Significant factors of aviation insurance and risk management strategy: an empirical study of Taiwanese airline carriers.

Full 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.

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Author information

Author/s: Lin, Yi Hsin (YH); Chang, Yu Hern (YH);

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

Journal and publication information

Publication Type: Journal Article; Research Support, Non-U.S. Gov't

Journal: Risk analysis : an official publication of the Society for Risk Analysis (Risk Anal), published in United States. (Language: eng)

Reference: 2008-Apr; vol 28 (issue 2) : pp 453-61

Dates: Created 2008/04/18; Completed 2008/06/20;

PMID: 18419661, status: MEDLINE (last retrieval date: 11/6/2008)

Sourced from the National Library of Medicine. Abstract text and other information may be subject to copyright.

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MeSH headings (categories)

This article was linked to the MESH Headings shown below.

Insurance - economics
Risk Management - methods
Taiwan

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