Insurance and reinsurance

Captive insurance

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

There is no captive insurance regime in Israel relating to aircraft. However, the Aviation Regulations (Requirement of Insurance in Commercial Operation of Aircraft), 2017 require that insurance be placed either with an insurer regulated under Israeli law, or with a foreign insurer that is authorised to act under applicable law in its jurisdiction.

Cut-through clauses

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

As a matter of general contract law, a cut-through clause should be enforceable if properly drafted in a manner clearly establishing privity between the reinsurer and the party named as loss payee.

Reinsurance

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

If the assignment of insurance is properly drafted and proper notice and consent is provided as required by Israeli law, an assignment of insurances should typically be recognised by the courts.

Liability

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

The owner of an asset or its financier may be liable in tort or on other grounds in Israel for damages caused in connection with the operation of the aircraft or the activities of the operator if sufficient linkage is established between the damage caused and the acts or omissions of the relevant entity under general principles of tort laws.

Strict liability

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

Israel has not adopted a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft. However, if the lessor is deemed the importer of the aircraft into Israel it may have exposure under the Defective Products Liability Law, 1980.

Third-party liability insurance

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

The Aviation Regulations (Requirement of Insurance in Commercial Operation of Aircraft) 2017 establish minimum requirements for each case and for each aircraft depending on the aircraft’s maximum weight.

The authors wish to acknowledge the help of Chen Arbel with this chapter.