Allianz SE is lead reinsurer for MAS

PETALING JAYA: Allianz SE, Europe's biggest insurer, has clarified that it is the lead reinsurer – and not insurer – for the still-missing Malaysia Airlines jet, a board member told SunBiz.
Manuel Bauer (pix), a member of the board at Allianz SE, confirmed a SunBiz news report that Etiqa Insurance & Takaful Bhd is the lead insurer covering Malaysian Airline System Bhd's (MAS) fleet of aircraft.
Etiqa's position of lead insurer means that all claims by MAS will be made through the insurer.
Bauer said Allianz SE's wholly owned subsidiary, Allianz Global Corporate & Specialty SE (AGCS SE) - a specialist reinsurance company, is the lead reinsurer for the Boeing 777-200ER jet.
Earlier reports had erroneously stated that Germany's Allianz was the lead insurer covering the MAS fleet of aircraft.
Coverage of the fleet however is evenly spread out between Etiqa along with several Malaysian insurer and reinsurers, in small local aviation insurance pool.
Bauer refuted reports that said Allianz would take the brunt of the claims payout as it carries the bulk of the reinsurance policy.
"That is not true. To be precise, we have signed certain share for which we are liable but not the bulk. The rest of the risk is spread between other reinsurers," he said.
Bauer confirmed that Allianz Malaysia Bhd has a small share in the local pool and are involved in insuring the aircraft as well.
He declined to comment on the extent of the company's exposure.
Insurers and reinsures cover both aircraft hull and liability insurance. Aircraft hull insurance covers losses airising from the physical damage to aircraft hull as a result of various perils, including war and terrorism while aircraft liability insurance covers operators of aircraft for third party liability.
Bauer also could not confirm or deny if any payments have been made on claims linked to the disappearance of MH370 on March 8, as earlier reported.
"I cannot confirm any payments we have made or will make to MAS at this point. We have a confidentiality towards MAS," said Bauer, who is responsible for insurance growth markets at the Germany-based insurance giant.
He also could not confirm or deny if Allianz Malaysia Bhd has made or will make payments on claims.
"Normally at a certain point in time when a plane disappears they will be some deposit put into an escrow account from the reinsurers. This serves in general to pay for legal cost, to pay for loss adjusters etc and it varies from case to case.
"This is the standard procedure when plane is lost or missing," said Bauer, adding that the money from the escrow account does not go directly to the passengers nor the carrier insured.
He however explained that in the MH370 case is an extraordinary one as the plane has been missing for almost two weeks.
Bauer also said that in total 10 passengers on board MH307 are insured with Allianz but did not disclose their nationality. He said four passengers onboard the missing flight MH370 are Allianz Malaysia customers.
"They have a variety of policies that we are liable and which we will honor when the times comes," he said.
He said claims payout, if need be, vary from a week to months but litigation could drag it to many years especially when a multi-nationality of passengers are involved.
"Litigation plays a (significant) role in regards to the indemnification or amount paid out," he said.
However, Bauer said, the incident would not have a big impact on Allianz as it has a very tight risk management and controls that limits its risk appetite accurately.
"We have a risk control that tells us automatically what the limit of our risk appetite is. We are accountable to that point because that is what we signed in the reinsurance policy. We will only take risk up to the level of exposure that we are comfortable with," he said.