Germany’s Allianz announced the launch of “a new product addressing the need of airlines for a solution regarding their exposure to terrorism and war third-party legal liability.”
The policy, which will be available through Allianz “together with a panel of international partners,” has liability limits of $1 billion per aircraft with a maximum coverage of $2 billion per airline in a yearly period. According to a report in London’s Financial Times three of the major partners involved in providing the coverage are Warren Buffett’s Berkshire Hathaway, Germany’s Hannover Re and PartnerRe in Bermuda.
Detlev Bremkamp, member of Allianz Board of Management stated that “With this product Allianz has a good answer to inquiries from airline customers asking for a broader availability of solutions to protect them against war and terrorism related third-party legal liability claims.”
The announcement indicated that, although individual policies could not be cancelled, “coverage will automatically terminate after four major events resulting in losses under the master scheme.” It added that not even the events of Sept. 11 would have triggered an automatic cancellation.
Bremkamp described the terms as striking “a fair balance between the requirements of the airline industry for increased certainty and adequate comfort of coverage as well as our own requirements to protect our capital base against an accumulation of events.”
The company’s announcement did not indicate what role, if any, the newly created Special Risk Insurance and Reinsurance Luxembourg S.A. (SRIR) might play in writing the policies. Allianz and Swiss Re officially formed the company earlier this month with Zurich Financial Services, Bermuda’s XL Capital Ltd, Hannover Re and SCOR to provide terrorist coverage (See IJ Website April 11).
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