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

Lion Cecil's Killing Sparks 'Canned Hunting' Debate in S. Africa

Conservationists believe incident, which triggered worldwide outrage, will reshape debate about practice in which hunters are allowed to target animals bred for hunting More

Taliban's New Leader Says Jihad Will Continue

Top US Afghan diplomat also meets with Pakistani, Afghan officials following news of Mullah Omar's death More

Environmentalists Issue Warning on Mekong Biodiversity

Scientists say decades of economic development, hydropower-dam construction, lax law enforcement and trafficking have taken their toll More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Astronauts Train Underwater for Deep Space Missionsi
|| 0:00:00
...    
🔇
X
George Putic
July 30, 2015 8:59 PM
Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

VOA Blogs