CHRIS KJELGAARD / WASHINGTON DC
The International Civil Aviation Organisation is proceeding with plans to establish a worldwide aviation war-risk insurance company following council approval of a taskforce report. The scheme would complement the Equitime and Eurotime war-risk insurance companies planned by US and European airlines, respectively.
The report recommends creation of a global scheme to provide third-party war-risk liability insurance for airlines and other companies involved in civil aviation, to be backed up by ICAO member state guarantees. ICAO plans to launch the scheme once it obtains confirmations from states representing at least 51% of its total budget and has asked for responses by 19 July.
ICAO says the new non-profit company would create a "short-to-medium-term programme", initially lasting five years, "to provide insurance at reasonable cost - and, more important, to ensure that the air transport industry can continue to survive and grow".
The scheme would cover the $1.45 billion war-risk liability amount above the $50 million non-cancellable cover airlines were left with after commercial insurers cancelled all war-risk policies following the 11 September attacks.
ICAO plans to provide coverage to the $1.5 billion limit per client and per event, rather than per year as proposed by commercial insurers. Its insurance company would receive premiums from clients worldwide, holding the premium and interest available to pay claims. If claims exceed the financial reserve, it would call on government guarantees.
ICAO says the member states would be "guarantors of last resort". The scheme would aim to repay from premiums any payments made by states under the guarantees, which would be sized according to the financial contribution a state makes to the ICAO budget. The USA provides 25%, Japan 14% and each of the major European economies 6-9%.
European transport ministers will be asked this week to approve creation of Eurotime, which has "an automatic switch-over mechanism that allows it to revert easily to the ICAO plan", the organisation says.
Source: Flight International
