Nations meet to work out details of war-risk scheme
Experts from several European countries are meeting in Brussels this week to hammer out the details of a government-backed war-risk liability insurance scheme to ensure airlines are fully covered against chemical or biological terrorist attacks.
Many airline insurance contracts are due for renewal in the coming months and the aviation executive committee of Lloyd's Aviation Underwriters Association is understood to be urging its members to withdraw cover for non-conventional war risks, based on a higher perceived threat of such an attack.
Many European Union countries fear their flag carriers could be grounded if war-risk exemptions are put in place, and have called on the European Commission to host crisis talks to co-ordinate emergency cover, similar to the EC-crafted temporary guarantees scheme following the 11 September 2001 attacks.
The EC says the meeting is "to evaluate the consequence on the air transport industry of serious attacks", adding that member states have requested the meeting.
The Association of European Airlines (AEA) says it is urging member states to "take the topic seriously. Our viewpoint is that governments should step in to provide insurance where there is no market." Insurers are understood to be worried about the risk exposure that would result from an airborne attack using chemical, radiological or biological agents. Airlines are bound by EC law to have insurance for every eventuality, and insurers' reluctance to offer cover against potential future terrorist methods of attack may leave airlines in breach of their air operator's certificates.
John Balfour, partner at aviation law firm Beaumont and Son, says: "Read literally, mandatory airline insurance requirements don't allow for any exclusions, despite exclusions always being part of policies in practice."
Airlines are also beginning to question the value of aviation insurance. Speaking at the seventh International Aviation Conference, hosted by Beaumont and its French partner firm Cabinet Garnault, Robert Webb, general counsel for British Airways, said: "Our premiums have doubled since 9/11, but with the exemptions the insurers are trying to introduce, we are beginning to question the value of such cover."
JUSTIN WASTNAGE / LONDON
Source: Flight International
