The insurance companies covering Malaysia Airlines Floight MH370 have agreed to share the USD100 million (RM330 million) cost of the lost aircraft, as the reasons for its disappearance are still unknown, according to a report by the Wall Street Journal.
The report also said the agreement only covers the cost of the plane itself, and does not cover the life insurance on the lives of the passengers onboard, or the compensation package from the airline.
It reported that the reinsurance is divided between insurers covering hull and liability – an all risk comprehensive policy which covers loss of passengers and plane, and another policy that covers the plane against a malicious act, known as Hull War and Allied Perils.
“When the cause of loss is unknown, we both put up 50% of the value of the aircraft,” a person familiar with the issue was quoted as saying by WSJ.
This agreement does not, however, signify that the reinsurers have accepted full liability, and the division of payment will be negotiated amongst themselves as the airline is paid in full.
Last week, Allianz Global Corporate & Specialty stated it was the lead insurer for MH370’s hull and liability policy. Atrium, a unit of Lloyd of London, is the lead insurer against malicious acts such as terrorism and suicide. It offered to pay half the value of the plane.
Personal insurers are reported to have already started making payments to the next of kin of MH370 victims following Monday night’s declaration by the Malaysian government that Flight MH370 was confirmed to be lost at sea, with no possibility of survivors.
See also: MH370: Insurance companies prepare to pay MAS RM365 million
Story: Wall Street Journal
