Congress Extends War, Terror Coverage For Airline Industry

NU Online News Service, Oct. 5, 1:38 p.m. EDT

WASHINGTON–Congress quietly extended a terrorism risk insurance program for the airline industry for another year last Thursday.

The one-year extension was included in a continuing resolution aimed at funding the government until Dec. 3.

Authorization for the program would have expired Thursday without the extension.

President Obama immediately issued a proclamation authorizing the Department of Transportation to extend the program, which provides insurance or reinsurance to U.S. air carriers against loss or damage arising out of terrorism.

The extension runs until Sept. 30, 2011.

But the DOT secretary cannot authorize such insurance unless he "determines such insurance or reinsurance cannot be obtained on reasonable terms and conditions from any company authorized to conduct an insurance business in a state of the United States."

The program is the Federal Aviation Administration's War Risk Insurance Program. The program has been available to U.S. carriers flying into war zones since the 1950s, according to the Department of Transportation, which administers it, but has been extended to domestic carriers since January 2003.

Officials of various brokerages which sell the coverage declined to comment on the program.

The Obama administration is looking into the possibility of reducing its terrorism risk insurance coverage liability as a budget-saving measure.

The Treasury Department asked for comments on the issue in July and received 49 comment letters on it, predominately from insurance industry interests that insisted the current version of the Terrorism Risk Insurance Act is essential to maintaining affordable terrorism risk coverage, especially for commercial properties in high-risk areas.