The German insurance giant Allianz confirmed on Monday that it is the lead insurer for the AirAsia airplane missing in the Java Sea.
This is the third major plane crash in which Allianz has been involved this year. The Munich-based group was also the main reinsurer of the Malaysian Airlines flight MH 370, which disappeared over the Indian Ocean in March, and of flight MH17, which was shot down in July over Ukraine.
“We can confirm that Allianz Global Corporate & Specialty UK (AGCS) is the lead reinsurer for AirAsia, for aviation hull and liability insurance,” Allianz said in a statement Monday. “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.”
The group did not give any further details or cost estimations.
The amount the insurance industry will have to pay will depend on the cause of the crash.
AirAsia, a Malaysian budget airline, said on Sunday that one of its craft had lost contact with air traffic controllers while flying in bad weather between the Indonesian city of Surabaya and Singapore. The aircraft has not yet been found, but the head of Indonesia’s search and rescue unit said he believes the plane is at the bottom of the Java Sea.
At a minimum, Allianz and other insurers will pay for the cost of the aircraft, an Airbus A320-200, which costs around $94 million new, and compensation to the families of the 162 passengers on the flight. The Montreal Convention, an international aviation agreement, suggests payouts of at least $165,000 per passenger. The figure rises if the airline or the pilot is found to have been negligent.
Allianz shares were down 1.36 percent to €137.80 late Monday morning. AirAsia shares meanwhile fell 7.82 percent to 2.71 ringgitt ($0.77) in Malaysia on Monday.
For the aviation industry, 2014 has been one of its worst years. Despite only seven confirmed fatal crashes – the lowest number for passenger flight accidents in modern aviation history – 762 people are reported to have died, representing one of the highest number of fatalities ever.
If the AirAsia jet is found to have crashed, 2014 will be the worst year for loss of life in civil aviation since 2005. In September, Allianz said that 80 percent of all insurance payouts in 2014 came from aviation accidents and fires.
The reputation of Malaysia Airlines is in tatters after two of its aircraft crashed in mysterious circumstances.
On March 8, Malaysian Airlines flight MH 370 vanished an hour after take off from the Malaysian capital of Kuala Lumpur. It was scheduled to fly to Beijing, but the plane simply vanished from air traffic control systems, without sending any kind of distress signal or message. Neither the plane nor the 239 people on board have been found.
Allianz and other insurers made an initial payment of around $100 million in costs for the plane and the 239 people on board in mid-March, just a few weeks after the it disappeared.
Allianz also paid out for the Malaysia Airlines Boeing 777 that crashed in Ukraine while flying from Amsterdam to Kuala Lumpur on July 17. All 298 people on board were killed.
Investigators have struggled to gain access to the site and the early results suggested it was shot down by a surface to air missile. It is not yet clear who fired the missile. Ukraine and the West have accused Russia of supplying separatist fighters in eastern Ukraine with the anti-aircraft missile that downed the plane. Russia denies responsibility.
In all cases, the final amount paid out by insurers will be determined by the cause of the crash. The payouts can vary according to whether it is an act of war, negligence on the part of the airline, or an unavoidable accident.
Aviation insurance premiums have been relatively low in recent years. They hit a high in late 2001 in the wake of the September 11 terror attacks in the United States but analysts suggest the figure could jump up in light of the recent crashes.
Meera Selva is an editor for Handelsblatt Global Edition. To contact the author: firstname.lastname@example.org