Legislation to handle war insurance published

Legislation to deal with the withdrawal of war insurance cover for airlines and airport operators has been published by the Government. The Navigation and Transport (Indemnities) Bill, 2001, addresses the charging of premiums for airlines availing of the Government's underwriting of war risk cover.

Following September 11th, insurance companies said they would offer only third-party war-risk cover to airlines at a much greater premium and with lower limits on pay-outs. Ms O'Rourke said that, among other issues, the Bill addressed the charging of premiums for airlines utilising the Government's underwriting of war-risk cover. "The terrible events in the United States have had huge repercussions for economies across the globe, and, in particular, the aviation industry. This Bill, which I intend to introduce into Dβil ╔ireann, is the Government's response to one aspect of these repercussions, the withdrawal of war-risk insurance cover in the insurance industry worldwide."

She said the underwriting by the Government of the missing insurance cover was done in common with the action of other EU governments and others to solve this problem. "As this scheme could not be introduced under existing legislation it became necessary, on the advice of the Attorney General, to bring in legislation."

The Bill will authorise the Minister to issue indemnities to airlines, airports and other essential aviation-support services to make up the gap between the insurance cover that they actually have and what was available before the insurance industry withdrew the cover. It also authorises the Minister to charge airlines, airports and service providers premiums for the insurance cover provided by the Government. It limits the amount to be paid out by the Government "in the unlikely event of a claim being made by the undertakings covered under the scheme to €9 billion".

The Government had issued undertakings to allow them to continue operations after September 24th, the date of withdrawal of this insurance. These were issued with "letters of comfort" containing an undertaking by the Government to introduce the legislation. These letters have since been renewed for another month.