The value of airline failure insurance may be diminishing, according to a recent report from The Times Online.

And, with many airlines being forced to shut down due to increased oil prices and lack of funding, The Times report indicates that now, more than ever, such insurance policies should be more in demand.

The reason these policies – which refund tickets to people if an airline shuts down or pays for the higher cost of booking with a new airline – are becoming less valuable, is also in connection with the endless credit crunch cycle.

Available since the mid-1990s, such insurance policies are likely losing value due to the fact that insurance brokers like Marcus Hearn are not paying-out on new airlines without a specific arrangement being made with the insurer first, The Times reported.

One such example highlighted by The Times, was Silverjet, an airline that has only just reportedly received funding to support it to the year’s end. Apparently the insurance broker will not cover passengers of the airline without specially arranged agreement.