In brief: insurance considerations for aircraft financing and leasing in Singapore

Sara G. Norris

Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

There is no requirement to place insurance with local insurers.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

There are no prohibitions against the enforceability of cut-through clauses in insurance and reinsurance documents in Singapore.

Reinsurance

Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Assignments of reinsurance are legally binding provided that the formalities for the legal assignment are met. Assignments of reinsurance are common in aviation leasing and finance agreements.

Liability

Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

Generally, no. Each party may, however, incur independent liabilities for their own acts or omissions. Moreover, there is a statutory strict liability imposed on the owner for loss and damage caused by the aircraft to any person and property on the surface, with the owner having the right to be indemnified by any third party who has legal liability for that loss and damage.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

Section 9(2) of the Air Navigation Act 1966 (ANA) states that the owner of an aircraft has strict liability for loss and damage caused by the aircraft to any person and property on the surface. 

However, under section 9(3) of the ANA, where damages for loss are recoverable from the owner by virtue of section 9(2) of the ANA and legal liability is created in a third party to pay damages in respect of that damage or loss, the owner is entitled to be indemnified by that third party in respect of that damage or loss.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

There are no statutory limits prescribed for third-party liability insurance. Although there are legislative provisions enabling the Civil Aviation Authority of Singapore and the Minister for Transport to make regulations in respect of insurance requirements, at the moment there are no mandatory insurance requirements for operators of aircraft.

https://www.lexology.com/library/detail.aspx?g=1754fc6c-a51b-4ba7-900b-5cc01523f768

Next Post

Top 10 Business Intelligence Jobs to Apply for in April 2022

by Satavisa Pati April 7, 2022 With your expertise in business intelligence, these top 10 jobs are for you to apply for, in April.  Business intelligence (BI) leverages software and services to transform data into actionable insights that inform an organization’s strategic and tactical business decisions. BI tools access and […]