Insurers assess fallout from Russian aviation ruling
In what could be the largest aviation loss in history, observers believe the final figure in the Russia aircraft lessor policy trial in the British High Court should top the 9/11 catastrophe.
Top three reinsurance broker, Gallagher Re, has noted that hundreds of aircraft trapped in Russian-controlled jurisdictions and the potential amount of claims remain “of concern to all parties”, given the degree of uncertainty that continues to exist.
Commercial Risk reported Gallagher Re’s view that aviation insurers and reinsurers face “sizeable losses … to an extent not seen before” from the Russia-Ukraine conflict, expressed in a commentary regarding April 1 reinsurance renewals.
The observations came for the circumstance, which has not happened before, in which the world’s largest aircraft lessors and insurance firms were locked in a legal battle over compensation for €2.5 billion (about $2.93 billion) worth of jets stranded in Russia after the Ukraine invasion.
Lessors were suing dozens of insurers over losses of more than $8 billion after more than 400 aircraft were stranded in Russia.
The 230-page Commercial Court ruling handed down last month held that the aircraft were lost on 10 March 2022, when Russian legislation banned the export of aircraft and aircraft equipment from Russia.
Western sanctions, it said, did not prevent insurers from indemnifying the claimants for the loss of aircraft.
Many trapped aircraft were Bermuda-registered and court case files included a mention of the decision taken by Bermuda authorities to cancel airworthiness certificates for Russian-held aircraft.
An official of Yamal Aviation Transport Company, which operated a small airline, wrote in April 2022 that “due to the unfriendly actions of the Bermuda authorities in cancelling airworthiness certificates, it had decided to re-register its (Ireland-based) AerCap aircraft on the Russian register, and would continue to fly in order to fulfil its social and contractual obligations”.
AerCap later agreed to settle its insurance claim over Russia's refusal to return 17 jets leased to airline Aeroflot.
Meanwhile, insurers party to the litigation included Fidelis Insurance Bermuda Ltd, Fidelis Underwriting Ltd and Fidelis Insurance Ireland DAC.
As reported by The Global Legal Post, the Russian aviation insurance litigation ended when the judge found that the aircraft were permanently lost owing to the war-related circumstances in Russia, entitling the claimants to recover their losses under their war risks policies, rather than all-risks policies.
The publication is an online publisher of international news, comment and analysis on the business of law.
It called the landmark judgment one of the most significant insurance cases in English legal history.
Reinsurance News reported Gallagher’s position that significant uncertainty persisted as to “how reinsurers might respond and the potential ripple effects on reinsurance pricing that could influence the broader aviation insurance market”.
• For more on the judgment, see Related Media
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