ICAO needs yet more time to gain the state support necessary to launch its Global Time aviation war risk insurance scheme. At the recent ICAO Council Meeting, it agreed to extend the deadline for signing up more states to 14 February 2003.
ICAO had already moved the deadline from July to October in its efforts to obtain the backing of states representing 51% of its annual budget to go ahead with Global Time. By October ICAO had received positive answers from a large number of states - albeit with conditions attached to the risk some are willing to take - but the budget total only reached 38%. The US and Japan, which are both large contributors to ICAO, have not yet committed.
IATA director of taxation and insurance Howard Goldberg described the delay as "frustrating, but not surprising". He believes the main question the delay raises is what European carriers will do for this insurance, because the European Commission said member states should not extend their government-backed schemes past the end of October.
One alternative is for carriers to go to the commercial market, and insurance giant AIG has launched a new War Liability Product which is a 12-month, non-cancellable policy giving carriers "guaranteed continuity of cover", says Nick Brown, senior vice-president of AIG Europe.
Although similar to Global Time, this product is "awfully expensive", says Goldberg. The overall airline insurance bill will be close to $6 billion this year, up from under $2 billion in 2001, he adds.
MARK PILLING LONDON
Source: Airline Business