Thursday, January 8, 2009

Why Bush Insured Airlines December 23rd

Insurance for air carriers rose rapidly in November of 2008. Canadian Underwriter reported premiums increased 16% in an environment that normally would have seen price decreases. The line has not seen any significant losses. Rate increases came despite benign loss levels and overcapacity.

A continuing hardening of rates could mean that gross premium for 2008 will exceed US$2 billion, driven by major renewal activity in December.

Either renewal prices came in too high or insurers wouldn't write airlines at all. Thus, President Bush ordered the Department of Transportation to insure/reinsure U.S. flagged air carriers on December 23rd.

A conspiracy theorist might predict an airline based terror attack prior to March 31, 2009. If so, Uncle Sam would shoulder the risk. But that's foolishness. Surely, America wouldn't sacrifice citizens for geopolitical means? Ask soldiers on the U.S.S. Liberty, as they suffered under brutal attack by the Israeli military. They know our nations colors.