Airmic says Berkshire-Hathaway is `underpinning existing schemes'

Airlines are facing unfair competition in an insurance market dominated by one player and there is a threat that the terrorist attacks in Bali could destroy the cover available.

Operators are scrambling for cover before the state-backed system ends this month.

The European Commission indicated it would withdraw an exemption from the end of October that has allowed governments to support aviation insurance schemes.

The UK's scheme, called Troika, is due to expire then. France is thought to be the last major EU country holding out for a further extension.

A UK Treasury official said: "We always believed Troika was a short-term solution. Commercial cover has been returning to the market over the past 12 months and the amount of cover available has been increasing over that time."

An Airmic spokesman said: "Americans are getting huge support from their government whereas it looks like we are going to be forced back into the market.

"One of the main concerns is that it's only Berkshire Hathaway that's underpinning all three existing schemes."

Global Aviation Insurance Network (GAIN) managing director John Lumley said the market was not yet competing fully.

GAIN, which entered the market this summer, is a network company dedicated to representing the interests of local brokers around the world.

"There is a service available in the market's terms, but the market is yet to start finding overcapacity and therefore competition."