of doing business. Insurance carriers may be the facilitators of the lower pricing, but brokers/agents are the sentinels who control Following the events of 9/11, the aviation insurance business entered the gates. into a hard market. During a hard market, underwriters have higher training and qualification requirements, or may require participation Success through any market cycle requires a long term view, strong in safety programs. Premiums on all aviation lines are increased, relationships, and a focus on quality and patience. A positive attitude and companies limit the types of aviation risks. Caps are placed on is successful in riding out any wave. the amount of exposures in a particular category and become more selective of the classes and lines they are willing to write. Underwriters become more sophisticated and look closely at claims, loss history, loss frequency, and ratios.

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ADJUSTING FIRE LOSS CLAIMS: DON’T GET BURNED! Moris Davidovitz - Davidovitz + Bennett law firm

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ooner or later, the aviation claim professional will face response to a significant fire loss, involving a first-party and/ or third-party claim. An insured aircraft may be destroyed in a hanger fire. A fire may arise on FBO premises, damaging property and/or persons. Issues of structural elements, and the operations of contractors, tenants, lessees, and such will likely be involved. Immediate decisions will need to be made in investigating and determining where (“origin”) and how (“cause”) the fire took place--decisions which may significantly affect liability determinations. A

liability claim for insurance policy limits may later be presented, accompanied by the report of a local fire department indicating the cause was due to the operation of your insured. A potentially responsible party may assert a defense of spoliation of evidence based on adjustment efforts associated with clean up of fire debris before preserving the evidence of the scene and its critical components.

When this happens, do you know enough not to get burned?

Decisions made at the outset of the claim will affect the successful handling of the claim. So when you don’t know what you do not know about the subtleties of fire loss claims, problems are sure to arise. For instance, could you confidently answer the following types of questions?

• What are the industry standards for collection and preservation of fire physical evidence?

Should I give notice to potentially responsible parties and allow

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claims division report access to the scene before clean-up efforts? When and what physical items should be preserved and tested?

The NFPA (National Fire Protection Association) 1033, Standards For Professional Qualifications For Fire Investigator, includes such matters as documenting the scene and evidence collection and preservation. The ASTM (American Society for Testing and Materials) E11, Standard Practice for Collection and Preservation of Information and Physical Items by a Technical Investigator, and ASTM E860, Standard Practice for Examining and Preparing Items that Are or May Become Involved in Civil or Criminal Litigation, are also useful for consideration. An insurance professional will face a dilemma; on the one hand, proceeding with cleanup and repair efforts, and on the other hand, providing potentially responsible parties the opportunity to inspect and document what may well be determined to be the most important piece of evidence – the scene.

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What are the standards for the necessary scientific method for the fire investigation? What are the standards for developing reliably based expert opinions on the origin and cause of the fire? How do I go about developing evidence that will hold up against court challenges?

NFPA 921 is now considered to “set the bar” for scientificbased investigation and analysis of fires and explosions. Where specific equipment may be involved (such as fire suppression systems, cooking ventilation systems, propane tanks, etc.), additional published industry-based standards need to be considered. Failure to carefully guide the investigation and the development of expert opinions may result in a court exercising its “gatekeeper” function to bar evidence of an offered theory, methodology, or opinion that the court determines is not a scientific-based investigation analysis of fires and so does meet a legal threshold for evidence to be relied upon by the fact finder at trial [the “Daubert” or “Kelly/Frye” standards].

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Does a report by the local fire department stating the cause of the fire establish the responsibility?

Fire investigation is a complex process, involving decisionmaking on sophisticated scientific factors, such as thermodynamics, computer fire modeling, and fire chemistry [to name a few: NFPA 1033 details minimum performance requirements for a fire investigator]. Local municipal fire inspectors may not meet these performance requirements, or as a practical matter in the absence of a death, arson or such

photo by ursin camenisch

a circumstance may not devote investigation resources to establish origin and cause according to the principles in NFPA 921.

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Can I determine the fire’s origin by finding the area of the greatest burning inside the structure?

Not necessarily. For indoor fires, it is necessary to consider the phenomenon of “flashover”, where a fire in an enclosed space transitions from burning fuel to ignition of surfaces exposed to heat transfer, resulting in rapid spread of fire through the enclosed space, and expansion from openings in the enclosed compartment [See NFPA 921]. Factors come into play in the pattern of spread, notably ventilation (available oxygen). So, once that flashover transition occurs, there are changes in interpreting the evidence of the burning. A recent experiment with fire investigators revealed a high rate of error in the investigators’ opinion of the area of origin of a post-flashover fire. (See, Lentini, “The Evolution of Fire Investigation and Its Impact on Arson Cases”, Criminal Justice, Volume 27, Number 1, Spring 2012. © 2012 by the American Bar Association).

Such considerations are illustrated in the following case studies of some litigated fire liability claims with which I have been involved:

Case Study 1

An insurer brought a subrogation action against a contractor who installed an appliance at a home, at the outset making a settlement demand for the contractor’s liability insurance policy limits. The insurer claimed the contractor did not follow

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warnings in the manufacturer’s installation instructions.

Through investigation and discovery, we developed an alternate theory for the cause and origin of the fire: electric wires in the heavily fire-damaged attic space above the area the insurer claimed was the area of origin, and an adjacent audio-visual system, where according to household staff interviews, there had been a burning smell days before the fire.

Deposition of the fire investigator revealed the investigator had not inspected either the AV system or the wires in the attic [let alone conducted an “arc mapping” of the wires]. Essentially, he did not inspect, because he had determined that arson was not involved and no one was injured. We asserted that the insurer failed to preserve evidence of these electrical components. We debunked the insurer’s causation claim that the appliance had over time lowered the ignition temperature of wood framing inside a wall [a theory of “pyrolysis”/”pyrophoric carbon”], by finding an expert who had studied pyrophoric carbon, building an exemplar mock-up of the appliance in-situ and then conducting tests under industry standards for testing heat emitted from such an appliance. Our depositions of the appliance manufacturer established that the manufacturer’s promulgation of installation instruction warnings was such that the manufacturer could not say that the warnings were in the user manual, which had shipped with the appliance in question [the insurer had the opportunity to preserve the actual manual accompanying the appliance, but had failed to properly instruct its restoration company to preserve that manual]. Further, we established a theory of liability of the manufacturer based on its failure to warn of hazards. Result: a confidential settlement, which included a party other than the contractor we represented.

Case Study 2

An insurer brought a subrogation action claiming a gasoline powered power washer placed adjacent to an exterior wood wall of a home was the cause of ignition of the wall. At the outset, the

photo by ursin camenisch

insurer made a settlement demand for the liability insurance policy limits of the contractor who had used and placed the power washer. The previous defense attorney for the client had evaluated the claim as one exposing the policy limits, and so did little investigation or analysis. Through investigation and discovery, we developed an alternate theory for the cause and origin of the fire: an electrical fault in the control box of the home’s electrical power producing solar system. We retained an electrical engineer expert who had familiarity with another fire caused by the same manufacturer’s control box, and we conducted a detailed expert inspection and microscopic photographing of the box’s components [which the insurer had preserved, but the insurer had not preserved the upstream and downstream wiring, which created an evidence problem for the insurer]. We disputed the insurer’s causation claim by testing the heat emitted from areas of the power washer’s engine, and videotaped experimental efforts which failed to produce the ignition theorized by the subrogation insurer.

The insurer’s theory was one possibility; testing under similar conditions was something else entirely. We showed graphics of the heat emission and the videotaped experiment at the mediation. Result: settled for a fraction of the policy limits.

Fire investigation is a complex process, involving decision-making on sophisticated scientific factors, such as thermodynamics, computer fire modeling, and fire chemistry 22

Case Study 3

A first-party insurer for a home and ranch property consumed by fire notified the manufacturer of the home’s

electrical power panel of the fire and provided the opportunity to inspect the scene before major cleanup was undertaken [a restoration contractor was already working on-scene]. On behalf of the equipment manufacturer, we retained a fire cause and origin expert and an electrical engineering expert to inspect and document the scene before the cleanup. Along with our experts, we met the chief and some of the fire crew who had responded to the fire at the scene. Inspection of the electrical panel did not reveal any deficiencies. In meeting with the crew chief, we learned that the fire report was going to state that the origin appeared to be where the garage joined the home [the location of the electrical panel was in close proximity to that junction, on the home’s exterior], and the cause would be stated as “undermined”. As such, a detailed inspection and documentation of the scene would be essential for the client manufacturer. That detailed inspection revealed a number of propane tanks in the garage debris, including tanks which were out of the service date for refilling [due to industry changes in tank design for safety reasons] and one tank had a damaged valve, which was leaking propane! The team showed the fire crew this evidence, who did not then document the conditions and locations. Again, it was not the fire department’s job to expend further resources on investigation once it had determined that arson was not involved, and there were no injuries (perhaps other than injury to the crew’s pride in not discovering the leaking tank which was an ongoing safety hazard). Our crew moved the leaking tank away from the structure, and from the scene telephoned the first party insurer to inform we had moved the tank and the tank leak condition. Result: No subrogation claim made against our client.

So, when you do not know what you don’t know about the subtleties of fire loss claims, some of the time the resulting claim and liability problems can later be ameliorated by qualified expert(s) and legal counsel. In a significant claim, however, it pays to get qualified expert(s) and legal counsel on the adjustment team earlier rather than later.

About the Author Moris Davidovitz is the senior partner at Davidovitz + Bennett law firm, San Francisco.

Morey has been involved in liability and insurance coverage claims for over 38 years, including aviation claims over 34 years. He has successfully resolved and has an interest in fire liability claims and is a member of the National Fire Protection Association as well as the California Conference of Arson Investigators.

claims division report

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AIA Member Direct Contact

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Location

Lloyd’s of London - 1688 Room One Lime Street, London

sessions & speakers 4:30 – 5:00 p.m.

Registration and Arrivals

5 – 5:10 p.m.

Opening Remarks David Sales, AIA President

5:10 – 5:20 p.m.

Inga Beale, Lloyd’s of London, Chief Executive Officer

5:20 – 5:40 Nick Brown, CEO Global Aerospace Underwriting Managers Limited, Group Chief Executive

5:40 – 6:30 p.m.

Mark Searle CAA Strategic Safety Programmes

6:30 – 8 p.m.

Closing Remarks & Cocktail Reception Relax and unwind with your peers during the closing networking reception.

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If you are an international insurance professional, or if you are working in the states and want to learn more about the issues impacting the aviation insurance industry on an international level, join us for the 2015 AIA London Reception. This is an incredible educational and networking opportunity, and the best part is, REGISTRATION IS FREE! This event is at NO COST to attendees and is open to both members and non-members of the Aviation Insurance Association. The only requirement is you must register for the event with AIA in order to meet security measures at Lloyd’s of London. Pre-registration for the event closes on October 23, 2015.

Registration

To register, visit the AIA Web site at www.aiaweb.org and follow these steps: • Click on the Conference button • Click on the London Reception button • Use the “Register Now” link on that page There is no fee to attend the session or cocktail party, but, you must register by October 23, 2015.

For more information (913) 627-9623 mandie@aiaweb.org Aviation Insurance Association 7200 W. 75th St Overland Park, KS 66204

www.aia.web

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industry news

The Right Stuff: What Is Your SMS Missing? chris YOUNG - Helicopter Aviation Services at PRISM

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s a member of the U.S. Helicopter Safety Team (USHST) SMS Working Group, we attempt to provide helicopter professionals with practical ideas and tools to help with their Safety Management System (SMS) implementation and sustainment. Despite the FAA’s reluctance to regulate SMS for other than Part 121 operators in the U.S., many proactive aviation companies and agencies have voluntarily begun their own SMS implementation with varied results. As one might imagine, the safety needs of aviation programs can vary widely depending on the size and scope of the operation, which can hinder the effective application. By now, most of us in this industry are familiar with SMS and its four pillars/ components (if not, we hope this article grabs attention): Safety Policy, Safety Risk Management, Safety Assurance, and Safety Promotion. These items are interrelated and are the essential framework for an organization’s SMS program as well as its connection with a Quality Management System.

When working with or talking to operators, the members of the USHST SMS Working Group have observed different levels of SMS application, as well as employee perceptions of how well they are performing. In many cases, the company personnel believe that they are further along in their implementation.

This is not necessarily a negative point (hats off to them for

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embracing SMS), but it highlights a trend among aviation professionals that they may not fully comprehend the extent to which the SMS pillars/components and their sub-elements must be applied within their organizations. This realization can really only occur when a group has an “outsider” review of its SMS program. This is one of the steps in truly

Organizations that always look at methods to make processes better will ultimately benefit from a safer, higher quality and more efficient system.

industry news understanding what “stuff” is results. In our experience, The Four SMS Components missing from the group’s own we see gaps in several areas, Safety Policy Safety Assurance system. Granted, as an SMS most notably, 1) Management Establishes senio management’s Evaluates the continued program evolves it should of Change or Change commitment to continually effectiveness of implemented improve safety; defines the risk control strategies; begin looking inward through Management; 2) Continuous methods, processes, and supports the organizational structure the use of its own internal Improvement; and 3) Safety identification of Policy needed to meet new hazards evaluation program (IEP).

Culture. There are many safety goals However, the most helpful elements that form an SMS, SA SRM Safety Risk Safety reviews usually come from but these seem to be the Safety Promotion Management Promotion an impartial entity that is not “Right Stuff” that can truly Determines the need for, Includes training, connected to the organization. transform the organization and adequacy of, new communication, and or revised risk control based other actions to create a As an example, one operator and the program’s future on the assesment of accetable risk positive safety culture within all levels of the workforce decided to bring in an auditor state. following a few negative customer observations. This When we talk about process yielded invaluable results by identifying internal Management of Change or Change Management, it is often communication issues among departments as well as a lack of overlooked mainly because of the effort that is required to direct involvement by the company’s Accountable Executive do it correctly. The author, John Kotter, defines change (i.e. CEO or President). The corrective actions that were management as “An approach to transitioning individuals, applied significantly improved these gaps and resulted in teams, and organizations to a desired future state”. This is higher customer confidence, because the changes made were not an easy task, especially in large organizations. However, observable. it is critical if we want the outcome to be positive (i.e. safe) and lasting. Organizations commonly attempt to mirror an As an organization progresses through its SMS development, existing process at another location, such as building a new the desired goal is to be more predictive versus simply reactive. maintenance base or expanding the route structure into To truly achieve this, the established safety and quality an unfamiliar area. This is usually referred to as the “quick processes need to help users be more aware of the gaps that fix”, but does not necessarily account for an organization’s might exist and to fix them so that they can sustain long term specific requirements. Just because it worked elsewhere or

Proactive (Present)

Responds to events that have already happened, such as incidents and accidents

Reactive (Past)

Actively seeks the identification of hazardous conditions through the analysis of the organization’s processes

Analyzes system processes and environments to identify potential/future problems

Predictive (Future)

Figure 2: FAA Depiction of an Organization’s SMS Evolution

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which may affect established processes, procedures, products and services. Prior to implementing changes, a formal management of change process should describe the arrangement to ensure safety performance”.

To help reinforce this, Senior leadership and the Accountable Executive must embrace what the author, Robert Quinn, calls “Deep Change”. His approach looks at the transformational paradigm and attempts to change not only the practices but the outcomes.

Leaders often think they know exactly what the problems are, when in reality, it is as if they are circling an iceberg with a host of issues lurking below the surface. for another company is no guarantee that it will work. Another common practice is to depend overly upon a few dedicated employees to spend the extra effort required to implement the change by “muscling” or “pushing” their way through the project to make up for the inadequate planning up front. This is the square peg – round hole phenomenon that is inefficient at affecting positive change. The International Civil Aviation Organization (ICAO) states, “A formal management of change process should identify changes within the organization

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Every commercial enterprise must embrace the concept of continual improvement in order to compete effectively in the market place and survive. By definition, it is an ongoing effort to improve products, services, or processes, as defined by the American Society for Quality. Continuous improvement is a

industry news characteristic of a “learning culture” that enables proactive risk management through process assessment and improvement (from Implementing Safety Management Systems in Aviation, Stolzer, Halford and Goglia). Organizations that always look at methods to make processes better will ultimately benefit from a safer, higher quality and more efficient system.

Having everyone willing to participate in this concept helps the organization to truly understand what the root causes of identified issues are and also enables more transformational solutions. This will also help to minimize the tendency for organizations to what Sidney Dekker describes as “drift into failure”. It starts when we view our past successes as a guarantee of future safety: “We have always done it this way and have never had a problem”. This mindset leads to complacency and the possibility of narrowing the safety margins, because we have gotten away with it before. Always being mindful of what could be done better will ultimately result in identifying potential problems and help to prevent quality and safety deficiencies.

Peter Drucker once said that “Culture eats strategy for breakfast”. This was stated in respect to business management, but culture will have a profound effect on the success of flight or maintenance operation and its SMS. If the environment within an operation does not allow for employees to express freely concerns or identify potential issues, the likelihood of safety and quality success is near zero. This culture must start at the highest level of leadership. Accountable Executives and senior managers often think they know exactly what the problems are when in reality it is as if they are circling an iceberg with a host of issues lurking below the surface.

Another example relates to the confidence that employees have in one another. One air medical operator explained that the relationship between the pilot crew and medical crew was often tainted with mistrust due to competing opinions about the conduct of flights. However, through the use of an effective crew resource management training program and the proactive involvement by senior leadership, the professionalism and mutual respect of crew members significantly improved and led to additional enhancements to the flight program. By having a robust and positive safety culture, issues can rise more openly to the surface and be addressed before a negative consequence

can occur. Ideally organizations want their employees to be, as C.S. Lewis once stated, “...doing the right thing even when no one is watching”. By having this level of participation, it will enable the change management and continuous improvement processes to flourish and further enhance safety and quality initiatives.

While the aggressive elimination of aircraft accidents and/or serious incidents remains the ultimate goal of our industry, it is recognized that the aviation system cannot completely avoid hazards and associated risks. However, as more and more aircraft operations continue to implement and sustain SMS, they will see huge benefits to their company, employees and customers – both from a safety and quality perspective.

Also by not overlooking the emphasis on the elements of Change Management, Continuous Improvement, and Safety

SMS Integrated, sustained and supported by an ongoing improvement process SMS functioning, results being measured SMS documented, approved, resourced and being implemented SMS under development Figure 3: IS-BAO Depiction of the Stages of a Maturing Program.

Culture, these safety professionals will have a more integrated and predictive system. This can work for large and small operations alike. SMS is scalable and can work based upon operational needs. Our willingness to learn and change is crucial. Organizations should never stop asking if they have the “Right Stuff” to achieve SMS and quality success.

www.USHST.org

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board of directors PRESIDENT

Director, Attorneys’ Division

Director-Elect of International

david Sales

Deborah Elsasser

Bruce Carman

Cooper Gay & Co, Ltd. david.sales@coopergay.com

Clyde & Co US LLP deborah.elsasser@clydeco.us

Cathedral Underwriting Ltd bruce.carman@cathedralcapital.com

vice PRESIDENT

Director of Claims Division

Director-at-large

Paul Herbers

Nic Stratta

Christopher S. Morin

Cooling & Herbers, P.C. pherbers@coolinglaw.com

Aviation LS nic.stratta@aviationls.com

Murray, Morin & Herman, P.A. cmorin@mmhlaw.com

Treasurer

Director-Elect of Claims Division

Director-At-Large

Christopher R. Zanette

Steve Teller

ZANETTE Aviation Insurance Service, Inc. chris@jet-insurance.com

Aviation LS steve.teller@aviationls.com

SEcretary

Director of Reinsurance Division

immediate past-PRESIDENT

Ian Wrigglesworth

FRANKLIN F. BASS

Jim Gardner

The James A Gardner Company Inc. jim.gardner@jagardner.com

Guy Carpenter & Company, Inc. ian.wrigglesworth@guycarp.com

Director of Agent & Brokers Division Director, Underwriters Division Jon Doolittle

Ernest De Spain

Sutton James, Inc. jdoolittle@suttonjames.com

W. Brown & Associates edespain@wbais.com

Director-Elect of Agent & BrokerS

Director of International Division

Luke Uithoven

Marcos Shuster

Kimmel Aviation Insurance Agency, Inc luke@kimmelinsurance.com

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Alegre, Calderon y Marquez marcos.shuster@gmail.com

Matt Rowley

Berkley Aviation, LLC mrowley@berkleyaviation.com

XL CATLIN franklin.bass@catlin.com

Executive Director Mandie Bannwarth

Aviation Insurance Association mandie@aiaweb.org

ADVERTISE IN

Call Mandie Bannwarth at 913-627-9632 for additional information.

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ACROSS 1 A woman pilot 6 The legal basis for a lawsuit by one person against another 11 To chose or select 12 To spoil or mar the surface or appearance 13 Located in Greenville, NC, this university is a member of the American Athletic Conference (abv.)

14 German jet reconnaissance bomber during WWII 18 This jet fighter was built by Germany, Italy and Great Britain during the 1970’s: Panavia _______________ 20 American battleship sunk in Pearl Harbor 23 A group of atoms 25 The border or edge of something 26 Reference (abv.)

27 Initials for an international civic organization (abv.)

28 Hospital professional (abv.)

29 Organization of pilots (abv.)

31 WWI battlefield in France 34 Great Britain (abv.)

35 A wall or similar structure for defense 37 First state of the original 13 colonies to declare independence from British rule (abv.)

38 “That” in Spanish 39 In the near future 40 Home state of the Titans (abv.)

41 To rise, fly or glide high in the air 43 Airline founded in 1924 as a crop duster by CE Woolman (abv.)

45 Bachelor of Arts (abv.)

47 A deliberate falsehood 49 _______ A clause or provision on extending coverage to persons other than the named insured(s)

crossword puzzle DOWN

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Mimic or imitate ________liability. The responsibility of one person for the acts of another Hospital department that serves critical patients (abv.)

This state has the highest number of pilots per capita (abv.)

Airport security force (abv.)

Term used for updating one’s education in a field (abv.)

Business matters IATA designator for this US major carrier headquartered in Chicago (abv.)

9 A descendant or heir 10 Bail ______. A person or organization to whom goods are delivered to be held in trust 12 German aircraft manufacturer during WWII 15 A trade organization representing the principal US airlines (abv.)

16 To work at 17 Located in the southwestern region of the US, this 48th state achieves statehood in 1912 (abv.)

19 River in Russia near Stalingrad 20 Middle eastern resident 21 To burst inward 22 Close in time, space, position or degree 24 Early Russian helicopter pioneer

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A state founded by Roger Williams in 1636 (abv.)

Unauthorized disappearance from a military base (abv.)

A particular group of buyers (abv.)

Symbol for the chemical element nickel (abv.)

A country in North America (abv.)

A form of “a” used before words beginning with a vowel An indefinitely long period of time A demand for property or money A variation of “I am” To detest or loathe ”Good” in Spanish An island A chocolate cookie with vanilla crème inside Airplane base for the Navy (abv.)

In its present condition without change A Navy enlisted person, E-3 (abv.)

Charles Lindbergh’s wife’s first name A single entity An Army commissioned officer (abv.)

A senior (abv.)

To express approval or agreement

53 49th state to be admitted to the Union (abv.)

54 To the same extent or degree; equally 55 An alternative 56 Pale in color 57 About 1/3 of the battles of the Revolutionary War took place in this state (abv.)

58 Sickness 61 Province in Canada (abv.)

62 Location at or along 63 The only Allied jet to see operational service during WWII was the Gloster ________ 64 An engine propelled by ejection of gaseous combustion products at high-velocity

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aviation insurance association

the binder 7200 W. 75 th street

overland park , ks 66204