MH17 crash insurance may be complex, lengthy
(Agencies) Updated: 2014-07-18 20:40
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| Special: Malaysia Airlines plane crashes in Ukraine |
Malaysia Airlines said flight MH-17 disappeared at 1415 GMT as it flew over eastern Ukraine toward the Russian border, bound for Asia. Flight tracking data indicated it was cruising at 33,000 feet when it lost contact with air traffic controllers, apparently struck by a missile.
It should be fairly easy for investigators to determine whether the plane was hit by a missile or blew up for some other reason, said Robert Cohn, an aviation attorney and partner at Hogan Lovells in Washington, D.C.
Ukraine accused "terrorists" - militants fighting to unite eastern Ukraine with Russia - of shooting down the Boeing 777 with a Soviet-era SA-11 ground-to-air missile as it flew from Amsterdam to Kuala Lumpur.
Leaders of the pro-Russian Donetsk People's Republic rebels denied any involvement, although around the same time their military commander said his forces had downed a Ukrainian transport plane.
INSURANCE COVER
Which insurers are on the hook for losses, which are usually spread across a wide number of players, depends on whether the downing is considered to have been due to a hostile act.
AGCS, a division of Germany's Allianz SE, is the lead reinsurer covering the aircraft, which London-based insurance broker Aon Plc has valued at about $97.3 million. AGCS is also the lead liability reinsurer for Malaysian Airlines, the company said in a statement.
"(But) if reports that the plane was shot down are verified, the aircraft loss will be borne by the niche aviation war market, which has recently been pummeled by a series of losses," Barclays bank said in a research note.
Fighting at the Tripoli Airport in Libya this week saw $200 million to $400 million in damages to aircraft, the bank said.
Atrium Underwriting Group leads the war policy covering Malaysia Airlines, Barclays said. An Atrium spokesman declined to comment.
Reinsurance cover for airline fleets is usually split between several of the sector's leading companies, which include Munich Re, Swiss Re and Hannover Re .
Hannover Re said it shared some of the reinsurance coverage for the aircraft but declined to offer details.
"In view of the high number of casualties, it would not be appropriate to release numbers now," a Hannover Re spokesman said.
Munich Re, the world's largest reinsurer, declined to comment, as did second-largest Swiss Re.
Willis Group Holdings, reported by Bloomberg to have brokered the policy, confirmed that Malaysia Airlines was a client.
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