July 24 Insurers are expected to hike war risk premiums for airlines following losses due to global conflicts, including the downing of a Malaysia airplane over Ukraine, insurance rating agency A.M. Best Company said on Wednesday.
The insurance settlement of the Malaysian airliner, which was shot down by a ground-to-air missile, is expected to be complex and lengthy. The claims would be both for the loss of the aircraft and passenger liability.
The ratings agency said that Lloyd's Syndicate 609, which is managed by Atrium Underwriters Ltd, has confirmed that it is the leader of the hull war policy for Malaysia Airlines.
War risk hull is used in shipping and aviation industries to cover damages and is calculated based on the value of the craft.
A.M. Best Company said that the syndicate and its co-insurers have agreed to settle the hull war aspect of the loss, and have instigated collection of funds.
Barclays bank in a research note last week said that if reports that the plane was shot down are verified, the aircraft loss will be borne by the niche aviation war market, which has recently been pummelled by a series of losses.
In an exclusive interview with Reuters on Wednesday, Alexander Khodakovsky, Ukrainian rebel and commander of the Vostok Battalion, confirmed that pro-Russian separatists had an anti-aircraft missile of the type Washington says was used to shoot down Malaysia Airlines flight MH-17 and it could have originated in Russia.
Khodakovsky blamed the Kiev authorities for provoking what may have been the missile strike that destroyed the doomed airliner, saying Kiev had deliberately launched air strikes in the area, knowing the missiles were in place. (Reporting by Aashika Jain in Bangalore; Editing by Lisa Shumaker)