Missing MH370 flight may have deliberately crashed, complicating insurance settlements

Missing MH370 flight may have deliberately crashed, complicating insurance settlements | Insurance Business

Missing MH370 flight may have deliberately crashed, complicating insurance settlements
Certain tenets of an international insurance treaty may stymie coverage for families of the victims of Malaysia Airlines Flight 370, as new evidence points to a deliberate crash and potential pilot suicide as the cause of the plane’s disappearance two years ago.

Peter Foley, the Australian Transport Safety Bureau’s program director of the operational search for MH370, admitted for the first time this weekend that damage found in the recovered wreckage suggests the plane was under the control of pilot Zahari Ahmed Shah when it went into the sea in March 2014. Severe erosion along the trailing edge of two recovered wing parts points to a controlled landing, Foley said.

Australian authorities also admitted that a Malaysian police report suggesting Shah had plotted a route deep into the southern Indian Ocean on his home flight simulator was genuine. Evidence of any such route has since been deleted.

The two admissions throw significant doubt on authorities’ preferred theory that the plane’s disappearance was an accident, instead pointing strongly to pilot suicide – something that could prevent families of the crash victims from collecting insurance settlements from the airline.

Grace Nathan, a spokeswoman for MH370 next-of-kin group Voice 370, said families of the victims who are suing the airline for negligence may now pursue criminal action as well. However, families who accepted payout offers may no longer be covered by insurance.

Families who missed the March 8 deadline to initiate lawsuits against the Malaysia Airlines may also be stranded if pilot suicide was indeed the cause of the crash, thanks to the 1999 Montreal Convention, which dictates international aviation insurance terms. Under the treaty, claimants have two years from the date an aircraft should have arrived at its destination to file suit for compensation against the carrier.

“You can’t start something now because the limitations date has passed,” Nathan told The Australian.

Nathan also pointed to the question of airline responsibility in a suicide situation.

Even if Malaysia Airlines can successfully determine the cause of the crash, aviation policies often carry exclusions for terrorism or suicide – under sanction from the Montreal Convention – which may apply here.

“If it is proven to be pilot suicide, then the insurance becomes void,” she said.

The Montreal Convention sets a mandated minimum compensation payment of just under $200,000 for claimants in cases where airlines could not produce evidence to defend themselves. Certain families of the victims have filed suit against the airline for the compensation under the assumption that the death of their next of kin was caused by something other than negligence.

Nathan has suggested Malaysia Airlines may not be able to meet this financial standard, calling the company “practically bankrupt,” though a spokesperson for the airline has pushed back against those claims.
“[There is] adequate insurance coverage in place to meet any legal liability that we may have in respect of those claiming as a consequence of the incident,” the spokesperson said.

Malaysian investigators concluded the Boeing 777 servicing Flight 370 crashed after someone aboard the jet intentionally disabled its tracking devices, turning it south before it plunged into the Indian Ocean and killed all 239 people aboard. The aircraft had been flying under Malaysia Airlines since May 2002 without mechanical or computer troubles. The communications systems aboard the plane were also operating normally until radio and transponder signals stopped during the flight.

The airline’s insurers – Allianz Global Corporate & Specialty and Lloyd’s of London unit Atrium – have already paid more than $300 million for claims related to the crash.

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