{
  "id": "R43715",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R43715",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 434087,
      "date": "2014-09-05",
      "retrieved": "2016-04-06T20:06:50.991848",
      "title": "Aviation War Risk Insurance: Background and Options for Congress",
      "summary": "Following the terrorist attacks of September 11, 2001, coverage for such attacks, and for \u201cwar risks,\u201d became difficult, if not impossible, for airlines to purchase from private insurers. In response, Congress passed expansions of the Federal Aviation Administration (FAA) Aviation War Risk Insurance Program. The amended statute (49 U.S.C. \u00a744301 et seq) requires that the FAA offer war risk insurance to U.S. airlines with the premiums based on the cost of such coverage prior to the 9/11 terrorist attacks. The federal coverage under the program is relatively expansive, with coverage provided after the first dollar of losses and with a broad definition of what constitutes a war risk loss. The expansion of the program was limited in time, but has been extended several times over the years, often as part of appropriations legislation. The last extension was in the Consolidated Appropriations Act, 2014 (P.L. 113-76), which extended the expanded program to September 30, 2014.\nUp until 2014, most U.S. airlines purchased the FAA coverage and generally supported the existing program against proposed changes. In 2014, the number of air carriers purchasing insurance and the premium volumes dropped. This movement away from government insurance has occurred against a backdrop of increased private insurance capacity and lower prices. A recent series of large aircraft losses, including the disappearance of Malaysia Airlines flight MH370 in March 2014, the shooting down of Malaysia Airlines flight MH17 over eastern Ukraine in July 2014, and attacks on aircraft on the ground in Pakistan and Libya, however, may lead to higher rates. It is unclear how much rates may increase and whether higher premiums might lead the airlines to again seek coverage from FAA, if such coverage remains available after FY2014.\nThree claims have been filed by airlines under the current Aviation War Risk Insurance Program and claims payouts have been minimal. The premiums paid for the insurance are deposited in a dedicated fund at the Treasury with the balance, currently over $2 billion, invested in U.S. Treasury securities. While this may seem a large sum, according to FAA, the statutory cap on premiums has resulted in past premium amounts insufficient to cover the full risks assumed by the government. For example, the 9/11 attacks are estimated to have caused approximately $5.6 billion in aviation hull and liability losses, adjusted for inflation. A much smaller event could cause losses large enough to deplete the fund and require general fund revenue to cover claims.\nSeveral presidential budgets in recent years have called for changes to the program to reduce government exposure. On March 31, 2014, the Secretary of Transportation submitted a draft legislative proposal to Congress which would make the program permanent but at the same time reduce its scope. Specifically, the administration proposal would create permanent coverage for war risk losses from nuclear, chemical, biological, and radiological events, while giving the Secretary the authority to offer full war risk coverage for 90 days after a widespread disruption in the insurance market, such as that following the 9/11 attacks. The administration draft proposal has not been incorporated into legislation introduced in the 113th Congress.",
      "type": "CRS Report",
      "typeId": "REPORTS",
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      "topics": [
        {
          "source": "IBCList",
          "id": 3281,
          "name": "Aviation Policy"
        }
      ]
    }
  ],
  "topics": [
    "Appropriations",
    "Intelligence and National Security"
  ]
}