The long-term renewal of a U.S. government terrorism risk insurance program for the nation's airlines–extended to cover domestic flights shortly after Sept. 11, 2001–is in jeopardy.
The program is similar to the Terrorism Risk Insurance Act, which the Bush administration doesn't like because it feels such reinsurance exposure should be borne by the private sector.
Another problem is that the European Union views the program as an illegal subsidy.
Terrorism risk for domestic carriers was added to an existing War Risk Insurance Program sometime after 9/11 by Congress after airlines complained that terrorism risk coverage was withdrawn by the private sector.
Such insurance has not been available at reasonable rates since 9/11.
A broker said that commercial terrorism insurance for domestic aviation is simply unavailable and warned that “without this government program, the airlines would be in a world of hurt.”
A report due out by the end of this month from the President's Working Group on Financial Markets, which was asked to study the affordability and availability of terrorism insurance in the private market place, will gauge how receptive the Bush administration is to renewal of TRIA past its 2007 sunset.
(Read the complete story in National Underwriter's Sept. 11 issue, “Airlines May Be Left Bare,” page 7.)
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