US airlines plan to create a company to insure themselves against terrorism and acts of war at premiums about half the rate private insurers have been charging since the Sept. 11 terrorist attacks.
AMR Corp's American Airlines Inc, UAL Corp's United Airlines and other members of the Air Transport Association, the US airlines' trade group, are forming the company, according to Jerry Frick, head of the global aviation practice for Marsh Inc.
Marsh, the insurance brokerage unit of Marsh & McLennan Cos, advised the association on the plan.
PHOTO: AP
The airlines would provide about US$300 million in start-up funding and first-year premiums to the company, called Equitime, said Jim Casey, a spokesman for the association. Coverage will cost about US$0.50 to US$0.70 per passenger, compared with the US$1.33 they pay now. Insurance available in the private market requires airlines to pay premiums equal to the potential loss they could absorb.
"Pre 9-11, US airlines were paying a combined US$15 million to US$20 million for war risk coverage and today we're paying a combined US$930 million," said Chris Duncan, risk manager at Delta Air Lines Inc and chairman of the ATA's insurance group. "That's not insurance."
The program would offer liability coverage of up to US$1.5 billion per event. The ATA hasn't completed the proposal and would still need regulatory approval for some parts of it, Casey said.
"We're not at a point where we can formally announce anything," Casey said, declining to detail outstanding issues.
The proposed insurance could be available to US passenger and cargo carriers as early as June, he said.
Commercial insurers limited war-risk coverage available to airlines and increased premiums after the attacks, forcing carriers to seek alternatives and more funding for insurance. The US government stepped in to provide coverage through March 20 for damages of more than US$100 million that might result from acts of terrorism.
"The appeal to the government is that Equitime is a self-help mechanism that over time reduces the necessity of the federal government providing a backstop to the industry," Marsh's Frick said.
The International Air Transport Association and the International Civil Aviation Organization are also working on plans to provide alternative insurance to airlines, airports and vendors, said David O'Connor, an IATA director.
The proposal includes additional coverage from the US government for claims over Equitime's initial US$300 million during the first year, Casey said. As Equitime's premium payments and interest accumulate, the federal government's role would decrease, he said.
Frick said the company would eventually eliminate the need for coverage from the government.
The Transportation Department didn't have an immediate comment on what role it might play in Equitime. The carriers would need the government to extend its stopgap coverage past March 20 and no decision has been made on that front, said Bill Mosley, a spokesman for the Transportation Department.
Officials at American and United, the two largest carriers, declined to comment on the plan, which was reported Sunday by the New York Times. Other airlines couldn't be reached for comment.
Equitime is being formed under the 1986 US Risk Retention Act, which allowed groups of companies in the same industry to form a risk retention group to insure its members.
The Risk Retention Act supersedes state insurance laws, so the new company doesn't have to be licensed by every state. That speeds up the process and cuts costs for the airlines, Frick said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique