The discovery of an aircraft part from missing Malaysia Airlines Flight 370 is unlikely to affect the negotiations over insurance payments to families of passengers, aviation lawyers, insurers and people familiar with the case said.

The first confirmed piece of wreckage, a section of the wing that washed up on Réunion Island in the Indian Ocean, doesn’t yet offer enough clues on what happened to the plane, the people said. Experts say more key pieces, especially the jet’s black boxes, would still need to be found before authorities could attempt to determine why the plane veered far off course and apparently crashed in the southern Indian Ocean.

“I don’t think the discovery of the debris would have any real impact on the position of the insurance claims unless further discovery is made…that would give some indication of what exactly happened,” said Jeremy Joseph, a lawyer specializing in maritime and aviation law based in Kuala Lumpur.

So far, the discussions between lawyers for the families and lawyers for the insurers have been predicated on the absence of the aircraft. Discussions over compensation have been complicated by the fact that no concrete evidence has emerged over what caused the disappearance of Flight 370, which vanished on March 8, 2014, en route from Kuala Lumpur to Beijing with 239 people on board.

Under the Montreal Convention, an international aviation agreement, airlines must pay out up to about $175,000 per passenger after an accident regardless of whether the airlines are at fault. Some families haven’t chosen to accept the payments yet. That figure is capped if the airline can prove it wasn’t negligent or that a third party was negligent. While payments to next of kin have started, final payments are yet to be determined and will be based on individual circumstances, regardless of what was paid upfront.

After Malaysia confirmed a wing part found on Réunion Island was from MH370, some relatives of the missing passengers are still doubtful, thanks to a distrust of the government since the beginning of the search. Photo: Getty Images

“Malaysia Airlines (MAS) and its insurers remain steadfast to ensure that fair and reasonable compensation is paid to the families of all MH370 passengers in accordance with the law,” a spokeswoman for Malaysia Airlines said in an emailed statement. “The discovery of the MH370 wreckage will not affect MAS’ commitment to paying appropriate compensation as soon as agreement can be reached with those affected.”

Insurance of the plane is split between an aviation policy covering hull and liability, which covers the loss of passengers and the plane, and a policy that covers the plane itself against acts such as terrorism. Industry insurer Allianz Global Corporate & Specialty SE, a unit of Germany’s Allianz SE, is the lead reinsurer for the hull and liability policy consortium while Lloyd’s of London unit Atrium is the lead for the other.

“The Lloyd’s market has a record of paying all valid claims and continues to ensure claims arising from this tragedy are paid,” a Lloyd’s spokeswoman said in an emailed statement.

The continuing discussions don’t concern personal life or travel insurance policies some passengers had carried. Chinese insurers among others in recent months have detailed payments they’ve made to families under such policies.

Oliver Bäte, chief executive of Allianz, said on Friday during an earnings call with journalists the debris found from the plane “doesn’t change the situation from our perspective.” Insurers together have provided more than $300 million for estimated claims related to the crash, Mr. Bäte said, adding that it was too early to give an update to the estimate.

Some lawyers for the families say they don’t believe the debris will have any impact on the outcome. “The airline is strictly liable under international law to the families, and the airline has the burden of proof, which is extremely difficult to discharge,” James Healy-Pratt, head of aviation and travel at Stewarts Law LLP, wrote in an email.

If more pieces of the Boeing 777 jet are found, and there is evidence of a design or manufacturing flaw, “we will be recommending to families to pursue claims against those particular entities,” said Joseph Wheeler, special counsel for aviation at Maurice Blackburn Lawyers in Melbourne, Australia.

A Boeing spokeswoman declined to comment on the possibility of litigation but said in an emailed statement that the company’s goal is to determine what happened to the plane and why. A report by a team of international experts released on the one-year anniversary of the plane’s disappearance found nothing unusual about the crew or aircraft that could explain the aviation mystery. According to the report, the Boeing 777 aircraft was delivered to the Malaysian flag carrier in May 2002 and didn’t have any mechanical or computer troubles. Its communication systems were operating normally until radio and transponder signals abruptly stopped, the report said.

Many are waiting to see what happens after the debris is examined. “I don’t think [the debris] is going to change anything at this stage from a liability perspective, but who knows what tomorrow, next week, next month will hold?” said John Ribbands, a barrister specializing in aviation law based in Melbourne.

The Wall Street Journal


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