US airlines are following the example of their British counterparts and investigating the formation of their own insurance operation. Increased premiums – which were on their way up before September 11 – and severe limitations on cover are the main reasons the US airlines are examining their options.

Mega-broker Marsh is understood to be pushing the idea of a new reinsurance operation that it would own jointly with the airlines. Headquartered in the state of Vermont, it would cover airlines’ third-party liabilities as well as “ground damage” caused by aircraft. As liability premiums continue to soar, expect to see more of these industry-specific arrangements and alternative risk transfer systems becoming more common.