While many American aviators wallow in their insurance woes, they can at least take some comfort knowing that the big boys are suffering too … globally. In response to insurance concerns, theInternational Civil Aviation Organization (ICAO) and International Air Transportation Association (IATA) have proposed to set up an exclusive insurance company for airlines, airports, leasing companies and support-service providers. The two organizations claim the establishment of the new company would bring down insurance costs for aviation companies, especially for … airlines. ICAO member-nations are supposed to contribute to the core of the proposed insurance firm. The services will be cheaper since state guarantees would also be involved. The contribution and liability of each country will be in proportion to the ICAO funding committed by the member-nation. If ICAO and IATA have their way, the proposed insurance group would also set a trend during these times when insurance premiums are skyrocketing in response to the ongoing global terrorist threat. While the proposed third-party war risk limit is $1.5 billion for one incident, total liability for the company would be capped at $15 billion.
Insurance Issues Get Global Attention
Key Takeaways:
- The International Civil Aviation Organization (ICAO) and International Air Transportation Association (IATA) are proposing to establish an exclusive insurance company for aviation entities, including airlines and airports.
- This new company aims to reduce skyrocketing insurance costs, particularly for airlines, by leveraging state guarantees and contributions from ICAO member-nations.
- The proposed firm would offer cheaper services, with a third-party war risk limit of $1.5 billion per incident and a total liability cap of $15 billion, primarily to counter high premiums driven by global terrorist threats.
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