The blasts that demolished four hijacked airliners in the Middle East last week had more than political repercussions. They created shock waves in airline head offices round the world, threw the aviation insurance market into a tailspin, and endangered delicate arrangements for financing the new generation of jumbo jets.
The problems created by the destruction of a Pan American World Airways 747 in Cairo at the beginning of the week were indicative of the industry's dilemma. The 747, insured for $24.5 million, was covered by two kinds of policies—"all risk" insurance, placed largely with a U.S. consortium, and "war risk"...
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