In contrast to my previous blog, I have just finished reading an article in the NY Times, which tells of the plight of the passengers of US Airways Flight 1549.

Flight 1549 as I am sure you all will remember, was the plane that ditched into the Hudson River, piloted by Capt Chesley B. Sullenberger, a near disaster that all walked away from.

Although they all survived, there were still casualties, people lost their belongings, suffered mental trauma, but US Airways told them all not to worry, they would be made whole for their losses.  So all was well, until it fell into the hands of AIG, an insurance company operating under government stewardship since it bailout in autumn ’08.

If your home is burgled, or you are involved in a crash, normally a phone call to your insurer sets the wheels in motion.  This appears to not be the case for aviation liability insurance.  AIG, US Airways insurer, would only be activated if the airline was found to have been negligent.  As we know the plane fell out of the sky as a result of a bird strike, it was the actions of the airlines crew that saved the day.  So who to claim, I’m pretty sure the bird didn’t have personal liability insurance, the thought is just plane quakers.

And when the airline are being praised, it is hard to put blame on their doorstep, as such AIG don’t feel responsible.

The airline gave each passenger a cheque for $5,000 to cover losses, something it was not obliged to do.  But this America, and medical care doesn’t come cheap, one family of four were all on the flight, they had to be treated fro concussion, injuries and hypothermia, but the mother is also suffering post traumatic stress after abandoning her husband and infant son, to get her daughter to safety.  AIG have advised that for mental health care she should speak to her health insurer, but they have a $3,000 deductible (excess).  AIG in this case are right, such as this people are expected to claim from their own in insurers and if the airline is found liable, then the insurers and as such the claimant are reimbursed.  However similar to US Airlines, although not obliged to AIG have said that they will pay for three sessions for each passenger.

This seems a pretty responsible, caring part on AIG part but passengers such as a Mr. Jorgensen, are being offered $10,000 if they sign a statement releasing AIG from any further responsibility.

However in a further twist Aviation liability risk does not lie with any one company but is spread between 8-10 insurers, AIG are the lead underwriter, and as such bare the brunt of any backlash.  Again this will apply in the case of the Air France flight, AIG are not he lead underwriter but are part of the insurance pool.

This insurance business as Alice says gets “curioser, and curioser!”