Israeli Airlines Could Face Insurance Issues

The war between Israel and Hamas forces could have a knock-on impact on airline operations. According to a report posted on the Reuters website today (Oct. 19), industry sources “with direct knowledge of the matter” said aviation “war insurers” have given notice they could cancel coverage for certain airlines based in Israel and Lebanon. Normal insurance strategies for airlines include both “all risks” policies for risk of regular hull damage and passenger liability—and a “war policy” to guard against war- or terrorist-related losses.

According to contract terms, Reuters wrote, insurers based in Europe, the U.S., and the Lloyds of London markets have the right to issue a seven-day notice of cancellation—or other changes to terms and conditions should a major conflict bring greater risk than the companies are willing to assume.

Bruce Carman, chief underwriting officer at Hive Underwriters, told Reuters, "War underwriters' appetite for continuing to cover these risks for no additional reward differs, and some are now looking to withdraw cover[age], especially given the news the Israeli government has provided a backstop to cover flights."

According to the Reuters report, the Israeli Parliament’s finance committee has approved a government guarantee of up to $6 billion to cover insurance for war risks for Israeli airlines.