AIRMIC has criticised the Government for making slow progress to resolve concerns over the lack of adequate and affordable terrorism cover in the UK market. And it says the aviation industry has been left between a rock and a hard place by a Treasury decision to withdraw underwriting support as insurer of last resort.
Executive director David Gamble said the insurance industry was suffering from a 'too many cooks' syndrome, and instead of finalising the issues around property and business interruption, which the Treasury had agreed to support in December, it had concentrated on widening the debate to include liability issues connected with terrorism.
In a hard-hitting letter to the Financial Times, he also said that so-called joined-up government did not mean removing from airlines the long-term certainty of government-backed insurance support in the misguided hope that commercial insurers would provide long-term cover, when the same government estimated that the terrorist threat would last for years, or even for decades.
"It means providing parliamentary time to make whatever changes are necessary to the existing government-backed insurance cover (eg Pool Re and Troika) so that companies, including airlines, in the UK are not exposed to potentially huge accumulations of risk," he commented. "There is no virtue in being deliberately unprepared in the face of extreme risks, even though there is a long and inglorious tradition of 'too little, too late' in this country."
AIRMIC has urged the Government to accept that it is not financially sound for any organisation to be faced with unlimited liability as a result of a terrorist attack. For all terrorist activity, it says, the Government must accept the role of insurer of last resort for losses above a significant level.
The Treasury has twice extended its support as insurer of last resort for the airlines - first on March 20 until March 31 to bring it into line with what was already on offer to the rest of Europe and then, just before the Easter holiday, until May 31. Meanwhile, discussions continue about a possible European mutual for the airlines.
