Third major aviation accident for Allianz in 2014
HONG KONG - German insurer Allianz said on Monday it was the lead re-insurer to the AirAsia jet missing off the Indonesian coast with 162 people on board, making it the third major airline accident it has been involved in this year.
The German company, which has Malaysia Airlines as a client, was the main reinsurer to flight MH370 that disappeared over the Indian Ocean in March, as well as to flight MH17 which was shot down in July while flying over Ukraine.
"We can confirm that Allianz Global Corporate & Specialty UK (AGCS) is the lead reinsurer for AirAsia, for aviation hull and liability insurance," an Allianz spokeswoman said in a statement emailed to Reuters.
Aviation incidents accounted for four of the top 10 major insurance losses not linked to natural catastrophes in the first eight months of 2014, putting pressure on aviation claims that are already rising due to the use of expensive materials and demanding safety regulation, an Allianz report said.
Allianz declined to comment on the extent of its exposure or to identify other insurers with exposure to the missing Indonesia AirAsia plane, an Airbus A320-200.
But Reuters calculations show the minimum payout to cover for this accident could be around $100 million.
"It is much too early to comment on reports of this incident at this stage, except to say that our thoughts and prayers are with all those affected by this missing flight," Allianz said.
The plane disappeared on Sunday after its pilot failed to get permission to fly higher to avoid bad weather during a flight from the Indonesian city of Surabaya to Singapore. Indonesian officials believe it crashed into the Java Sea.
As with the two Malaysia Airlines crashes, Allianz and its co-insurers will have to foot the bill for the cost of the missing Indonesia AirAsia aircraft, as well as for payments due to the relatives of the passengers that were aboard the flight.
The Airbus 320 sells for an average price of $94 million, according to Airbus's website. However, according to the age of the aircraft, the hull is likely to be insured for a lower sum.
For passenger liability, an international aviation agreement called the Montreal Convention caps initial payouts at around$165,000 per passenger at current exchange rates, or about $27 million total for the 162 passengers aboard the AirAsia flight.
But if the airline is found to have been at fault, such as through pilot error, the claims could be much higher.
"This is going be identical to MH370 and MH17 in the sense there are standard minimum insurance obligations which all carriers have to have, but if negligence can be demonstrated the sky's the limit in terms of claims," said John Ribbands, an independent Melbourne-based lawyer expert in aviation insurance.
JLT Group was the insurance broker for the AirAsia plane, the company told Reuters in a separate statement.