Potential Impact of Israel-Hamas Conflict on Aviation Insurance

Potential Impact of Israel-Hamas Conflict on Aviation Insurance

In a recent development, aviation "war insurers" are considering the cancellation of coverage for certain airlines based in Israel and Lebanon due to the ongoing Israel-Hamas conflict. Industry insiders, described as having direct knowledge of the situation, have indicated that aviation insurance typically includes two main policies: "all risks" coverage for regular hull damage and passenger liability, and a "war policy" to protect against losses related to war or terrorism.

As per contract terms outlined in a Reuters report, insurance providers based in Europe, the United States, and the Lloyds of London markets possess the authority to issue a seven-day notice of cancellation or modify terms and conditions when a significant conflict introduces more risk than they are willing to bear.

Hive Underwriters' Chief Underwriting Officer, Bruce Carman, has highlighted the varying appetites among war underwriters regarding the continued coverage of these risks, particularly given recent developments where the Israeli government has reportedly stepped in to offer a backstop for flight insurance.

The Israeli Parliament's finance committee has moved forward by approving a government guarantee of up to $6 billion to cover insurance for war-related risks associated with Israeli airlines. This initiative seeks to address the potential repercussions of the Israel-Hamas conflict on airline operations.

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