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Cancellation Insurance?
Pedro Écija Serrano ¦ www.datadriven.ie ¦ pedroecija@datadriven.ie
Cancellation Insurance?
Who looks after you when your flight is cancelled?
Cancellation Insurance?
http://on.ft.com/2wDdFl1
http://bit.ly/2w4gmfN
http://on.ft.com/2wDdFl1
Cancellation Insurance
Mr Passenger
Travel
Insurance
Liability
Insurance
Business
Interruption
Insurance
Liability of
Air ...
Cancellation Insurance?
•Travel Insurance: paying only after other avenues of
compensation have been exhausted and might n...
Cancellation Insurance?
•Travel Insurance: paying only after other avenues of
compensation have been exhausted and might n...
Cancellation Insurance?
https://www.rte.ie/news/business/2017/0615/882987-ba-disruption-costs/
https://www.linkedin.com/pu...
Cancellation Insurance?
https://www.theguardian.com/business/2010/apr/16/iceland-volcano-airline-industry-iata
https://www...
Cancellation Insurance?
http://bit.ly/2uiK8zr
https://www.theguardian.com/business/2017/jun/06/european-commission-plan-ta...
Cancellation Insurance?
•Airlines are usually on their own but does it
have to be that way?
•Could we insure the cancellat...
Cancellation Insurance?
Based on US flights data:
93% of routes have cancellation
rates below 1%.
–1.4% average cancellati...
Cancellation Insurance?
Some routes are more prone to cancellations than others but there might also be an
airport effect....
Cancellation Insurance?
Cancellation Insurance?
Let’s take an A320 plane and EU compensation rules:
–180 passengers
–Compensation between €250 and...
Cancellation Insurance?
What else could be done?
If cancellations are airport driven, rather than route
dependant, an assi...
Cancellation Insurance?
•Insure entire flights for airlines,
compensating for a portion of the incurred
losses.
•Use data ...
Cancellation Insurance?
“You define a good flight by negatives: you
didn’t get hijacked, you didn’t crash, you didn’t
thro...
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Cancellation Insurance?

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A short presentation I delivered on 5th October 2017 for the first InsurTech MeetUp in Dublin. I suggest the possibility of offering cancellation insurance to help airlines meet related costs as well as to provide assistance service to stranded passengers.

Published in: Data & Analytics
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Cancellation Insurance?

  1. 1. Cancellation Insurance? Pedro Écija Serrano ¦ www.datadriven.ie ¦ pedroecija@datadriven.ie
  2. 2. Cancellation Insurance? Who looks after you when your flight is cancelled?
  3. 3. Cancellation Insurance? http://on.ft.com/2wDdFl1 http://bit.ly/2w4gmfN http://on.ft.com/2wDdFl1
  4. 4. Cancellation Insurance Mr Passenger Travel Insurance Liability Insurance Business Interruption Insurance Liability of Air Carriers Who looks after the airlines when there is flight disruption?
  5. 5. Cancellation Insurance? •Travel Insurance: paying only after other avenues of compensation have been exhausted and might not cover Acts of God. •Airline Liability Insurance: there must be bodily injury or death and/ or property damage.and/ or property damage. •Business Interruption Insurance: expensive and likely to require property damage to warrant compensation. Terms exclude many claims. •Liability of Air Carriers: airlines are not expected to compensate only under exceptional circumstances according to EU legislation.
  6. 6. Cancellation Insurance? •Travel Insurance: paying only after other avenues of compensation have been exhausted and might not cover Acts of God. •Airline Liability Insurance: there must be bodily injury or death and/ or property damage. And The Winner Is… and/ or property damage. •Business Interruption Insurance: expensive and likely to require property damage to warrant compensation. Terms exclude many claims. •Liability of Air Carriers: airlines are not expected to compensate only under exceptional circumstances according to EU legislation.
  7. 7. Cancellation Insurance? https://www.rte.ie/news/business/2017/0615/882987-ba-disruption-costs/ https://www.linkedin.com/pulse/cyber-payout-ba-failure-zoe-campbell
  8. 8. Cancellation Insurance? https://www.theguardian.com/business/2010/apr/16/iceland-volcano-airline-industry-iata https://www.theguardian.com/business/2010/jul/28/easy-jet-puts-volcano-costs-at-65m https://www.theguardian.com/business/2010/apr/19/ba-volcanic-ash-losing-money
  9. 9. Cancellation Insurance? http://bit.ly/2uiK8zr https://www.theguardian.com/business/2017/jun/06/european-commission-plan-tackle-air-traffic-control-strikes
  10. 10. Cancellation Insurance? •Airlines are usually on their own but does it have to be that way? •Could we insure the cancellation of a flight?•Could we insure the cancellation of a flight? •How much would that cost? •Is there anything else we can do about it?
  11. 11. Cancellation Insurance? Based on US flights data: 93% of routes have cancellation rates below 1%. –1.4% average cancellation rate including all flights. –The least reliable routes have an–The least reliable routes have an average 3.6% cancellation rate.
  12. 12. Cancellation Insurance? Some routes are more prone to cancellations than others but there might also be an airport effect. It could simply be a result of there being many routes in that location.
  13. 13. Cancellation Insurance?
  14. 14. Cancellation Insurance? Let’s take an A320 plane and EU compensation rules: –180 passengers –Compensation between €250 and €600 The risk premium (100% of the risk) would be between:The risk premium (100% of the risk) would be between: –€315 for reliable flights and €250 compensation p.p. –€3,890 for the most cancelling flights and €600 compensation p.p. On a per passenger basis, between €1.75 and €21.6 Profit loading, expenses and other margins would need to be added too.
  15. 15. Cancellation Insurance? What else could be done? If cancellations are airport driven, rather than route dependant, an assistance service located on cancellation prone airports might be viable.
  16. 16. Cancellation Insurance? •Insure entire flights for airlines, compensating for a portion of the incurred losses. •Use data science to its full potential, as retail regulation would not apply (i.e.: no gender directive, etc) •Provide complementary services to Proportion of passengers who would like to use their smart phone to… •Provide complementary services to passengers such as: •Real time flight information (delays, cancellations) •In situ support to stranded passengers (information, food, drink, transport, etc) http://bit.ly/P5ViiA
  17. 17. Cancellation Insurance? “You define a good flight by negatives: you didn’t get hijacked, you didn’t crash, you didn’t throw up, you weren’t late, you weren’tthrow up, you weren’t late, you weren’t nauseated by the food. So you are grateful.” Paul Theroux

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