Andy Cook says Treasury indifference to the insurance industry's £600m airline pool plan is sending out the wrong signals
Last week the government extended its deal to cover UK airlines. Originally due to run out on 20 March, the so-called Troika deal has now been extended to 31 March.
But Treasury patience is wearing thin. The original deal was created in the wake of 11 September and expected to run until January 2002. It was extended because the market was not ready to offer a deal. Now the government says a deal must be found. It seems that there will be no more extensions.
So what will the industry do? AIG and Berkshire Hathaway are rumoured to be back in the market, albeit tentatively. But the favourite plan is an $850m (£597m) pool administered by Aon, Marsh and Willis (as revealed by Insurance Times, 21 February). The three brokers are lobbying 187 governments to back the pool. The Treasury, however, seems uninterested.
Not only is the UK government harming the deal by its indifference, it is increasing its chances of failure. Talk of a war against Iraq is likely to scare off those insurers who were looking to dip their toes back in the water. And it could have wider consequences for the insurance industry. Home secretary David Blunkett warned that raids could lead to young Muslims creating civil unrest.
Add into the mix the Treasury's slow progress on extending Pool Re cover for commercial property and unlimited motor liability, and one might begin to think that the government doesn't care much for the ills of the insurance industry and its clients.
