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1. Alias Conference
Florence 15 June, 2012
Automation and Liability in ATM from an
insurance perspective
Roger Sethsson
Inter Hannover

2. Automatic tools to shift liability?

3.  ATM or Air Traffic Management is mainly about Air Traffic Control (systems and
controllers).
 It is a class of business with low loss frequency and high volatility.
 World-wide annual aerospace premium income is estimated at 7 BUSD
 ATC share is 1-2%
 EML for a mid-air collision is 6-7 BUSD!
 Manufacturers have aggregate policy limits
whilst ATC policies have any one occurrence…
ATM from an insurance underwriter's point of view

4. Insured ATC (en-route) world-wide

5. 1
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
UWY
Total
Loss
Factor
TL factor 7Y moving average TL factor
World Total Loss Factor History
Western built jets

6. 1
5.5
1.5
0.75
0.5 0.5 0.5
1
0.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
US$
Million
Passenger Liability Awards
Inter Hannover figures

7.  Japan Airlines Flight 123
 Accident date: 12th August 1985
 Fatalities: 520
 Accident cause: Lost tailfin due to a faulty repair (tail strike in 1978)
What can we learn from past accidents?
1980 - 1989

8.  Scandinavian Airlines Flight 751
 Accident date: 27th December 1991
 Fatalities: 0
 Accident cause: Aircraft took off with clear ice on the wings which was
ingested by the engines. The engines were destroyed by engine surges.
The pilots were not trained to identify and eliminate engine surging. If
the pilot had know of the ATR (Automated Trust Recovery) system
they would have been able to disconnect the system and reduce the
thrust and making a turn back to Airport.
What can we learn from past accidents?
1990 - 1999 (a first example)

9.  China Airlines Flight 140
 Accident date: 26th April 1994
 Fatalities: 264
 Accident cause: Pilot inadvertently pressed the Take-off/Go-around
button (TO/GA)
What can we learn from past accidents?
1990 - 1999 (a second example)

10.  Turkish Airlines Flight 1951
 Site: near Schiphol airport
 Accident date: 25th February 2009
 Fatalities: 9
 Accident cause (preliminary): Faulty altimeter + pilot error ?
What can we learn from past accidents?
2000 - (a first example)

11.  Air France Flight 447
 Accident date: 1st June 2009
 Fatalities: 228
 Accident cause: ?
What can we learn from past accidents?
2000 - (a second example)

12. Air Traffic Control

13. Date Accident place Type Fatalities*
08.10.2001 Linate, Italy Runway incursion (MD-87 & Cessna) 118
01.07.2002 Überlingen, Germany Mid-air collision (B757 & TU-154) 71
02.08.2005 Toronto, Canada Runway excursion (A340) 0
27.08.2006 Lexington, Kentucky Runway confusion (CRJ-100ER) 49
29.09.2006 Mato Grosso, Brazil Mid-air collision (B737 & Embraer aircraft) 154
30.12.2007 Bucharest, Romania Runway incursion (B737 & vehicle) 0
Total 392
ATC 18% (of total loss amount)
ATC - What can we learn from past accidents?
2000 - (an example)

14.  Mid-air collision Golf Flight 1907 and US ExcelAire
 Accident date: 29 September 2006
 Fatalities: 154
 Accident cause: Pilot, TCAS and ATC (but different views)
What can we learn from past accidents?
2000 -

15. Technology has proven that it leads to improvement in safety but if
something goes wrong:
 Some believe that system manufacturers will have more liability.
others;
 "if the controller had all information the plaintiff lawyer may ask why
didn't you do anything"
 "is it a human error or a system error if, eg, the controller misread
information?"
Insurers' view on Automation and Liability

16. 1. Defining a strategy depends on many things e.g. …
 Technical Analysis (circumstances and causes of the accident)
 Legal Analysis (where did the accident occur, parties involved, potential liability etc)
 Financial analysis (potential claim amount, will it be more expensive to defend than settle etc)
2. Implementing the strategy…
 Enter into a sharing or funding agreements without admitting liability
3. Depending on the strength of your case…
 Settle out of court
 Go to court
 Mediation
 Arbitration
Claims Best Practices - Liability

17.  Automation will continue to improve safety
 Training will be a key factor
 A groundbreaking shift of liability from operators to manufacturers
remains to be seen!
Conclusions

18. THANK YOU!