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(Ecofin Agency) – Insuring the airlines flying the Egypt-Russia route against various risks has become a challenge for insurers, mainly due to Western sanctions. The bill signed allows the government to cover the national airlines against such risks.
In Egypt, the parliament recently approved a bill authorizing the Ministry of Finance to provide insurance protection to the local airlines for flights to Russia, which is now sanctioned by several countries. According to local media, the insurance will cover damages sustained as a result of planned attacks or even accidents.
This decision comes after Egyptian insurer Misr Insurance Holding Co. stopped covering EgyptAir flights to Russia in a context marked by sanctions against Russia for its attacks on Ukraine. Many insurance firms are gradually ending their operating segments that involve Russia to avoid sanctions from countries like the USA.
Beyond the fears of sanctions from Western countries, the Ukraine-Russia conflict makes damage compensation difficult since war situations are usually not included in the premiums subscribed.
According to a recent article in the UK’s Financial Times, the war in Ukraine could cost insurers billions of dollars globally. The aviation insurance industry has already recorded the largest loss in its history because of hundreds of aircraft stranded in Russia. Misr Insurance wants to avoid being exposed to such risks.
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