News / Asia

    Malaysia Airlines Jet Crash Insurance May be Complex, Lengthy

    Wreckage from the nose section of a Malaysian Airlines Boeing 777 plane which was downed on Thursday is seen near the village of Rozsypne, in the Donetsk region July 18,
    Wreckage from the nose section of a Malaysian Airlines Boeing 777 plane which was downed on Thursday is seen near the village of Rozsypne, in the Donetsk region July 18,
    Reuters

    Insurance on the Malaysian airliner brought down over Ukraine is likely to pay out relatively quickly if the cause of the crash is determined, but observers say settling insurance for the loss of 298 lives and other liability could be complex and lengthy.

    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.

    “Then the interesting issue is who do you go after as the malefactors?” he said. “Are you going to sue a rebel?”

    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.

    Malaysia Airlines MH 17 partial flight path from Amsterdam, July 17, 2014Malaysia Airlines MH 17 partial flight path from Amsterdam, July 17, 2014
    x
    Malaysia Airlines MH 17 partial flight path from Amsterdam, July 17, 2014
    Malaysia Airlines MH 17 partial flight path from Amsterdam, July 17, 2014

    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.

    In some ways, the investigation will mirror the search for the Malaysia Airlines flight that went missing in March, when Malaysia had jurisdiction and other countries assisted.

    The U.S. National Transportation Safety Board, which often investigates air accidents overseas and must be invited to join, said it was still determining its possible involvement in probing the Ukraine loss.

    “We are communicating with other government agencies and evaluating what our role will be,” the agency said in a statement.

    U.S. and European air regulators warned in April that airlines should avoid flying over the Crimean Peninsula and parts of Ukraine.

    However, some airlines were routinely flying over the northern part of Ukraine, said Mark Duell, vice president of operations at FlightAware.com, a flight-tracking website.

    Lufthansa AG, Air India and Malaysia Airlines are among the airlines that have flown there, according to FlightAware's data.

    “It doesn't seem anyone's been avoiding Ukraine,” Duell said. “I don't see airlines going over Crimea, but I don't see anyone avoiding the rest of Ukraine.”

    People walk amongst the debris at the crash site of a passenger plane near the village of Grabovo, Ukraine, July 17, 2014.People walk amongst the debris at the crash site of a passenger plane near the village of Grabovo, Ukraine, July 17, 2014.
    x
    People walk amongst the debris at the crash site of a passenger plane near the village of Grabovo, Ukraine, July 17, 2014.
    People walk amongst the debris at the crash site of a passenger plane near the village of Grabovo, Ukraine, July 17, 2014.

    However some international airlines, including Australia's Qantas Airways and Korea's two major carriers, said on Friday that they had already shifted routes to avoid Ukrainian air space due to the conflict between Kyiv and pro-Moscow rebels.

    Cohn said he expected regulators to issue broader warnings about Ukraine airspace, and that airlines would be more cautious in the area even if regulators did not expand such warnings.

    China's civil aviation authorities on Friday ordered Chinese aircraft flying over Ukraine to avoid the country's eastern airspace, state news agency Xinhua reported.

    On Thursday, the Federal Aviation Administration said U.S. airlines “have voluntarily agreed not to operate in the airspace near the Russian-Ukraine border.”

    “The FAA is monitoring the situation to determine whether further guidance is necessary,” the agency said.

    Several airlines, including Turkish Airlines, have since announced they would avoid Ukrainian airspace. 

    • Emergency workers carry a stretcher with a victim's body in a bag at the crash site of a Malaysia Airlines jet near the village of Hrabove, eastern Ukraine, July 19, 2014.
    • Flowers are placed on a plane engine at the crash site of a Malaysia Airlines jet near the village of Hrabove, eastern Ukraine, July 19, 2014.
    • A pro-Russian fighter guards the crash site of a Malaysia Airlines jet near the village of Hrabove, eastern Ukraine, July 19, 2014.
    • A woman holds an anti-Putin placard to protest the downing of Malaysia Airlines MH17 in Sydney, Australia, July 19, 2014.
    • Passengers' belongings are pictured at the crash site of Malaysia Airlines flight MH17 before a visit by OSCE monitors, near the settlement of Grabovo in the Donetsk region, July 18, 2014.
    • People bring flowers and candles to the Dutch embassy in Kyiv, Ukraine, to commemorate the victims of the Malaysia Airlines Boeing 777 plane crash.
    • People walk amongst the debris at the crash site of a passenger plane near the village of Grabovo, Ukraine.
    • A relative of passengers on flight MH17 cries as he waits in a bus to be transported to an unknown location to receive more information, at Schiphol airport in Amsterdam, the Netherlands.
    • People take photos of a screen showing arrival details of Malaysia Airlines flight MH17 (C) at Kuala Lumpur International Airport in Sepang.
    • A woman reacts to news regarding a Malaysia Airlines plane that crashed in eastern Ukraine at Kuala Lumpur International Airport in Sepang, Malaysia.
    • The upper floor of Schiphol Airport in Amsterdam, the Netherlands, is closed for media and reserved for family and relatives of Malaysia Airlines flight MH-17.
    • A relative walks past members of the press as he arrives at Schiphol airport in Amsterdam, the Netherlands.
    • Smoke rises up at a crash site of a passenger plane, near the village of Grabovo, Ukraine.
    • A part of the wreckage of a Malaysia Airlines Boeing 777 plane is seen after it crashed near the settlement of Grabovo in the Donetsk region.
    • The site of a Malaysia Airlines Boeing 777 plane crash is seen near the settlement of Grabovo in the Donetsk region.
    • The site of a Malaysia Airlines Boeing 777 plane crash is seen near the settlement of Grabovo in the Donetsk region.
    • The site of a Malaysia Airlines Boeing 777 plane crash is seen at the settlement of Grabovo in the Donetsk region.

    You May Like

    In Britain, The Sun Still Doesn’t Shine

    Invoking Spitfires and Merlin, Leave voters insist country can be great again, following surprising 'Brexit' vote last week

    Double Wave of Suicide Bombings Puts Lebanon, Refugees on Edge

    Following suicide bombings in Christian town of Al-Qaa, on Lebanon's northeast border with Syria, fears of further bombings have risen

    US Senators Warned on Zika After Failing to Pass Funding

    Zika threats and challenges, as well as issues of contraception and vaccines, spelled out as lawmakers point fingers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeasti
    X
    June 29, 2016 6:15 PM
    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeast

    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video Clinton Leads Trump, But Many Voters Don't Like Either

    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video New US Ambassador to Somalia Faces Heavy Challenges

    The new U.S. envoy to Somalia, who was sworn into office Monday, will be the first American ambassador to that nation in 25 years. He will take up his post as Somalia faces a number of crucial issues, including insecurity, an upcoming election, and the potential closure of the Dadaab refugee camp in Kenya. VOA’s Jill Craig asked Somalis living in Kenya’s capital city Nairobi how they feel about the U.S. finally installing a new ambassador.
    Video

    Video At National Zoo, Captivating Animal Sculptures Illustrate Tragedy of Ocean Pollution

    The National Zoo in Washington, D.C., is home to about 1,800 animals, representing 300 species. But throughout the summer, visitors can also see other kinds of creatures there. They are larger-than-life animal sculptures that speak volumes about a global issue — the massive plastic pollution in our oceans. VOA's June Soh takes us to the zoo's special exhibit, called Washed Ashore: Art to Save the Sea.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.

    Special Report

    Adrift The Invisible African Diaspora