Disappearance of Flight MH370 (2014)
The disappearance of a Malaysia Airlines Boeing 777 between Kuala Lumpur and Beijing, which raised the question of settling an aviation loss with no wreck, no known cause and no certainty about the war exclusion.
Flight MH370 vanished from civilian radar on March 8, 2014, less than an hour after taking off from Kuala Lumpur for Beijing, with 239 people on board. Satellite data later placed its probable end in the southern Indian Ocean. For insurance, the case is unique for what it leaves unsaid. The airline's hull and liability policy covers loss of the aircraft and liability to passengers, but the hull war policy, placed separately, responds only if the cause is a hostile or malicious act: with no established cause, neither market could prove the loss was its own. Insurers therefore settled on the basis of a disappearance, following market practice, and the 1999 Montreal Convention let families claim without having to establish the cause. The case also shows the public cost of a search that no insurer funds.
As early as March 2014, the lead reinsurer of Malaysia Airlines' hull and liability program announced that it and its co-reinsurers had made initial payments, in line with practice when an aircraft is reported missing. The underwater search led by Malaysia, Australia and China was suspended on January 17, 2017 after covering 120,000 square kilometers without finding the wreck.
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