Asia’s airlines consider US$1 billion insurance pool

12 November 2001

BALI - Asia’s major airlines are leading the industry by looking to set up a billion-dollar mutual insurance pool to make up for coverage shortages since September 11. The pool would be the first such group response by airlines globally to soaring insurance costs since the attacks.

The Association of Asia Pacific Airlines agreed to look at setting up the fund on Friday at their annual presidents’ meeting in Bali, according to the Asian Wall Street Journal. Members also voted to launch a regional marketing campaign aimed at reviving consumer confidence.

Members of the of the 18-strong group would each contribute as much as US$20 million to the insurance fund, the paper quoted Richard Stirling, AAPC director general as saying. To raise the necessary more than US$1 billion, members would commit bank funds, including letters of credit or bank guarantees, with claims then payable to participating airlines, he said.

The association will also try to recruit new members to reduce the financial commitment placed on individual airlines, Stirland said.

The International Air Transport Association anticipates overall insurance premiums paid by its members will increase six-fold in 2002 compared with this year to more than US$9 billion, and at a time when many are suffering financial losses.

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