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Aviation History
1945
1945 - 0963.PDF
MAY 17TH, 1945 " Indicator " Discusses Topics of the Day FLIGHT 335 Paying the Piper— -And Calling a Better Tune? : Insurance Costs as a Future Quide to Airline and Other Civil Developments 1 Paving the Way for a Self-ruled Air Transport System AT the risk of finding myself innocently involved inpolitics and high finance (whatever that may mean),*• I must say something about aviation insurance from the interested layman's point of view. It has always seemed to me that, in any eventual free-for-all system of civil aviation, all operational methods and equipment, as well as the choice of aircraft types and even crews must directly or indirectly be guided by insurance interests. Directly, for instance, when the insurer flatly decides that particular aircraft type will not be covered, or a par- ar airfield can only be used at the operating com- pany's own risk, or even when a particular pilot's pre- mium is refused. Indirectly, when the premiums charged are so very high that the operating company itself is forced to discontinue the use of a particular aircraft or airfield until each has been modified to suit the under- writer. It is reasonable to suppose that in earlier years the insurance companies were rather feeling their way on p. basis of year-to-year accident rates. Even underwriters, who were in the best possible positk the answers, must have felt that they wej«'workin£ in financial shadow, comparatively speaking. It will#cer- tainly not be the same in the future $6t only musUfthere now be a reasonably accurate set of on which to work, but there ma^Je a great man] thousands of "experts" who can b« various issues. But, will come the question, wh; into it? Surely the outlays and risl immense that they will have Government? That may be so, is nothing much more nor less than a giant ^n^r^rtce con- cern, whether it is dealing with doles, pensig.n<subsidies, or war-preparedness, and the bill still has to be met with an overall profit—using the word in its widest sense. Economics Without Tears This, of course, js where I am liable to fall into the bottomless pit of economic darkness, where there is always a weeping and gnashing of teeth over points which some- tunes seem to the ordinary person to be as basically simple ^s, they were in the Garden of Eden—though with s some- what larger and less easily calculable number of people involved. So I will steer "away from the edge with the reminder that John Smith multiplied sixty million times behaves, as a shareholder, in much the same way, as Fred Robinson mulitplied only a million times, and represent- ing the individual "owners" of an insurance combine. Maybe even the Robinsons, guided by an energetic and brave board of directors, will demand smaller premiums than the Smiths, who may be guided only by necessarily less brave and possibly less well-informed civil servants. Let us think of tlte operating companies and private owners who are not prepared to carry, or capable of carrying, the whole "baby." They will endeavour to find an insurance concern which, at the lowest reasonable figure, will be ready to cover them against the various risks involved. Obviously, this figure cannot be arrived at accurately by a mere process of average computation. The underwriters are not dealing with standardised road, rail, or marine vehicles, with. " average "drivers and com- paratively small risks • involved, but with individually Measurable values and losses that can be either alarmingly great or quite small, according to the selection of aircraft and operating crews. The underwriters are not only likely to want to know all about the routes, types of air- craft used, and the individuals employed both on the ground and in the air, but may also insist that one of their knowledgeable representatives is, at least in the case of a large concern, on the spot all the time, with absolute freedom of movement, but without, of course, the power to dictate any immediate policy. He will merely be expected to watch the proceedings, with knowledge and experience behind him, and to know everyone, so that the premiums can be assessed on a basis of his reports. If the right type of man is chosen for the job he will not be considered as a "spy," but, by constant discussion and by taking part in the actual operations as a supernumerary pilot, will be accepted as a necessary and useful part of the organisa- tion. All the more useful and necessary because he will not be dealing with figures but with facts, and will be able to recommend changes or improvements by which the premiums—and consequently the concern's eventual profits —may be modified. \ Underwriters' Influence j>- \A11 of which is a mere suggestion. Possibly the under- writers will prefer to work on a computation basis, leaving t|ie operators to their own devices. But their direct or indirect influence must be felt in the end.* For their own ^immediate good they will need to follow closely all lech- <^nical developments which involve operational safety, and their opinion of these developments must inevitably influence the operators in their choice of equipment. And it is hard to see how this influence can, for better or worse, be prevented from spreading through the entire organisation, since safety depends as much on personnel as on material. Without going too deeply into it, I am inclined to the view that, judged by overall results covering a period of years, it will be found to be better for civil aviation to be guided and/or driven by insurance cost considerations, rather than to be ruled by a series of Government depart- ments to whom ultimate safety considerations—so long as they are " covered "—are naturally of no great interest. Aviation cannot, after all, be for ever hanging on to the apron strings of the Civil Air Ministry. It will eventually be left to walk and run by itself, and it will be better if, gradually, a vast safety-check organisation is brought into action by natural means. Guided at first by the Air Ministry, the insurance in- terests might, if only to save themselves from '' irrecoup- aple " losses, start slowly to develop a vast "control" system which would eventually cover all aspects of air operation—Jrom the airworthiness of aircraft and the standardisation of safety and navigational equipment to the licensing of personnel and the checking of operational systems and conditions. Premiums would perhaps need 'to be higher—though, if they took a sufficiently long view, the underwriters might reasonably consider that the neces- sary layout merely as '' bread cast upon the waters ''— but at least the operators who were paying the premiums would consider that they were paying for something ever which they would have some control, and for a system which would help to make the whole thing self-supporting and self-operating in the much later years to come. So long as a Civil Air Ministry is allowed to act as a Bene-
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