The Cabinet yesterday agreed to guarantee liability for the nation's airlines for 30 days, staving off the possible grounding of all commercial aircraft due to insufficient insurance coverage.
Premier Chang Chun-hsiung (
On Tuesday, insurers worldwide reduced their liability for third-party war risk insurance to US$50 million, down from the as much as the US$2 billion required by airports and aviation authorities around the world in the wake of the terror attacks on the US two weeks ago.
"Airlines without coverage equal to original levels would have to either shoulder the enormous risk without insurance or simply halt operations, which would have a serious impact on consumers," said Chang in the statement.
The Cabinet agreed that the government should assume the full amount of liability for each incident exceeding US$50 million for the nation's airlines without setting a ceiling, according to the statement.
Some reports said the Cabinet had agreed to assume liability of up to US$1.95 billion, but aviation executives said that the maximum amount of third-party war risk liability for Taiwan's major airlines was around US$1.7 billion.
The coverage would be valid for 30 days, expiring on Oct. 25, "giving the airlines time to seek coverage organized by private insurance companies,"the statement said.
Alex Shih, (施建華) secretary-general of the Taipei Airlines Association, which represents all six of Taiwan's international and domestic carriers, said that finding insurance firms to assume coverage might be tough.
"It's difficult to say what kind of policies insurance companies will offer within the next 30 days ... if they insist they cannot provide it, then all we can do is ask the government to extend its guarantee until we get the commercial insurance to cover our risks," Shih said.
Paul Wang, (
AIG chairman Maurice R. Greenberg said Tuesday that member companies would extend up to US$1 billion per airline in war risk liability coverage to "bridge the gap between the limits currently available in the market," according to industry journal Aviation Daily.
Nick Ionides, Asia editor for Flight International magazine, was also upbeat that coverage would become available.
"There are a number of people who are offering coverage and as we see what happens around the world in the next few weeks there probably will be more and more coverage being offered," he said.
The liability package will be discussed today by the Legislative Yuan, which must give its approval for it to be implemented.
Though criticizing the Cabinet for being slow in responding to the crisis faced by the airline industry, the opposition-controlled Legislative Yuan agreed to alter its agenda for today in an attempt to push through the emergency legislation.
Legislative Speaker Wang Jin-pyng (
The legislature is then to decide on the fate of the extraordinary bill, he added.
"Hopefully, we can wrap up the business before noon," the speaker told reporters.
Seeking to speed up legislation, the Cabinet had sought yesterday to settle the matter through cross-party negotiations.
But opposition parties rebuffed the attempt on grounds it would encroach on their power to oversee the executive branch.
"As long as the Cabinet follows proper procedure, the KMT caucus will try to cooperate," KMT legislative leader Lee Cheng-chong (李正宗) said. "Having said that, I can only hope that no accident takes place in the next 30 days," Lee said.
Lee also criticized the Cabinet for failing to respond more quickly to the crisis arising from the Sept. 11 terrorist attacks on New York and Washington.
With a majority control in the legislature, the KMT can make or break the emergency measure aimed at ensuring normal international flights by domestic airline companies.
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