25/07/2014
Malaysia: Re/insurers seeking more info on MH17
Several Malaysian insurers and reinsurers for Malaysian Airline System’s (MAS) fleet of aircraft are gathering more information on the ill-fated flight MH17 to decide the extent of its insurance coverage.
Etiqa Insurance and Takaful Bhd, the insurance unit of Malayan Banking, are said to be the leading local insurers covering the MAS fleet. Malaysian Reinsurance, a unit of MNRB Holdings, is one of the local players exposed to the risk, along with Alliance Malaysia Holdings. Allianz SE is the lead reinsurer, reported the Sun Daily.
Insurers are trying to determine whether the incident is included in war risk policies, since the plane flew over the battle-torn region of Donetsk. However, the region itself has not been declared a war zone.
The crash of Flight 17 appears to have caught the war risk insurance market particularly by surprise, reported the New York Times. Insurers often prohibit airlines from flying across dangerous areas, or cancel their policies, but most carriers kept flying over Ukraine until the crash.
“One assumes that if the war risk underwriters thought there was any risk, they would have prohibited airlines from flying or cancelled their policies,” said Mr Paul Hayes, head of accidents and insurance at Ascend, an aviation consulting firm in London.
MAS may have some protection via the Montreal Convention, which governs claims arising from disasters on international flights, where passengers are automatically entitled to proven damages up to a fixed amount. The Montreal treaty determines only how much carriers pay. It caps payouts at US$170,000 per passenger regardless of whether the airline is at fault.
Source: AIR eDaily