Shocking MH17 reports could complicate insurance coverage

The alleged gunning down of the plane by Russian-backed rebels we reported yesterday, raises the issue of insurance coverage given common policy exclusions

Insurance News


Two years ago, the tragic loss of civilian airliner Malaysia Airlines Flight 17 left the world reeling. Now, new reports on the origin of so much loss are raising questions on coverage —given that officials now believe the jet was intentionally downed by Russian-backed combatants, who will be left to pay for the loss of the plane?

The answer, at least in this case, is a simple one.

While a “wartime exclusion” is often included in aviation hull and liability policies, Malaysia Airlines carried separate war coverage from Atrium Underwriting Group that addressed the loss. In this case, final determinations on who launched the missile are unimportant for settlement of the claim.

Instead, it’s much more likely to have an impact on rating for the niche aviation war market. Even immediately after the loss, an A.M. Best reported noted that the MH17 disaster was just the latest in a series of losses sustained by insurers in this space.

“For the niche war risk market, losses this year will considerably outweigh premiums written and insurers are expected to react with substantial rate increases,” Catherine Thomas, director of analytics with the group, said at the time.

The Boeing 777 broke apart in mid-air near the Russia-Ukraine border July 17, killing all 298 people on board. While reports that the plane was gunned down by Russian forces surfaced soon afterward, a new investigation from Dutch police is the first official declaration of such activity from international prosecutors.

Wilbert Paulissen, chief Dutch police investigator, confirmed Wednesday that based on criminal investigation, his team has concluded “that flight MH17 was downed by a Buk missile of the series 9M83 that came from the territory of the Russian Federation.”

The missile had allegedly been taken from Russia to rebel-held Ukraine the morning the plane was shot down, and the launcher was taken back to Russia the next day, Paulissen said.

Russian officials have said they cannot accept the Dutch findings as the final truth.

The insurance broker for the gunned-down plane, whose hull was reportedly wort $97 million, is Willis while Allianz is the lead reinsurer on hull and liability risks and Atrium managed the war coverage.

Related Stories:
Insurers on alert as MH17 investigators say Russia shot down flight
Authorities rule on cause of MH17 crash, complicating insurance coverage

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