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Insurance ruling threatens airlines

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Insurance ruling threatens airlines

Old 12th Oct 2002, 12:31
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Thumbs down Insurance ruling threatens airlines

A huge rise in the cost of insurance cover for war and terrorism risks could result in the ruin of UK and other European airlines, aviation experts have warned.

From the end of October, the European Commission is to end an emergency scheme under which EU member states underwrite airlines' war-risk insurance. The move means European airlines will have to pay full commercial rates for the first time since the September 11 attacks.

The attacks last year exposed airlines' potential liability for losses on the ground, highlighting the possibility of claims from families and businesses for the loss of people and property.

see here http://news.bbc.co.uk/1/hi/uk/2322027.stm
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Old 12th Oct 2002, 13:59
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This cannot be good news.

Does this mean that war will be declared after the end of October?!
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Old 12th Oct 2002, 15:21
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Well about time!
All Scandinavian operators have been paying market price premiums for a long time now. Talk about competition on equal terms?
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Old 13th Oct 2002, 12:30
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I agree with Justforkix.
It won't suit companies with the requirement to recalculate fares however, it will certainly be fairer that the passenger has to pay his own costs rather than expecting the taxpayer to do so.
It is just another increased overhead for which we have to thank the despotic terrorists who infest our planet.
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Old 14th Oct 2002, 13:03
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Interesting subject!!

The effect of being pushed back to what can be laughingliy call the insurance market is that cover is restricted to a level that doesn't comply with most aircraft lease agreements, doesn't comply with the new EU requirements on insurance levels and costs even more money than the vast premiums already being paid to governments.

It also allows insurers to issue notice of cancellation with a limited notice period ultimately grounding aircraft.

The main change in cover is that rather than providing an Any One Occurrence limit (remembering that Sept 11 can be classed as up to 4 occurrences) to a total limit per policy year.

This would have meant that following the first impact on Sept 11, both airlines would have had not liability insurance for any other aircraft they had in the air at that time.

On the subject of level playing fields, interesting that this whole subject started in the USA where their government is providing cover for third party liabilities at a cost of $0.10 per sector pax, whereas the rest of us are having to pay around $2 per sector pax.

In addition US carriers are not paying the surcharge of $1.25 to insurers to cover passenger insurance because that is also being provided by the US Government. Meaning the only country not contributing to the losses incurred by insurers last year in the USA are airlines based in the USA!

There is mention of airlines re-calculating their fares, well they can unless tey happen to be UK charters, then the cost can be passed onto the tour operator (who mostly have common ownership to the airline) but the Tour Operator is not allowed to surcharge it on to the passenger only build the cost into future brochures!!!

Hence the comment that some airlines (for which you can read tour operators) may well not survive.

Think of this, the cost to EU airlines is now about 11 times that which is was before Sept 11th 2001!

Last edited by clipstone; 14th Oct 2002 at 13:09.
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