Smoke billows and flames rise after a Japan Airlines (JAL) plane collided with a Coast Guard aircraft on the ground, at Tokyo's Haneda airport, Japan, January 2, 2024 in this image obtained from social media.
Obtained by Reuters
Even as investigation in the Japan Airlines (JAL) crash with a coast guard aircraft at Tokyo's Haneda airport, on January 3, the airline’s insurers are pinning their hopes that blame can be placed entirely at the doorstep of the coast guards. This could mean the liability, presently estimated at $130 million (Rs 1,100 crore), with the application of the subrogation norms, could pass to the Japanese government. Indian insurers, who may have to pick up a tab of Rs 33 crore, are among the 25-30 insurers for the airline - led by AIG of the US.
The bulk of the Indian insurers’ liability - Rs 18 crore - will be picked up by the state-owned reinsurer - GIC Re, while three other non-life insurers - New India Assurance, Oriental Insurance Company and National Insurance Company are expected to foot the remaining Rs 15-crore claim.
Speaking to DH, Neerja Kapur, chairman and managing director of New India Assurance, confirmed, “We have an exposure through the Quota Share Treaty. Our exposure on this risk is less than 5 crore.” Quota Share Treaty is a pro-rata reinsurance contract in which the insurer and reinsurer share premiums and losses according to a fixed percentage.
It may be recalled that while all the 379 onboard JAL’s A350 widebody jet were safely evacuated, five of the six-member crew in the smaller coast guard aircraft, that was bringing in relief material for the earthquake affected, were killed. It is yet to be established who exactly was responsible for the accident. There are reports that the Japanese coast guard plane misunderstood the signal given the air traffic control room leading to the mishap.
Rashmi R Singh, chairman and managing director of Oriental Insurance Company, pointed out, “The liability reserve is yet to be established. At this point I can only say that Oriental's share is very, very small."
“GIC Re has been participating in the reinsurance of Japan Airlines. The actual quantum of the loss for GIC Re's share will be known when the loss is crystallised”, said a senior GIC Re official requesting anonymity.
There are several components attached to the loss, which includes subrogation, if any. For starters, subrogation means that if JAL was not responsible for the incident, the reinsurers can recover the claim amount from those responsible for the incident in the real sense, he added.
Moreover, even if the claim (loss) is finally placed with the reinsurers, then it will be distributed among a host of reinsurers globally, numbering somewhere between 25 and 30.