AIG Australasia has established a local underwriting division for the aviation and aerospace markets.

AIG Aviation will underwrite aircraft operators, manufacturers and airport service providers from March 17.

It will provide cover for hull assets up to a limit of $US85 million ($94 million) and liability to a limit of $US500 million ($554 million).

Aviation policies were previously handled by local underwriting agencies and underwritten by AIG UK. The company has moved to terminate agency agreements.

Instead, Brisbane-based AIG Aviation will handle all Australian business.

AIG has made its move in advance of the July 1 implementation of direct offshore foreign insurer (DOFI) legislation, which will place greater controls on foreign insurers operating in Australia.