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PR(01)26: The EFTA Surveillance Authority authorises emergency measures in support of airline companies in Iceland following the events of 11 September 2001

16.9.2002

In a decision taken yesterday, the EFTA Surveillance Authority decided not to raise objections to the temporary re-insurance of supplementary insurance cover in support of airline companies in Iceland for third-party damage due to acts of war and terrorism.

In the aftermath of the terrorist attacks in New York and Washington on 11 September 2001, insurance companies reduced, with effect from 24 September 2001 at midnight, insurance cover for damage due to acts of war and terrorism (‘war insurance’) to a level not regarded as adequate by Icelandic airline companies.

In order to avoid the discontinuation of all commercial air traffic as of 24 September 2001 at midnight, the Icelandic Government offered 100% re-insurance for ‘war insurance’ which would, at that time, otherwise not have been available on the commercial insurance market. The insured airline companies had to pay a premium, which was due at the end of the insurance period, i.e. 25 October 2001. The State-guaranteed ‘war insurance’ is administered by an insurance company, which receives 15% of gross premium income collected under the insurance scheme as remuneration for its services.

In assessing the compatibility of these measures, the Authority applied Article 61 (2)(b) of the EEA Agreement (which allows for the possibility to grant “aid to make good the damage caused by …exceptional occurrences”), in accordance with the criteria established by the EC Commission in its Communication of 10 October 2001 on “The repercussions of the terrorist attacks in the United States on the air transport industry”.

Against this background, the Authority verified, in particular, that the State-guaranteed ‘war insurance’ was limited to remedy the withdrawal of such insurance cover by the commercial insurance market and did not place air carriers in a position which was more favourable than before the events of 11 September 2001, that the insured paid a reasonable premium and that the ‘war insurance’ was limited to 30 days.

The Authority is currently examining the prolongation of these measures until 24 November 2001.

For further information, please contact Mr. Utne (tel.: 286.18.50) or Mrs. Antoniadis (tel.: 286.18.52).

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