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The insurers emphasized that future premium rates for aircraft third party insur-ance could not be predicted with certainty and that the low rates then current might be increased if a series of accidents occurred involving large payment to third parties. It was impossible to predict the effects on insurance costs of the provisions in the Convention relating to absolute liability, the granting of jurisdiction to the State where the damage occurs, and the right of direct action against the insurers in certain cases. Some insurers believed, however, that these provisions would cause substan-tial increases in the cost of third party insurance both by increasing the costs of litigation and by tending to raise the amounts of compensation claimed and awarded.
There were, however, other factors tending towards the reduction of the cost of third party insurance for aircraft. In the .rst place the number of aircraft accidents in relation to the amount of .ying done constantly tended to decrease as the quality and ef.ciency of aircraft construction, maintenance and operation improved. The Council was aware that any decrease in the number of accidents per aircraft would ultimately have produced a decrease in insurance premiums for third party insur-ance as well as for other forms of aviation insurance. In the second place the growing experience of third party risks gained by the insurers as the volume of .ying increases should tend to produce a stabilization of the market and hence to reduce third party insurance rates. Some operators considered the limits proposed in the Mexico City draft as being considerably below the limits of their present third party insurance limits and a premium reduction might result to these operators on this account.
C. The Rome Convention of 1952
Making due allowance for the effect of these various factors, the Council felt that, it was fairly certain that although the cost of third party insurance under the provisions of the Mexico City draft Convention could have been increased, it still would not have imposed an undue burden on aircraft operators, and that, at least for commercial operators, the liability limits in the Convention might be substantially raised without this part of their operating costs becoming excessive. The cost of third party insurance to private operators of aircraft, however, was a considerably higher proportion of operating costs and an increase in liability limits might impose burdens of cost on this section of aviation that would seriously impede its development.
It was suggested that an increase in the liability limits substantially above those proposed in Article II would have produced overall limits for the larger aircraft so high as to strain the insurance market. It seemed, however, that the insurers did not believe that this would occur as long as existing conditions prevail.
The information in the Appendices submitted to the Council clearly showed that aircraft accidents involving large third party claims occurred infrequently. At that time, out of over 2,000 accidents in the British Royal Air Force, only 124 had caused third party damage or casualties and in the vast majority of cases the damage done was minor. It was also noted that, in 118 of these accidents only property damage was done, and in the remaining six where injury was caused to persons, the casualties were one dead and eight injured. Reports from States concerning 23 accidents that caused substantial third party damage included only two instances in which the claims paid and outstanding exceeded the limits in the medico City draft for the aircraft involved.
This information did not, however, point directly to any exact conclusion as to where the liability limits should be set so as to cover all but rare catastrophic accidents. In the .rst place, it was possible to disagree as to what constituted a catastrophic accident; in the second place past experience as to the frequency of accidents causing large third party damage was inadequate to predict their inci-dence in the future. It was clear that at whatever level the liability limits were established, the possibility would still have existed that accidents might have occurred where legitimate compensation for third party damage would have been greater than those limits, that is to say, where the third parties concerned would not have been able to obtain full compensation. It was also clear that the higher the limits were placed the smaller that possibility will become and the more nearly the compensation paid in such cases would approach to the full compensation level. The Legal Committee had raised the limits from those proposed in the original Rome draft of the Convention to those now in the Mexico City draft. The diver-gence of opinion was as to whether they should be further raised or not. The Council believed that it would have been of assistance to Contracting States to have had a brief analysis of the arguments that cause this divergence of opinion.
　
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