[Congressional Record Volume 151, Number 86 (Friday, June 24, 2005)]
[Extensions of Remarks]
[Page E1349]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    THE INTRODUCTION OF A BILL TO EXTEND AIRLINE WAR RISK INSURANCE 
                                POLICIES

                                 ______
                                 

                          HON. ROBERT MENENDEZ

                             of new jersey

                    in the house of representatives

                         Friday, June 24, 2005

  Mr. MENENDEZ. Mr. Speaker, today I am pleased to introduce 
legislation that will extend war-risk insurance coverage for our 
Nation's airlines for 3 years, through August 31, 2008.
  In the aftermath of the September 11th attacks, commercial insurance 
providers invoked their 7-day cancellation clauses on war-risk 
insurance policies held by U.S. airlines. With the absence of a 
commercial war-risk insurance market, the Federal Government was forced 
to step in. Less than 2 weeks after the attacks, Congress authorized 
the Federal Aviation Administration to begin offering war-risk 
insurance to airlines, and that authority has been extended a number of 
times, but is now set to expire on August 31 of this year.
  We need to extend the FAA's ability to issue war-risk insurance 
policies for the financial sake of the U.S. airline industry, which 
lost approximately $9 billion in 2004. This program is not a bailout. 
First of all, it is actually a revenue raiser for the Federal 
Government. Second, it is considerably more expensive than the war-risk 
insurance policies held by the airlines prior to September 11th. Four 
years ago, the airline industry paid a total of approximately $20 
million in premiums per year. Last year, they paid over $140 million. 
However, this is much more reasonable than the over $600 million the 
Air Transport Association estimates they would have to pay on the open 
market. This massive jump in premiums could mean the difference between 
solvency and bankruptcy for many of our struggling airlines. In 
addition, the commercial insurance policies that exist still contain 
the 7-day cancellation clause that would allow the insurers to cancel 
policies in the face of an enhanced threat.
  Should the airlines be unable to obtain war-risk insurance policies, 
they would be forced to stop operating. This would be a crippling blow 
to not only the aviation industry itself, which employs over 15,000 
people in New Jersey alone, but also to the entire United States 
economy.
  Airlines are still a prime target for terrorist attack, which makes 
war-risk insurance both an absolute necessity and something that can 
not be offered by the commercial market at a reasonable price. This 
bill would help our struggling airline industry without costing the 
Federal Government one cent, and I urge my colleagues to support this 
small but crucial piece of legislation.

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