Uk airline companies will receive terrorism insurance cover free from the government for another 30 days after its emergency scheme was extended.

But Willis aviation insurance expert Martyn Hedley said insurers had wanted the government to extend the scheme until March, when it would be easier to estimate the capacity and demand, and calculate risks.

He said: "Without knowledge of the shape of the market, we are hamstrung."

He added meetings with insurers and reinsurers would help industry figures draw up a framework of options within weeks.

The Treasury stepped in as "insurer of last resort" in the aftermath of the September 11 attacks to keep aircraft flying when insurers withdrew most of their war liability cover.

The government initially waived premiums when it launched the emergency cover for UK airlines, intending to review the deal after

30 days and charge a commercial rate. It extended the package on Monday (October 22), 24 hours before its expiry.

It has given the airlines until November 1 to find commercial cover for the first $100m (£70.4m) for third-party war and terrorism liabilities. Airport workers and other service providers have until the same date to find cover for the first $50m (£35.2m).

Association of Insurance and Risk Managers (Airmic) executive director David Gamble said airlines would not be able to return to the commercial insurance market for months, rather than weeks.

He said: "The uncertainties are still very significant and if there was another disaster involving aircraft, it's very likely that cover would be withdrawn.

"Until everyone has had a better understanding of the risks we are facing, we would hope the government would continue to act as insurer of last resort.

"If terrorists are able to mount further major attacks, particularly using aircraft, they are going to find the only people able to stand behind that kind of risk are governments," he said.

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