The frightening cost of the Germanwings plane disaster
11 April 2015
The Germanwings crash is going to cost the insurance companies a pretty penny. The loss of innocent lives has also raised many critical questions and has started debates about the importance of risk management.
Parent company Lufthansa is already liable to pay the families of each and every one of the 149 people who died 140,000 euros (around AUD 200,000) automatically under the terms of the 1999 Montreal convention. Lead insurer Allianz has already made 50,000 euro payments (AUD 71,500) to every family.
However, if pilot suicide is proved to be the cause, Lufthansa and its insurers will be liable for claims that could hit 279 million euros (AUD 398,571,000).
Allianz is not the only insurance company involved, but it is Lufthansa’s insurer and it is taking on an umbrella role. Also included are Lufthansa’s own in-house insurer, and smaller firms.
Lufthansa may be able to argue that the loss of the plane is covered by their policy, and they could recoup some of the costs, but the personal liabilities will be unaffected. Analysts say it is likely that Lufthansa will try to settle all claims quickly.
Lawyers say some victim compensation payments could end up being high, especially in countries where emotional damage is recognised.
A lawyer who specialises in aviation law, said: “(For) the American passengers – given the fact that Lufthansa maybe has acted faulty regarding this pilot – these awards I anticipate will be very high.
“And it can even be the case that an American judge awards so-called punitive damage, depending of course on the fact how grave this judge sees the fault of Lufthansa."
How will this impact travel insurance and aviation corporate liability in the future? Time will tell.