The Association of Asia Pacific Airlines (AAPA) is to study the feasibility of a billion-dollar mutual insurance fund in case of war or terrorist attack. The decision was taken at its recent annual chief executives' summit in Bali.
Director-general Richard Stirland says establishing the fund will pose difficulties, but that it must be considered, perhaps globally. "There's no reason why airlines in this part of the world should not be pioneers," he adds.
The association believes mutualisation could be cheaper than commercial insurance, provided enough airlines participate. Following the 11 September attacks in the USA, insurers withdrew third-party war-risk cover for airlines, forcing more than 60 governments to step in to provide temporary indemnities.
Although coverage has been returning to the market, premiums have soared. IATA predicts its members will have to pay $9-10 billion for insurance next year - without 11 September the bill would have been only $1.5 billion. IATA's vice president member relations and communications, Kevin Dobby, says all-risk insurance renewal charges are estimated at $3 billion for next year alone.
Source: Flight International