This article from NYTimes.com has been sent to you by psa188@juno.com. A Call for U.S. to Get Out of Terror Insurance for Airlines February 26, 2002 By JOSEPH B. TREASTER Maurice R. Greenberg, the chief executive of the American International Group (news/quote) and a strong advocate of government help in providing general terrorism coverage, urged yesterday that Washington get out of the business of providing terrorism coverage for United States airlines for damage on the ground. Mr. Greenberg said his company and other private insurers, which refused to sell the coverage after the Sept. 11 terrorist attacks, were now willing to do so. For the government to continue a subsidized insurance program for the airlines, he said, would only stymie the full development of the commercial insurance market. "We, as taxpayers, don't want to compete with our own government for business that the commercial sector can underwrite," Mr. Greenberg said at a news conference at his office in the Wall Street district. Private insurers have continued to provide full coverage for passengers and $50 million for ground damages, far short of the $1 billion minimum required by lenders and many national regulators. Mr. Greenberg said his proposal was sent last Thursday to Norman Y. Mineta, the transportation secretary, who administers the government insurance program. Bill Mosely, a spokesman for Mr. Mineta, declined to comment yesterday. The Air Transport Association of America, the trade group of the major airlines, said it was too soon to end the government program because private coverage was not yet being offered at prices that are "commercially reasonable." Mr. Mineta must decide by March 20 whether to extend the government program. Congress created the special insurance program 11 days after the September attacks. European governments followed soon afterward with similar plans. But many countries around the world did not provide insurance assistance to their airlines. In early October, A.I.G. and 15 other insurers began selling the coverage. The group, now up to 25 insurance companies, has signed up more than 200 foreign carriers. Now, Mr. Greenberg said, governments in Europe are ending their programs and the airlines are turning to private insurers. Coverage from private insurers is several times as expensive. Under the federal program, United States airlines are required to buy the first $50 million from private insurers for $1.25 for each passenger on every flight. Then they pay a flat fee of $7.50 for each takeoff for $3 billion to $4 billion in coverage, regardless of how many passengers they carry. Jim Casey, deputy general counsel for the Air Transport Association of America, estimated that comes to about $850 million a year, mostly to the private insurers. >From private insurers alone, the coverage would cost at least $2.25 a passenger on each flight. That would increase costs to the United States airlines by $550 million, to about $1.4 billion a year, Mr. Casey said. That would be on top of $10 million to $80 million annually for each airline for other coverages, up threefold to fourfold since the September attacks. The airlines are discussing forming their own cooperative insurance company. Mr. Greenberg brushed aside questions about potential profits for his company. "Unless you can tell me there is not going to be another terrorist attack," he said, "how can you talk about profits?" Mr. Greenberg said there was nothing inconsistent about simultaneously appealing for government support for general commercial insurance and calling for an end to it for the airlines. "They are two different things," Mr. Greenberg said. In airline coverage, he said, the costs for the insurer are clearly defined, usually a maximum of $1 billion or $1.5 billion. But he said the potential for losses in general coverage was far more variable. Many buildings and offices could be damaged and thousands of people could be killed, as they were at the World Trade Center. Each building and each office carried separate coverage, and losses mounted to an estimated $50 million, $3 million of which was for the two aircraft that were flown into the twin towers. http://www.nytimes.com/2002/02/26/business/26INSU.html?ex=1015758591&ei=1&en=017d532ed3dff491 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company