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At the meeting of the Executive Council on May 16, the Council advised and the Chief Executive ordered that the Civil Aviation (Insurance) Order should be made. The Order will prohibit civil aircraft from landing or taking off in Hong Kong, unless there is in force in relation to the use of the aircraft in Hong Kong a policy of insurance in a combined single limit (CSL) coverage which covers third party risks and passenger, baggage, cargo and mail liabilities.

For many years, the Government has been implementing an administrative arrangement under which aircraft engaged in commercial flights are required to carry insurance for third party liability, although their insurance may also cover other liabilities. Aircraft engaged in non-revenue flights, such as private or corporate aircraft, are not subject to such insurance requirement.

"Under the Order, a civil aircraft, whether engaged in commercial or non-revenue flights, will be required to have a CSL insurance cover for liabilities in respect of five 'required items', namely third party, passenger, baggage, mail and cargo liabilities. This will provide greater protection for third parties, passengers and shippers," a Government spokesman said.

The Order provides that aircraft operators may exclude from their CSL coverage the liabilities for those items that are not carried by their aircraft. For example, an all-cargo airline has the option of not including liabilities for passenger and baggage.

"The Order also allows aircraft operators to include in their CSL the liabilities for items other than the required items (e.g. premise liability), except for the operators' own aircraft hull. Such flexibility is in line with international practice. It should not undermine the cover for the required items because CSL applies on a per occurrence basis and the probability of coincidental claims for compensation in respect of the required items and claims for other items (except for aircraft hull) arising from the same occurrence is very remote," . the spokesman explained.

"Taking into account the highest claims in aircraft accidents in the world, we consider that minimum levels of CSL under the existing administrative arrangement (ranging from US$25 million to US$1 billion depending on the weight of the aircraft) are adequate and should continue to apply when the Order comes into operation. The only change is the addition of a lower minimum level (US$15 million) for light aircraft to ensure adequate insurance cover while not imposing an excessive burden on the operators concerned", the spokesman added.

Most commercial airlines already comply with the insurance requirements set out in the Order. As regards non-revenue flights, the number of aircraft engaged in such operations is small. The Order is therefore not expected to have any significant economic implications.

In preparing the Order, the Government had consulted the Legislative Council Panel on Economic Services, the Aviation Advisory Board, the International Air Transport Association and the Hong Kong Federation of Insurers. All of them consider the new requirements acceptable.

The Order will be gazetted on May 19 and tabled at the Legislative Council on May 24. Under the current plan, the Order will come into operation in late 2000 in order to provide a grace period for aircraft operators for compliance.

End/Wednesday, May 17, 2000

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