103/01
21 September 2001
GOVERNMENT ACTS TO HELP UK AIRLINES WITH INSURANCE
The Treasury has acted to fill the gap in the commercial insurance market to ensure that British airlines will continue to fly as planned next week in the wake of events in the United States last week.
In an arrangement with the London insurance market, from next Monday the Government will provide an indemnity for third party war and terrorism liabilities above the $50 million most insurers are now offering. A commercial charge will be made for this indemnity but this will be waived for airlines for the first 30 days in recognition of the particular circumstances which the airlines face at present.
Chief Secretary Andrew Smith said:
?The Government has acted swiftly and decisively to ensure that the aviation industry can continue business following the terrorist attacks in the US. And in recognition of the particular challenges the airlines are facing, we are waiving the commercial charge for this arrangement for the time being.?
NOTES TO EDITORS
1. On the 20 September 2001 the British Air Transport Association (BATA) confirmed airlines had received seven days notice of cancellation of their war liability insurance cover.
2. Sir Andrew Turnbull, Permanent Secretary to the Treasury, hosted meetings on the afternoon of the 20 September with the insurance industry and airline representatives to urgently explore possible solutions.
3. Working jointly with the insurance industry the Government has put together a scheme that will fill in the gap between the cover airlines had for third party war and terrorism liabilities before the US attacks and what the insurance industry is prepared to provide now.
4. Under the scheme the Government will provide indemnity for liabilities above $50m based on insurance cover for third party liability (war and terrorism) of airlines with UK operating licenses. This will be provided at a commercial charge following the example of the existing Pool Re scheme which provides insurance cover for terrorist attacks on buildings in Great Britain.
5. This charge for airlines will be waived for a period of 30 days. The objective is that the insurance industry should provide insurance capacity at appropriate market rates as quickly as possible.
6. These policies will also be available to other organisations, including airports and security firms, where liability cover for terrorism has been withdrawn.
7. The brokers AON, Marsh and Willis are setting up a vehicle which will provide insurance policies to fill the gap in commercial cover. The policies will be administered by Global Aerospace.
8. Media enquiries should be directed to HM Treasury Press Office, 020 7270 4420.