Insurers May Face Record Claims From Aircraft Grounded in Russia

One expert says the result of Russian President Putin’s actions could be ‘thoroughly devastating’ to aviation.

Thursday, March 24, 2022 at 12:42 PM ET

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One credit rating agency says the grounding of airplanes in Russia could force insurers to face as much as $10 billion in claims. [File Photo: Shutterstock]

Key Takeaways:

Russia effectively nationalized over 500 foreign-leased aircraft by allowing their domestic registration, making their operation illegal under international aviation rules after lessors canceled leases due to sanctions.
While this allows short-term regional operation, Russian aviation faces a bleak long-term future due to a lack of access to new parts and services from OEMs, leading to aircraft eventually becoming inoperable.
The inability of lessors to retrieve their aircraft is projected to trigger unprecedented insurance claims, potentially reaching $10 billion or more, which could be the largest annual claims in aviation insurance history.
This massive financial loss is expected to have a "thoroughly devastating" impact across the global aviation industry, potentially leading insurers to significantly increase premiums, add restrictive clauses, or cancel policies.

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Last week, Russian President Vladimir Putin, with a stroke of his pen, upended the entire aviation industry in one fell swoop.

After Bermuda suspended all airworthiness certificates for Russian-operated aircraft on its registry to comply with sanctions against Russia, Putin signed a law to allow regional and national airlines that leased aircraft from foreign companies to list on Russia’s registry and “to ensure the uninterrupted functioning of activities in the field of civil aviation.”