Airlines need coverage as Ottawa backs off airline insurance

Airlines need $5M insurance a year as feds get out of aviation insurance

Commercial Solutions

By Libby MacDonald

Insurance premiums are set to rise for Canadian airlines as the federal government gets out of the aviation-insurance business, a development likely to cost airlines $5 million in new insurance costs annually, according to one industry expert.

It’s the final step of a process that began when the 9/11 attacks nearly 15 years ago shocked the world and led to insurers cancelling their “war risk insurance" policies for air carriers in all parts of the globe. Into the resulting vacuum stepped the Federal government’s coverage.

Since then most countries have ended their taxpayer-supported war-risk coverage, which included paying out third-party liability claims from terrorist attacks and acts of war. The American government bought their equivalent war-risk insurance program to an end at the conclusion of 2014.

Ottawa renewed this government-provided coverage to June 30 this year, a reprieve of a six month extension past the initial expiration planned for the end of the calendar year, but according to Transport Canada spokeswoman Natasha Gauthier, the program "will not be renewed upon its expiry in June 2016."

President and CEO of the Air Transport Association of Canada, John McKenna, said "We did lobby for this program to continue as it has never cost the government a penny in claims. We thought it unfortunate that this should be one of Minister Garneau's first announcements."

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