[Congressional Record Volume 143, Number 128 (Tuesday, September 23, 1997)]
[Senate]
[Page S9801]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             AVIATION INSURANCE REAUTHORIZATION ACT OF 1997

 Mr. GORTON. Mr. President, I am pleased to join with my 
distinguished colleagues, Senator McCain, Senator Hollings, and Senator 
Ford, to introduce the aviation insurance reauthorization Act of 1997. 
The bill would reauthorize the aviation insurance program for five 
years. The program is set to expire at the end of this fiscal year.
  The aviation insurance program, commonly known as war-risk insurance, 
has been in place since 1951. It insures air carriers against losses 
resulting from war, terrorism, or other hostile acts, when commercial 
insurance is canceled, or is unavailable at reasonable rates. For an 
air carrier to qualify for the program, the President must determine 
that a flight is essential to the foreign policy interests of the 
United States.
  The FAA can issue both premium and nonpremium insurance under the 
program. Premium insurance is issued to air carriers flying commercial 
operations in foreign air commerce, or between two or more points 
outside the United States. Nonpremium insurance is issued to air 
carriers flying missions for Federal agencies, such as the Departments 
of Defense and State, that have indemnification agreements with the 
Department of Transportation. Nonpremium insurance accounts for 99 
percent of the aviation insurance program.
  Both the premium and nonpremium insurance provides hull coverage for 
the loss of, or damage to aircraft. The insurance also provides 
liability coverage for death or bodily injury, and damage to property, 
baggage and personal effects. Program coverage is limited to the amount 
of insurance that an air carrier's commercial policy would have 
provided. The program is self-financed through the aviation insurance 
revolving fund.
  Reauthorization of the aviation insurance program is 
noncontroversial. The program enjoys the support of all of its 
participants. I want to note, however, that my bill adds a new element 
to the program. It authorizes the Federal Aviation Administration [FAA] 
to borrow money from the Federal treasury to pay a claim, in the event 
that the revolving fund is not sufficient to cover a large claim, or 
simultaneous claims. I believe that this provision is necessary to 
ensure that timely payments for hull losses can be made to air 
carriers. These same carriers typically lease aircraft under agreements 
that stipulate that the carriers must repair or replace damaged 
aircraft within 30 days of the incident.
  Although the Congressional Budget Office claims that this provision 
does not have a significant budget impact, I understand that the Office 
of Management and Budget [OMB] may disagree. The FAA and the OMB are 
working with the aviation leadership on the Commerce Committee to 
resolve this issue. I pledge my full cooperation, and I hope and expect 
that we can resolve this issue before the Commerce Committee reports 
out the legislation.
  The Commerce Committee plans to report out the bill as early as next 
week. The House plans to approve companion legislation next week, as 
well. I urge my colleagues to work with me to reauthorize the aviation 
insurance program before it expires at the end of the fiscal 
year.

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