Insurance-claim plan approved

Lawmakers yesterday approved a government plan that will provide guarantees for domestic airlines on insurance claims for accidents caused by hijacking or war.

The guarantees will be effective for a 30-day period starting Wednesday and will end on Oct. 26.

During this period, the government will be allowed to guarantee between NT$6.9 billion (US$200 million) and NT$58.6 billion (US$1.7 billion) of any insurance claims above NT$1.7 billion (US$50 million), for damages caused to third parties in each hijacking or war-related accident.

Global insurers have reduced their third-party coverage to NT$1.7 billion (US$50 million) in the wake of the Sept. 11 attacks in the US.

Premier Chang Chun-hsiung (張俊雄), in a report to lawmakers yesterday, said the government hopes the island's six airlines will be able to work out better policies with global insurers within the 30-day period.

"But if they really can't strike any better terms, the government will make the proper arrangements based on conditions then," he said.

Under the government plan, an official aviation fund will be mandated to cover insurance claims exceeding the NT$1.7 billion (US$50 million) level and the government will reimburse the fund. Chang didn't give details about where the government money will come from. According to documents provided by Hsieh Chang-chieh (謝章捷), an opposition People First Party lawmaker, the government would have to guarantee around NT$241 billion (US$7 billion) of third-party insurance claims if the island's six airlines run into accidents at the same time.

The ceiling on third-party insurance claims for China Airlines Co (華航), Taiwan's biggest carrier, is now at NT$60 billion (US$1.75 billion). For EVA Airways Corp (長榮), the second-largest carrier, is at NT$51.7 billion (US$1.5 billion).