ATA Announces War-Risk Insurance Initiative

Washington, May 21, 2002—The Air Transport Association of America (ATA) announced that an important step has been taken in the initiative to make war-risk insurance available on affordable terms. ATA has been working with Marsh Inc., the world`s leading risk and insurance services firm, to create a risk retention group, know as Equitime, which would offer war-risk insurance to airlines to protect them against acts of terrorism. Marsh today filed an application with the Vermont Department of Banking, Insurance, Securities and Health Care Administration for a license to operate Equitime.

A risk retention group (RRG) is a liability insurance company that is owned by its members and is typically created when insurance is unavailable or not available on commercially reasonable terms. Equitime is designed to offer war-risk insurance to both passenger and cargo airlines at premiums roughly half of what airlines are currently paying. Airlines would individually decide whether to purchase insurance from Equitime.

In the immediate aftermath of the terrorist attacks of Sept. 11, commercial insurers cancelled the airlines’ war-risk insurance policies, thereby requiring U.S. airlines to obtain war-risk insurance from the Federal Aviation Administration (FAA). This action was taken because war-risk insurance was not available on commercially reasonable terms post-Sept. 11. Without this insurance coverage, U.S. airlines would have ceased operating.

John T. Sinnott, Chairman and CEO of Marsh, Inc., stated, “The stability of the country’s air carriers is vital to the economy’s health. The risk retention group that is being formed will help ensure that they continue to serve their customers` needs.” He continued, “We are gratified that multiple operating units of Marsh & McLennan Companies, our parent organization, are contributing to solving the complex issues surrounding war-risk liability insurance for the airlines.”

ATA President and CEO Carol Hallett complimented the FAA and Department of Transportation for continuing to provide war-risk insurance at a time when it has not been available on reasonable economic terms from the commercial market. Hallett noted, “Our U.S. airlines would prefer to obtain their insurance from traditional sources but, until the marketplace returns to normalcy, the U.S. airline industry must explore other alternatives. By pursuing more cost-effective sources of such insurance, the airlines, along with the traveling and shipping public, will ultimately benefit.”


The Air Transport Association of America, Inc. is the trade association for leading U.S. airlines. ATA members transport over 95 percent of all the passenger and cargo traffic in the United States.