June 14, 2002 by Canadian Underwriter
North American airlines have succeeded in gaining a license to operate a risk retention pool from Vermont’s "onshore" captive domicile. The "Equitime" pool will provide its airline members with cover against terrorism and war related third-party risks. European airlines are currently seeking EU approval to establish a similar "self-insurance" mechanism in the wake of steep insurance renewal rates. Government insurance backing of the airlines in both North America and Europe set to expire at the end of June this year. It is unclear whether government coverage for terrorism related losses will be extended beyond this deadline.
Jon Harkavy, a director of the Vermont Captive Insurance Association, says Equitime will be one of the larger risk retention entities operating from Vermont. The aviation risk retention pool will give the domicile greater "political clout", he adds. Details on how Equitime will operate have not yet been released. However, it is expected that the U.S. federal government will provide excess layer cover to the airlines, at least until the industry is able to build up sufficient capital reserves within Equitime to become fully self-insured.