Several major insurance companies are considering adding an extra charge for airlines flying to Iraq's neighboring states because of risks linked to the war.
"We are discussing ways of adding premiums to the war insurance coverage for aircraft flying to states bordering on Iraq," a major airline insurer said.
He said a flat surcharge to cover war risks is a better solution than the standard seven-days notice system, whereby policies are scrapped and have to be renegotiated when there is war conditions.
After the Sept. 11, 2001 terrorist attacks on the US, as well as after Iraq's invasion of Kuwait in 1990, insurance companies around the world handed air carriers seven days notice before scrapping their insurance policies.
To save the global air industry from collapse, many governments stepped in with emergency cover. France provided insurance for the state carrier Air France until December 2002.
But industry sources said the insurance sector is better prepared to tackle the risks of the US-led intervention in Iraq.
"The insurance sector has stayed remarkably calm," said the airline insurer, who asked not to be identified. "In London, we have even seen capacity [to offer insurance] for carriers whose aircraft could be requisitioned for military use."
On Thursday, Air France sus-pended its service to Amman and cancelled all flights to Tel Aviv in Israel until March 24, but the company said that the decision was not driven by insurance concerns.
An industry source confirmed that Air France had taken "precautionary measures that are not connected to insurers."
"War coverage policies for the air industry can exclude a certain number of countries -- which vary from one insurer to another. If war breaks out the list can be extended," the source said. "If a carrier does insist on covering a high-risk area, his policy will undergo regular, even daily, revisions."
Insurers design policies covering high-risk zones, based on factors such as flight frequency and time spent on the ground, leading many carriers to land and take off as fast as possible -- the "touch and go" method.
Following its invasion of Kuwait in 1990, Iraq seized all the aircraft that were on the ground at Kuwait City airport, including many from foreign airlines.
"At the time, insurers paid out for the aircraft and lost a lot of money," the source said.
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