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117/01
30
October 2001
GOVERNMENT OFFERS AIRLINES CHOICE OF COVER FOR TERRORISM AND
WAR INSURANCE
From
1 November, UK airlines will be able to choose between commercial
and government-backed insurance for third party liability for
terrorism and war risks.
The
Government announced on 22 October that it would renew the scheme
set up to fill the gap in the commercial insurance market to
ensure that UK airlines could continue to fly in the wake of
events in the United States last month. The Government intended
that from 1 November airlines would find commercial cover for
the first $100m, with the Government backed Troika scheme providing
cover for liabilities above $100m. However the planned increase
in commercial cover is not becoming available as fast as originally
hoped, and cover above $50m is only available from a limited
number of providers.
Airlines
will therefore be offered the following choice from 1 November:
- To purchase
the commercial cover for liabilities up to $100m. The Government
backed Troika scheme will provide cover above that level and
waive the premiums until midnight on 24 November, or
- To retain
cover under the Troika scheme for all liabilities above $50m.
Premiums for this cover are currently waived, but the Government
will start charging from 8 November, in line with European
Commission guidelines.
The
current 30 day scheme expires on 24 November. The Government
intends to renew the scheme but will introduce commercial charges
for all airlines covered by Troika, informed by consultation
with the industry about the most appropriate basis for charging.
Chief
Secretary Andrew Smith said:
“We
are taking a pragmatic view which aims to give airlines flexibility
to choose the most appropriate insurance option for them. The
Government’s objective remains to withdraw from the market as
soon as practicable. However commercial cover is not yet available
across the board for third party liability up to $100m. Therefore
the Government is ensuring an option is available for all airlines
through Troika, in addition to the commercial insurance available.”
NOTES TO
EDITORS
- As
announced on the 21 September 2001, the Government has established
an insurance scheme that fills in the gap between the cover
airlines and service providers had for third party war and
terrorism liabilities before the US attacks and what the insurance
industry is prepared to provide now. On 22 October it
was announced that the scheme would be rolled forward for
a further 30 days.
- New
arrangements are now being offered to the airlines as full
commercial cover is not yet available up to $100m. The position
of service providers, as set out in the press notice of 22
October, is not changed by this announcement.
- The
Government is consulting on the most appropriate method for
charging premiums to the airlines beyond 24 November (when
the current scheme expires). However, the Government will
be giving notice that from 8 November, airlines that choose
not to take out commercial cover up to $100m will be subject
to charges consistent with the guidelines issued by the European
Commission on 23 October. The Government intends to collect
premiums quarterly in arrears.
- The
European Commission guidelines proposed a tiered system of
charging for Government schemes: for cover between $50 million
and $150 million a premium of not less than $0.35 per passenger,
cover between $150million and $1billion a premium of not less
than $0.35 per passenger, and cover above $1billion a premium
of not less than $0.25 per passenger. The premiums are cumulative.
- Media
enquiries should be directed to HM Treasury Press Office,
020 7270 4420.
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