Air France Crash May Be Most Costly Since 2001 for Insurers

News added by Muhammad Kashif under Airline News

The Air France crash that killed 228 people may be the most costly airline disaster since 2001 as insurers led by Axa SA compensate victims’ families and pay for the loss of the plane. The families are entitled to the equivalent of at least $150,000 for each of the passengers, and Axa is ready to begin negotiations for additional payment, said Patrick de La Morinerie, who oversees aviation at a subsidiary of Paris-based Axa. The insurer is notifying relatives this week they can receive an initial payment of about $24,000 per victim, an offer mandated by an international treaty on air travelers’ rights.

The cost to Air France-KLM’s pool of insurers, which includes Allianz SE and American International Group Inc., will depend on estimates of the travelers’ nullified lifetime earnings and any negligence demonstrated by the airline. Insurers covering plane manufacturer Airbus SAS and servicing contractors may also be liable once officials determine why the A330-200 dropped into the Atlantic Ocean.

“It’s going to be an expensive claim,” said Stephen Riley, executive director of Global Aerospace Underwriting Managers Ltd., which has 7.5 percent of the plane’s coverage. “This will be the largest loss to the insurance market arising from an aircraft accident since that loss in late 2001,” when a flight from AMR Corp.’s American Airlines crashed in Queens, New York killing 265 people and costing about $600 million, he said.

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