While the final hours of Malaysian Air Flight 370 remain shrouded in mystery, there is one thing involved insurers do anticipate—the ability to make payments without materially affecting profit or future policies.
Munich Re board member Torsten Jeworrek told a news conference that some media quotes of $500 million in expected damages linked to the missing jet were “clearly too high.” The reinsurer did not forecast a size of the claim, but did assure press that the hit would not be a major one.
The damage claim for the plane itself is roughly $100 million, and payments from German insurer
Allianz have already begun. Families of MH370 passengers may also begin to collect compensation soon, even if the plane is not found, thanks to an international treaty that requires carriers to pay damages for each passenger killed or injured in an accident even if the cause is unknown.
Under provisions in the Montreal Convention of 1999, carriers may be liable for more than $40 million, according to a Bloomberg report. The figure is steep to be sure, but falls far short of the suggested $500 million.
Insurance Information Institute President Robert Hartwig echoed Jeworrek’s feelings on the event, telling Insurance Business that airline safety in the US remains “absolutely stellar” and the insurance industry is unlikely to see major changes in either policy or profits.
“Aviation underwriters will take a look at the environment in light of this event, but whether it was influenced by terrorism or pilot error, these events are not entirely unexpected,” Hartwig said. “The industry has the resources to pay the claims and, at this point, I don’t see radical changes to the aviation market in the offing.”
The search for the missing jet continues, with teams from Malaysia and Australia spotting two objects in the Indian Ocean believed to be linked to the disappearance. Even if the plane is recovered, however, former National Transportation Safety Board President Jim Hall told reporters it may take “months, if not years” for plane recorders to be located and an exact cause of the disappearance determined.
In the meantime, Malaysia Airlines holds liability for the crash, with the potential for the jet’s manufacturer, Boeing, and possibly even terrorist groups and sponsors, to share in that responsibility as evidence of liability develops.
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