A single clause embedded in aviation insurance policies could bring global air travel to a standstill. In the event of a hostile nuclear detonation anywhere in the world, airlines risk losing mandatory war liability cover, grounding fleets not because of physical damage but because they are no longer insured to fly.
The provision, rooted in Cold War assumptions, is well understood within the aviation insurance market. But as geopolitical tensions evolve, it is increasingly seen as a gap the market has yet to resolve.
“The important thing to remember is that we don’t cover the consequences of a nuclear detonation,” said Nigel Weyman (pictured), global executive - aerospace at Gallagher. “So back in the 1950s, when nuclear weapons started to proliferate, a clause was designed to cancel war-related cover immediately.”
At the time, the assumption was that any nuclear event would be catastrophic on a global scale. “They were effectively viewed as Armageddon,” Weyman said. “No one was too worried about cancelling cover because we didn’t think we’d be around.”
That assumption no longer holds. Advances in weapons capability, and renewed geopolitical tension, have introduced the possibility of more contained nuclear incidents with limited geographic impact. Weyman said the industry had not anticipated a scenario where a localised nuclear event could still trigger a worldwide grounding.
Efforts to modernise the clause have failed to produce a workable, market-wide solution. The core issue is definitional.
“The range of sizes is huge, and the impact depends on multiple variables,” Weyman said. “You can’t define in real time what is acceptable and what isn’t.”
Without a clear threshold, insurers have been unable to agree updated wording that distinguishes between large-scale and limited nuclear events. The result is a clause still anchored in a very different risk environment.
One change has been agreed: termination has shifted from immediate effect to 48 hours. “Forty-eight hours gives airlines critical breathing space,” Weyman said. “The old clause was simply too immediate.”
But beyond that window, the issue remains. War liability cover, which protects against third-party claims arising from conflict-related incidents, is mandatory. Without it, aircraft cannot legally operate.
The implications of a full grounding would be immediate and global. Airlines would halt departures, reposition aircraft, and manage large-scale passenger disruption across multiple jurisdictions.
“If you’ve ever been at an airport when flights are cancelled, it becomes mayhem very quickly,” Weyman said. “Now imagine that on a global scale.”
Reinstating cover is unlikely to be quick. Aviation liability programmes typically involve multiple insurers, reinsurers and retrocessionaires, each requiring internal approvals. “On a typical liability programme, you might have dozens of underwriters involved,” Weyman said. “Getting agreement could take weeks or even months.”
Government intervention is often cited as a fallback, but past experience suggests responses can be uneven. “You can’t rely on governments to get airlines flying again,” Weyman said. “They often see it as a commercial issue.”
In response, parts of the market are developing contingency frameworks to bridge the gap between termination and reinstatement of cover. These rely on pre-agreed insurer panels and structured post-event decision-making.
One such approach has been developed by Gallagher, which has structured a facility designed to provide interim war liability cover following a nuclear event, subject to insurer agreement. The model brings together a panel of insurers and external security expertise to assess risk in real time and determine where cover can be reinstated.
The facility has attracted participation from more than 100 airlines, reflecting growing industry focus on contingency planning for low-probability, high-impact events.
The aim is a phased return to operations, starting in lower-risk regions and expanding as the situation becomes clearer. Weyman said any restart would likely begin in areas furthest from the incident before moving closer. “It’s about restoring operations where it’s credible to do so.”
Such approaches also emphasise preparation, including pre-arranged documentation and coordination protocols, to reduce delays in a crisis.
While the likelihood of a nuclear-triggered grounding remains low, the exposure is not theoretical. Weyman said the perceived threat level shifts with geopolitical tensions. “It ebbs and flows, but clients are asking questions.”
For now, the clause remains in place, leaving the market without a fully aligned solution to the risk of a global grounding.
