Israeli Government Steps In to Provide War Insurance for El Al and other Israeli Airlines

In an urgent response to the impending cessation of insurance coverage by international companies, the Israeli government is set to extend a financial lifeline to El Al and Israel Airlines. The move aims to secure vital insurance against the risks of war, following the recent announcements of international insurers discontinuing their services within seven days.

Today, the Finance Committee is holding a special meeting to address the escalating issue. The cancellation of insurance policies had raised significant concerns, potentially halting Israeli airlines' operations abroad. In response to these concerns, Treasury Accountant General Yali Rotenberg has decided to arrange insurance coverage through the government insurance company Inbal.

This strategic intervention will necessitate government guarantees amounting to $5 billion, enabling comprehensive coverage of war-related risks. El Al and Israel Airlines will be required to transfer the insurance premiums they have paid to date to Inbal. The new insurance policy will remain effective for a period of three months, or until the Israeli airlines can secure renewed insurance agreements with international providers. In case of war-induced damages to their aircraft fleet, both El Al and Israel Airlines will be entitled to receive compensation of up to 50%.

Notably, any compensation paid by the property tax fund will be directed to Inbal, the company overseeing the insurance. As of today, the property tax fund has accumulated NIS 18 billion. However, with the potential for war-related damages looming, it is anticipated that these funds may not suffice, necessitating additional budgetary sources to support the fund.

Given the sensitivity of this issue, the Finance Committee, presided over by MK Moshe Gafni, is conducting the discussion in a confidential manner. This development follows the aftermath of the Gaza War, which prompted several airlines to suspend flights to Israel, leaving El Al and Israel Airlines among the few carriers still in operation. International airlines have progressively canceled their flights to Israel in recent times.