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 hundreds of foreign-leased aircraft by allowing them to be registered locally, making it nearly impossible for lessors to reclaim their equipment and causing these planes to operate illegally under international law.
While enabling short-term regional flights, this move will cripple Russia's long-term aviation capabilities due to the lack of access to parts and services from global manufacturers.
The inability to retrieve these aircraft is projected to trigger unprecedented insurance claims for lessors, potentially totaling over $10 billion, which could lead to significant repercussions across the entire global aviation industry, including increased premiums and policy changes.

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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.”