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An act of war vs. terrorism vs. criminal act vs. accident
As you likely know, insurance often doesn't cover "acts of war." The language used to describe the incident in Ukraine is important, because if it is determined that the destruction of MH17 was an act of war, beneficiaries might lose out on insurance claims. It was interesting to hear Ukraine first call this terrorism and then a "criminal act." That is likely not a coincidence.
Ukraine crash may be 'act of war' for insurers
The fact that the ill-fated Malaysian flight MH17 was brought down by a missile may trigger the war exclusion clause, which will mean that aircraft insurers pay only towards compensation for victims. General Insurance Corporation (GIC) of India is part of the consortium of worldwide underwriters which have covered the airline. The underwriters may term the crash an 'act of war', sources said.
Bulk of the claim arising out of an aviation accident is not the cost of the aircraft but the compensation paid to the victims. Given that there were 295 passengers on board, the total liability claim could be in the region of $400 million or Rs 2,400 crore. GIC's share is 3-4% of the total claim. But since that the reinsurer has protection for losses over $6 million, which ensures that the maximum balance sheet impact is limited to Rs 36 crore due to the liability claim. Although the cost of a new aircraft is a little over $300 million, insures said that the hull claim for the 17-year Boeing 777 would be in the region of $100 million.
Malaysian Airlines has announced an initial compensation of $5,000 per passenger. But the total amount would be substantially higher as compensation for air accident victims is decided under the Montreal Convention and usually ranges between $150,000 and $175,000 per passenger.
<snip>
http://timesofindia.indiatimes.com/business/india-business/Ukraine-crash-may-be-act-of-war-for-insurers/articleshow/38633197.cms
The fact that the ill-fated Malaysian flight MH17 was brought down by a missile may trigger the war exclusion clause, which will mean that aircraft insurers pay only towards compensation for victims. General Insurance Corporation (GIC) of India is part of the consortium of worldwide underwriters which have covered the airline. The underwriters may term the crash an 'act of war', sources said.
Bulk of the claim arising out of an aviation accident is not the cost of the aircraft but the compensation paid to the victims. Given that there were 295 passengers on board, the total liability claim could be in the region of $400 million or Rs 2,400 crore. GIC's share is 3-4% of the total claim. But since that the reinsurer has protection for losses over $6 million, which ensures that the maximum balance sheet impact is limited to Rs 36 crore due to the liability claim. Although the cost of a new aircraft is a little over $300 million, insures said that the hull claim for the 17-year Boeing 777 would be in the region of $100 million.
Malaysian Airlines has announced an initial compensation of $5,000 per passenger. But the total amount would be substantially higher as compensation for air accident victims is decided under the Montreal Convention and usually ranges between $150,000 and $175,000 per passenger.
<snip>
http://timesofindia.indiatimes.com/business/india-business/Ukraine-crash-may-be-act-of-war-for-insurers/articleshow/38633197.cms
