By Dean Beeby, CBC News

The federal government is getting out of the aviation-insurance business, despite a plea from Canadian airlines that will see their insurance premiums rise as a result.

Ottawa was pressed into providing aviation insurance almost 15 years ago, following the 9/11 attacks in the United States that within days spooked insurance companies into cancelling their so-called “war risk insurance” policies for air carriers around the world. It marked the first time blanket, global notice had ever been issued by the industry.

Governments stepped in to backstop their airlines by promising taxpayer-supported war-risk coverage, which included paying out third-party liability claims from terrorist attacks and acts of war.

The U.S. ended its war-risk insurance program in December 2014, as has every other country in the world – except Canada, which late last year renewed its government-provided coverage to June 30 this year.

John McKenna, president and CEO of the Air Transport Association of Canada representing 80 airlines and flight training organizations, says airlines face $5 million in new insurance costs each year as a result of Ottawa cancelling its war-risk program. (Ashley Burke/CBC )

Countries have argued that private insurers are again offering the aviation industry affordable premiums for third-party liability in connection with terrorist attacks and wars, meaning there’s no longer any need for their citizens to assume aviation-disaster risks.

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