The tragic loss of Malaysia Airlines Flight 17 has left the world reeling and insurers wondering: who pay for the loss of the plane if it was indeed shot down?
The issue is a ‘wartime exclusion’ often included in aviation hull and liability policies, which may negate coverage for the jetliner. Dr. Robert Hartwig of the Insurance Information Institute said that separate ‘war risks’ coverage does fill in the gaps, but it not yet known if Malaysia Airlines holds such a policy.
Although brokers and underwriters have conflicting takes on what the latest Malaysia Airlines crash will have on pricing, both believe renewal rates will be at least flat after months of 15-20 per cent cuts.
According to a Mashable report, the key issue is whether an area of conflict will trigger the wartime exclusion for the insurance carrier Willis, despite no official declaration of war. Experts differ in their opinion, with some believing the war clause will apply, eventually adding up to liability costs of up to $1 billion.
Rick Roberts, vice president of the Risk and Insurance Management Society (RIMS), took a more positive view.
“I’m not aware that there’s any coverage for an act of war, anywhere around the world,” Roberts told Mashable. “There hasn’t been a war declared, and that knocks down the exclusion. Unless Russia has declared war on Malaysia, that would knock out the exclusion. Based on the early facts it falls out of both of those categories.”
Any possible acts of terrorism must also be documented and certified.
Other factors complicating coverage includes the Malaysian government’s ownership of Malaysia Airlines.
Some experts believe that depending on how the policies were written, it could entitle the government to seek damages from Russia or Ukraine in an international court.
