Anniversary of Russian invasion of Ukraine prompts rush to litigate over lost civil aircraft

By 28th March 2023 Insights

The one-year anniversary of Russia’s invasion of Ukraine has led to a wall of legal claims being filed at the High Court against insurers who have not paid on aviation policies.

Twenty lawsuits against 40 insurers were filed on 23 February, exactly a year after the Russian invasion of Ukraine. The scale of the legal claims is almost unheard of in the commercial insurance market. The claims relate to the loss of commercial aircraft left stranded in Russia following the invasion of Ukraine.

While details of the claims have not been made public they are likely to be worth many billions of pounds. A similar claim, filed by aircraft leasing company AerCap against AIG in October last year was valued at $3.5bn by the claimants.

Bruce Hepburn, Chief Executive of Mactavish, said: “The scale of these claims is really very significant. Insurers’ increasing hardline approach to paying out on claims has led to a rapid escalation in the number of disputes that end up in court, however we rarely see 20 claims filed in just one day.”

For many such insurance policies, the one-year anniversary of the invasion is key as it is only after an asset has been held by a third party for this period of time that it can be declared a total loss.

The claims filed in February also dramatically expand the number of insurers who have been dragged into the litigation to around 40 insurers, including some of the largest names in the market, such as AIG, Allianz and Chubb as well as smaller specialist underwriters such as Convex Insurance and various Lloyd’s of London syndicates. In previous cases, some insurers have defended these claims by arguing that the aircraft are not lost as many are still operational in Russia. Some have also argued that western sanctions against Russia make it impossible for them to pay out on the claims.

Bruce Hepburn said: “Insurers are playing hardball. They know that premiums are on the rise across the market which makes it very difficult for customers to move to another insurer, even when there is a dispute about a claim. Unfortunately, our analysis of the market suggests it is very unlikely that premium inflation is going to stop any time soon.”

Last year Mactavish released Claim Litigation Index, a measure of the number of insurance claims that end up being litigated through the High Court. The Index showed that in frequency of such disputes had tripled over the last 10 years, with the bulk of the increase coming since the onset of the hard market in 2018. The Index demonstrated how insurance the industry was not only raising pricing in the hard market but had also tightened up on claims payouts.


Mactavish Claims Litigation Index

The Mactavish Claims Litigation Index aims at tracking insurance litigation and claims performance and getting the market to focus on what really matters, the product you buy with your premiums, not just the premium itself.

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