Insurance broker Gallagher developed a $1 bn industry solution to help airlines avoid grounding their fleets immediately after a hostile nuclear detonation.
New solution is intended to prevent major disruption for passengers and avoid costs that could reach hundreds of millions of dollars. It offers $1 bn in required liability coverage, pending approval from a dedicated group of insurers.
Gallagher designed the coverage as a short-term option to allow airlines to keep operating beyond the current 48-hour extension period following such an incident. The firm worked with security advisors and specialized underwriters to set a clear protocol that defines when and where the insurance can be offered again (see Deadliest Aircraft Crashes and Worst Aviation Accident Statistics).
If a hostile nuclear event occurs, the group will meet within a defined period to assess risk levels and decide where and when to activate the coverage.
They may reconvene multiple times as the situation progresses.
Over 100 international airline operators have already signed on, Gallagher said. Aviation insurer La Reunion is participating in the program, though it could not be reached for comment.
Gallagher explained that, without this new option, airlines would need to wait for general policy coverage to restart—a process that could take weeks or months—or rely on government support. Based on past cases like 9/11, government responses differ by country and may offer only limited indemnity.
Airline policies include a clause that cancels certain key coverage if a hostile nuclear device is used anywhere in the world. Under this clause, once a flight lands and passengers disembark, coverage stops immediately.
Gallagher noted that this standard policy language was written decades ago, when any nuclear event was viewed as globally devastating.
There is a condition on all airline insurance policies that in the event of a hostile nuclear detonation anywhere in the world, certain crucial insurance coverages are terminated and consequently all airlines could be grounded
“This is the war liability automatic termination clause. It would mean the moment the plane lands at its destination airport and the passengers are safely disembarked, insurance is stopped,” Gallagher said.
Today, the broker said, the risk of limited tactical nuclear strikes—affecting smaller, controlled areas—has become more realistic, with several countries now possessing such capabilities.
