Tags: Insurance | Industry | Mulled | Grounding | Airlines

Insurance Industry Mulled Grounding Airlines

Friday, 21 September 2001 12:00 AM

"Without terrorist coverage available for the airlines, they'd have to be grounded," said Maurice Greenberg, president of the New York-based AIG Inc.

Most of the world's airlines have until Monday to inform their insurance carriers how they plan to protect their assets from terrorists as a result of the Sept. 11 terrorist attacks in New York and Washington. Aviation insurance carriers want airline companies to renegotiate their policies to include terrorism.

A senior administration official said the White House and lawmakers on Capital Hill realized that if the bill did not pass, it could leave the airlines at risk of being grounded again next week.

The U.S. Senate on Friday night approved 96 to 1 the airline bailout package negotiated between Congress and the White House as a result of the Sept. 11 suicide hijackings that leveled the 110-story World Trade Center twin towers in New York, severely damaging the Pentagon outside Washington and injuring and killing more than 6,000 people. It provides liability coverage that would protect underwriters from losses in the event of another terrorist attack. The bill was expected to pass the House around midnight Friday night.

The agreement between Bush and lawmakers would provide $3 billion in immediate funds for air marshals and upgraded ground security. Those funds would come from the $40 billion emergency appropriation approved by both houses of Congress last week, the White House said. Airlines would also receive an additional $5 billion in cash to replace lost revenue after flights were grounded by the Department of Transportation in the hours following the hijackings. The agreement also provides $10 billion in loan guarantees.

Under the measure the federal government also would agree to pay the airlines' insurance premiums up to $100 million under the War Risk Insurance Program that provides protection against terrorist attacks, thus keeping the U.S. air transportation system in operation.

The measure would provide no-fault compensation to people physically injured and families of those killed in the Sept. 11 attack. It sets up a special master in the Department of Justice that would hold hearings to determine the level of compensation. Individuals accepting the pay out would waive their right to sue the airlines later and would not be able to receive punitive damages. A senior administration official said Friday the system was designed to prevent victims from a lengthy court proceeding in which resolution could take years.

And for similar attacks occurring within the next 180 days, airlines would be liable for up to $100 million for third-party damages.

The Federal Aviation Administration shut down U.S. airspace, grounding 4,500 commercial and air freight planes just hours after terrorists used three hijacked fuel-laden jetliners to crash into the World Trade Centers in New York and the Pentagon building outside Washington killing more than 6,000 people.

A fourth hijacked airliner crashed in rural Pennsylvania. The attack was the worst-ever on U.S. soil.

"The federal government has to backstop the impact on the industry arising out of terrorist activities,'' said Maurice Greenberg president of AIG Inc. He suggested that the U.S. follow the example of Great Britain, and establish a government-run fund that would be set aside and used to pay claims in the event of a terrorist action.

Copyright 2001 by United Press International. All rights reserved.

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Without terrorist coverage available for the airlines, they'd have to be grounded, said Maurice Greenberg, president of the New York-based AIG Inc. Most of the world's airlines have until Monday to inform their insurance carriers how they plan to protect their assets from...
Insurance,Industry,Mulled,Grounding,Airlines
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2001-00-21
Friday, 21 September 2001 12:00 AM
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