MH 370: Missing Malaysian Airliner

[Peter Lemkin]

Flight MH370: insurers make first pay out on missing Malaysia Airlines plane

Families of passengers on the Boeing 777 have received hardship payments and the airline has been paid for the plane

A woman writes on the message board in support of the passengers and family members of the missing Malaysia Airlines Flight MH370, at a shopping mall in Bangsar near Kuala Lumpur Photo: REUTERS









By Harry Wilson, Banking Editor

9:42PM GMT 23 Mar 2014



Malaysia Airlines has already been handed $110 million (£67 million) by insurers over the loss of its missing Boeing 777 on flight MH370 that is the subject of an international search after disappearing more than two weeks ago.

Allianz Global Corporate & Specialty has paid the money into an escrow account and also agreed to make hardships payments to the families of the missing airliner's passengers, to cover their costs while the hunt for the plane continues.

The payment was made in accordance with standard air travel industry policy which says that if a plane has been missing for more than two days then it is assumed it has been destroyed.

The policy was originally taken out in Malaysia but, as is common practice in the industry, it was reinsured with a group of large international financial groups lead by Allianz.

Depending on the outcome of the search and rescue operation for MH370, which is now thought to havecrashed in the Indian Ocean more than 1,000 miles off the west coast of Australia, the insurers could pay out tens of millions of pounds more to bereaved families of the 239 people on board. International rules stipulate a minimum payment per passenger of £105,000.

If terrorism or negligence is found to have played a role it could alter the size and liability of the payouts and insurers are watching closely the hunt for the missing jet.
The Boeing 777 went missing in the early hours of the morning of March 8 on a flight between Kuala Lumpur and Beijing.
An investigation into the loss have looked at potential terrorism and hijacking, as well as the possibility the plane's pilots could have been a deliberate attempt to reroute the aircraft for unknown reasons.
If this were found to be the case, it could have a bearing on the ultimate liability of the insures, though a source close to the underwriters said it was "too early" to speculate on the fate of the plane.