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TAMPA, Fla.-Risk managers for U.S. airlines anticipate added costs and administrative burdens resulting from changes to domestic and international law governing passenger injuries and fatalities.
A section of the Federal Aviation Reauthorization Act of 1996, passed last September and implemented this year, calls for new procedures by federal aviation authorities and private airlines in dealing with the families of passengers killed in airline accidents.
Airline risk managers are heavily involved in the implementation of the new regulations, which among other things call for disaster response plans to be filed with the National Transportation Safety Board.
In addition, risk managers are affected by an agreement among airlines to remove the Warsaw Convention's passenger liability limitations. Some are concerned as to whether the pact will fulfill its intended purpose to reduce losses and make claims payment easier.
These issues were raised by Rita M. Evans, manager of claims and loss prevention administration for US Airways Inc. in Arlington, Va., during an airline risk manager panel at the 21st Aviation Insurance Assn. conference in Tampa, Fla., earlier this month.
Following a string of disasters in the United States, the National Transportation Safety Board in 1995 met with family groups and airlines to discuss how to treat families of injured or deceased passengers in a more sensitive way.
The families were aggrieved because they "felt that the airline had just killed their loved ones," yet they had to work with that company after a disaster, Ms. Evans acknowledged.
To ameliorate that situation, the Aviation Disaster Family Assistance Act of 1996 was added as a section to the Federal Aviation Reauthorization Act of 1996.
The Family Assistance Act calls for the NTSB to appoint an employee to be the "point of contact within the federal government" for the families of passengers involved in the accident. The NTSB also is supposed to appoint an independent non-profit organization with experience in disasters and post-trauma communication to coordinate the "emotional care and support of the families of the passengers involved in the accident."
Each U.S. and non-U.S. air carrier licensed by the NTSB also must submit a plan to the federal agency that addresses how the airline will respond to the post-disaster needs of passengers' families. Although the act details the contents of such a plan, the NTSB in March issued additional guidelines on what should be included.
The guidelines address every aspect of the aftermath of the crash, "including how they wanted the room set up" for families to meet with the airlines' personnel, said Ms. Evans.
Much of what is in the act is not surprising, said Ms. Evans. When USAirways has had losses, she said, "I know how we responded. I know we had trained people there. We had people who tried to work with the families and did whatever we could in terms of their economic concerns. The act asks us to do what has already been done" but takes it one step further by getting the NTSB involved, she said.
The act also mandates that plaintiffs attorneys not approach passengers' families for at least 30 days after the crash.
Currently, plaintiffs attorneys and the television media "show up about the same time I do" shortly after a disaster, said Christa Meyer Hinckley, managing director of insurance and risk management for American Airlines in Dallas.
Victims' families have two years in which to file an action, and it is not their priority or the priority of the airlines to settle compensation claims just after a disaster, according to the panelists.
"There's no way you can settle a claim within 30 days of someone dying," said Ms. Evans.
There are some loose ends to the Family Assistance Act, however, according to Ms. Evans. For example, she questioned who will be responsible for paying the additional costs for what the government has asked airlines to do.
Another issue that is unrelated to the act but which the legislation has raised is who is going to pay for the cleanup costs following a disaster, Ms. Evans said. At the moment, the cleanup is paid for by the government.
Ms. Hinckley also noted that there will be additional administrative duties for airlines flying overseas, because the response plan to be submitted to the NTSB only applies to accidents within the United States. Airlines will then have to develop two plans, one for U.S. and one for non-U.S. disasters.
The plan submitted to the NTSB "doesn't necessarily work internationally, so the airline is put in the position of developing two plans for an international disaster as well as an American disaster," said Ms. Hinckley.
Airline risk managers also still want clarification about the application of the International Air Transport Assn.'s Intercarrier Agreement, which waives Warsaw's liability limitation, which for U.S. flights is $75,000 per passenger.
"If the purpose of these changes to the Warsaw liability limits was to eliminate losses and have a more seamless operation, I don't think we're there yet," said Ms. Evans.
For example, the agreement calls for airlines to have strict liability up to 100,000 Special Drawing Rights ($139,930) and for negligence to be proved above that. Previously, the liability limitation was broken only if willful misconduct could be proved.
However, victims' families now want to know if airlines will pay this 100,000 SDRs immediately, before the families sue for additional damages, said Ms. Evans. "It's a good question," she said.
Airlines also wonder whether their liability insurance premiums will go up as a result of the change.
"Domestically, I think we've already paid for adequate liability coverage" because there has long been unlimited liability for internal U.S. flights. But for non-U.S. air carriers the new agreement "could be a real adjustment," said Ms. Evans.
Aviation underwriters are scrutinizing the IATA agreement and whether it will increase the cost of liability claims they cover (BI, May 12).