Israel approves $8 billion airline war guarantee after insurers give notice

By Michael Jones

June 25 - (The Insurer) - Israel's Knesset Finance Committee has approved plans for an $8 billion state-backed guarantee for airline war cover after the aviation market gave notice to Israeli airlines last week, two senior aviation market sources told The Insurer.

The war-risks guarantee was approved by the committee on Monday, two senior aviation market sources said. The committee did not immediately respond to a request for comment.

The guarantee will provide coverage to Israeli and foreign airlines for the coming two years. Details of the approved scheme were disclosed by Israel's accountant general in a support document issued on June 19, 2025.

Coverage will be issued by state-owned Inbal Insurance Company and is contingent on the cancellation or reduction of existing airline insurance coverage, the document said. The scope and terms of the coverage will not exceed the terms of each airline's existing policy.

Insurance premiums charged for the issuance of the Inbal policy will be determined in advance but shall not be more than the insurance premium in the policy the company already has, the Ministry of Finance document said.

"The Government of Israel wishes to maintain functional continuity in the economy, and for this reason, the functional ability of airlines must be maintained for the purpose of transferring goods, and performing rescue flights through airlines arriving in Israel," said Israel's account general.

Two senior aviation market sources said that insurers gave notice to Israeli airlines last week after the tensions escalated between Israel and Iran. The accountant general confirmed this in the June 19, 2025 document.

There is currently little appetite for Israeli exposure while the conflict with Iran continues, one senior aviation war underwriting source said.

The insurance market will need the current ceasefire to hold and a more permanent peace solution to be negotiated before appetite for Israel increases, two senior aviation market sources said.

This week's scheme is not the first state guarantee for airline war risks issued by the Israeli government. In October 2023, Israel's parliamentary finance committee approved a plan for a $6 billion state guarantee to cover insurance against war risks to Israeli airlines.