Garuda says all flights are fully insured<\/p>\n
Tantri Yuliandini, The Jakarta Post, Jakarta<\/p>\n
National flag carrier Garuda Indonesia has secured coverage
\nfor its third-party war and terrorism liability insurance up to a
\nmaximum of US$1 billion without government support, a senior
\nexecutive said.<\/p>\n
Garuda's director of finance Emirsyah Satar said on Wednesday
\nthat the company had moved to cover the insurance with agencies
\nin London immediately after the government declined to underwrite
\nthe airline.<\/p>\n
\"It is, of course, up to the shareholder (the government) to
\nmake that decision,\" he told reporters on the sidelines of a
\nceremony marking a collaborative venture between Garuda and PT
\nBank Central Asia (BCA).<\/p>\n
The national airline had earlier asked for government support
\nfollowing the shortfall in its insurance coverage.<\/p>\n
Insurance companies around the world cut back airline
\nliability coverage for injury and damage to persons and property
\non the ground resulting from terrorism, hijackings, and other war
\nrisks immediately after last month's terrorist attacks on the
\nU.S.<\/p>\n
The companies limited their coverage to a maximum of $50
\nmillion instead of the usual maximum of $2 billion immediately
\nafter the attacks, causing many airlines around the world to
\nappeal to their respective governments for additional guarantees.<\/p>\n
Without adequate liability coverage, the aircraft would be
\nbanned from flying both by the lessor of the aircraft and the
\ndesignated airports.<\/p>\n
The government, however, said on Tuesday that it would not
\nguarantee the shortfall due to its limited financial capabilities
\nand the fact that adequate coverage on the insurance market had
\nbecome available again.<\/p>\n
Emirsyah admitted that Lloyds of London were once again
\nproviding insurance coverage of up to $1 billion, whereas there
\nhad been none available immediately after the attacks.<\/p>\n
\"Last week, there was no coverage for $1 billion available on
\nthe market in London. But there is now, so we've gone back to the
\nmarket,\" he said, adding that Garuda's insurance broker was EON
\nLondon.<\/p>\n
However, the higher coverage meant higher premiums, meaning
\nthat the extra costs would be added to the price of airline
\ntickets, Emirsyah said.<\/p>\n
But he added that Garuda had yet to decide on whether to
\nimpose surcharges on its international or domestic passengers.<\/p>\n
Global insurers had raised premiums per passenger for third-
\nparty war and terrorism insurance to $1.25 for coverage worth $50
\nmillion. For coverage up to $150 million, an additional 35 U.S.
\ncents was added to the premium, and another $1.50 for coverage up
\nto $1 billion.<\/p>\n
Therefore, a surcharge of approximately $3.10 per passenger
\nwould be needed to cover the insurance premium.<\/p>\n
Emirsyah said that Garuda needed to pay additional premiums of
\nbetween $20 million and $25 million per year for liability
\ncoverage of up to $1 billion, besides having to pay about $10
\nmillion a year for hull liability. The premiums were paid in
\nquarterly installments, Emirsyah said.<\/p>\n
He said that it was not yet certain when the airline would
\nstart imposing the surcharges.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/garuda-says-all-flights-are-fully-insured-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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