TOULOUSE, France-Airlines that have ordered Airbus S.A.'s latest jumbo jet will have to find additional aviation liability capacity in order to purchase per-passenger coverage limits comparable to those bought for other jets, brokers say.

With the massive A380 expected to start commercial flights next year, brokers for the airlines have several months to secure up to $3 billion in capacity before the first coverage placements enter the market.

And while finding the additional capacity may require some aviation insurance programs to undergo restructuring, brokers say that adequate coverage should be available before the first of the double-decker airplanes carries fare-paying passengers.

The Airbus A380, which was unveiled at the aerospace manufacturer's headquarters in Toulouse, France, last week, will be the largest commercial passenger aircraft on the market, significantly larger than the 747 manufactured by Chicago-based Boeing Co.

Currently, 13 airlines have agreed to add the A380 to their fleets.

The A380 will carry 555 passengers in a typical three class configuration, that is 33% more than the 747, which carries 416 passengers and is the largest commercial aircraft currently in use.

In addition, the A380's takeoff weight of 620 tons is 41% greater than the 747, its 263 feet wingspan is 24% longer and its maximum range is 8,000 nautical miles, 10% farther than the 747.

The cost of the A380 is not yet known, though insurance market sources estimate it will be around $250 million. The maximum cost of a 747, in comparison, is $227 million.

Airbus to date has assembled four of the aircraft for use in test flights during the next several months. The aircraft is expected to go into active service in 2006.

Brokers will likely present the A380 to underwriters for the first time in the 2005 fourth-quarter renewals.

Underwriting the liability side of the risk will likely represent the biggest challenge to the market, underwriters and brokers agree.

Average compensation awards in aviation disasters are around $4 million per passenger in the United States, though they are usually lower in other countries, said Florian Karner, head of global aviation for GE Insurance Solutions in Munich.

"If you multiply that by 555, the seating of the A380, you come up with a number that exceeds the currently available limit of $2 billion, and there is always the possibility of third-party liability," he added.

Airlines will want to purchase more than $2 billion in liability limits, Mr. Karner said.

Airlines with A380s may need to buy liability limits of between $2.5 billion and $3 billion, said Rod Dampier, aviation underwriter at Lloyd's of London insurer Amlin P.L.C.

Liability coverage will likely become expensive and scarce for limits above $2.5 billion, said Stephen Riley, a senior executive at Global Aerospace Underwriting Managers Ltd. in London.

Liability limits of $3 billion "would be a big stretch and not achievable in today's market, but there are markets coming in that could help to do that," said Charles Bridges, managing director of aviation at HSBC Insurance Brokers Ltd. in London.

Reinsurers could provide the cover for the right price if they could justify the exposure to shareholders, he added, noting the launch of Pfäffikon, Switzerland-based Glacier Reinsurance A.G. late last year. Glacier said it intended to offer aviation coverage.

Insurers may be willing to offer additional limits on an excess basis, said Mr. Karner of GE Insurance, for example, offering $1 billion in excess coverage above the $2 billion in limits that is currently available. However, the coverage would have to be written as an aggregate limit with one reinstatement, he said.

"The attractive route both for insurers and clients will be to have an excess policy. You do not want to cover your whole fleet for $3 billion," he added.

Insurers and reinsurers not currently involved in the aviation insurance market could play a role in the excess layer, Mr. Karner said.

Lloyd's of London syndicates that currently write property catastrophe coverage might be willing to offer excess aviation capacity, he said.

Although the A380 has not yet been ordered by any passenger carrier in the United States, the only U.S. buyer to date being Memphis, Tenn.-based FedEx Corp., the insurance programs of U.S.-based airlines will be affected by the introduction of the jet, said Wayne Wignes, president of Chicago-based Aon Corp.'s U.S. aviation practice.

U.S. airlines will likely have to buy higher third-party liability insurance to cover the risk of involvement in an incident with the A380, he said.

The risk "is incredibly remote and incredibly catastrophic, which is why it will need to be handled differently," he said.

Currently underwriters write a percentage of the entire limit bought by an airline, Mr. Wignes said. In the United States, the maximum liability limit is usually about $1.75 billion, he said.

But to accommodate the $3 billion third-party limit perceived necessary for the A380, the market should be restructured into a primary and excess arrangement, he suggested.

Some form of alternative risk transfer arrangement, such as a mutual, could provide the excess portion, Mr. Wignes said.

He noted that discussions are already in progress to interest parties outside of the aviation insurance market in participating in such a structure but declined further comment.

Placing hull insurance to cover the A380 does not pose as big a challenge as the liability coverage and should be possible with existing structures and markets, underwriters and brokers say.

The insured value of the aircraft will be higher than the $250 million that is currently thought to be approximate price of the A380, because the aircraft "will have additional equipment on board," added Mr. Karner.

The insured value will likely be between $250 million and $300 million, he said.

This is "well within the capacity of the international market, but it exceeds the current structure of the market placement of $185 million," said Mr. Wignes.

From an underwriting point of view, it would be disappointing for an insurer to go from writing 10% of $185 million to 7% of $250 million, because they are paid a higher premium for lower layers of a policy limit.

"So the underwriters will have to solve that problem or find themselves writing smaller lines and generating smaller revenues," but this should be possible without going to a primary and excess structure, he said.

More capacity may be needed to write A380 hull cover, said Andreas Peter, global head of aviation and space for Zurich, Switzerland-based Swiss Reinsurance Co. But insurers would likely be willing to provide more capacity in return for higher rates, he said.

Airports will have increased liability concerns when the aircraft is introduced, as well.

"Perhaps the most significant liability concern is that a larger aircraft, due to hull cost and passenger volume, creates a greater financial liability in the unfortunate event of a disaster at our airport," said William Hoyt, insurance risk manager at Minneapolis-based Metropolitan Airports Commission.

"If we were to allow larger aircraft with significantly larger passenger volume at our airport, I would have to assess the aviation insurance liability limits that we currently obtain to ensure we are properly insured," he added.

Airbus will also need to cover the exposure of test-flying the aircraft in its manufacturers' hull program that renews April 1, Mr. Bridges said.

Airbus "will be looking for as much cover as they can buy" but are "supported by all the major markets," which have always provided broad coverage for new aircraft, he added.