"Des Moines, Iowa airport board opts for terrorism insurance"

Tuesday, June 25, 2002

D.M. airport board opts for terrorism insurance
By WILLIAM RYBERG
The Des Moines (IA) Register


 The Des Moines airport board Monday decided it will pay sharply higher
liability insurance costs, but one member said it appears insurance
companies are gouging airports for coverage in light of the Sept. 11
terrorism attacks.

"Right now, what they're doing is gouging everybody across the country,
including us," said board member Ed Hansell.

Hansell, however, moved to approve the coverage that includes a one-year,
$96,000 premium for $50 million in liability coverage related to war and
terrorism. Hansell and other board members said the airport had no choice
because going without terrorism coverage is too risky.

For the 12 months beginning July 1, the airport also expects to pay $135,000
for general liability coverage. Both policies come from Phoenix Aviation
Managers Inc. of Kennesaw, Ga. Phoenix officials couldn't be reached for
comment.

Prior to the Sept. 11 terrorist attacks, the total cost was $85,000, with
terrorism coverage included.

Bob Jester, president of Jester Insurance Services Inc., an insurance broker
who handles most of the city's insurance, said insurance companies have
little statistical data to draw from in setting premium rates because acts
of terrorism in the United States have been rare.

"Who knows what the right premium is. We're into unchartered waters," he
said.

Liability insurance protects the airport from costs related to injuries or
deaths resulting from accidents or a terrorist act. About 820,000 passengers
boarded airliners at the airport last year.

In Omaha, Stan Kathol, director of finance and administration at Eppley
Airfield, said Eppley and most other airports have so far decided not to buy
war and terrorism coverage.

Reasons include the cost, hoped-for help from the federal government, and
limits to coverage, Kathol said.

The Des Moines policy and others, for example, allow the insurance company
to cancel coverage, without refunding any part of the premium, if war or a
major act of terrorism occurs anywhere in the world.

Other airports have taken the path Des Moines chose.

The Eastern Iowa Airport in Cedar Rapids, which handles fewer passengers
than Des Moines, expects to pay about $19,000 in the coming year for $25
million in terrorism liability coverage.

The Kansas City International Airport, which handles about six times as many
passengers as Des Moines, is paying $306,000 for $50 million in terrorism
coverage for the year ending Oct. 31.

Money for the Des Moines airport's operating expenses, including insurance,
comes from airport user fees, such as parking, airplane landing fees and
rent charged to other businesses at the airport.

The insurance package now goes to the Des Moines City Council for final
approval.

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