Situation Brief – Libya, Iraq & Pakistan Hull & Liability War Risks

Situation Update

Following the fighting in and around Tripoli Airport at the beginning of last week, it is anticipated that Libyan airspace will be closed for up to a month, as vital navigation equipment has been destroyed effectively paralysing the country’s air traffic control capabilities.

In view of these developments and their impact on the aviation insurance market, we can advise the current situation in Libya, Iraq and Pakistan as follows:

Libya

Militants from the Libya Revolutionaries Operation Room (LROR), launched an attack at the airport on Sunday 13th July, against the Zintan militia who have been controlling the airport since the uprising in 2011. The more city-centre located Matiga Airport has not been subject to attack.

To date we understand that at least nine (9) aircraft belonging to Libyan carriers and one (1) aircraft belonging to a carrier from the region, have suffered damage on the ground as a consequence of the attacks. The exact extent of the damage, and potential cost, is not verified at present but is thought to have been caused by small arms fire.

 Iraq

The scope of territory occupied by ISIS in Northern Iraq is little changed and has stabilised. Aviation operations at Baghdad International Airport and other Iraqi domiciled international airports under the control of the Iraqi government continue to be normal.

No damage to either airports or aircraft has been sustained to date.

 Pakistan

There has been no further reported insurgent activity since our previous briefing. Following the attack at Peshawar, the Pakistan CAA have inplemented additional security measures on the approach funnel to Bacha Khan International Airport in order to avoid repetition of the event.

Market Response

The Hull War market has suffered extensive losses in recent months including the weekend’s events in Libya. We would not expect to know the full financial impact of these incidents for some time, however, should the incident at Tripoli airport materialise into a significant loss we would expect Hull War (re)insurers to respond by endeavouring to increase premium volumes either across the book or for airlines domiciled or operating into the areas concerned.

Any increase in frequency or any flights into the aforementioned regions will be considered as a “Material Change of Risk” by (re)insurers. They are likely to require any non-scheduled flights; charter flights; repatriation flights; aid flights or similar, to be declared to them for agreement and/or rating, prior to any flight taking place.

The option to apply seven (7) days’ notice to review the rate and/or the geographical limits, or cancellation of the policy may also be applied to scheduled operations.

We would expect Liability insurers to follow suit in their approach for the provision of AVN52E War Liability write-back coverage.

Recommended Action

When considering flights into Libya, Iraq, Pakistan or their surrounding areas, it is important to liaise with your  Account Manager in order to discuss whether your insurers will consider your proposed activity increases their risk exposure.

Information is a vital aspect of any negotiation and we would advocate an open dialogue with insurers, supporting information in relation to security and operations will assist us in resisting, or mitigating, any additional charges that may be proposed and/or levied by (re)insurers.

Information should include, but not be limited to:

  • Aircraft details and values
  • Airport(s) to be operated to
  • Purpose of flight and details of passengers or goods to be carried
  • Accumulation of aircraft and time on the ground
  • Additional security measures undertaken
  • Contingency planning for movement of aircraft / alternative parking and over-nighting
  • Details of how you access intelligence to current and future threat would provide (re)insurers with a better understanding of the risk.

If you have any questions in connection with the above, please refer to your Account Manager.