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's new law allows foreign-leased aircraft to be registered domestically, effectively nationalizing them and making it nearly impossible for lessors to reclaim their assets, despite violating international aviation standards.
This action will severely limit Russian aviation, as aircraft will eventually be grounded due to lack of foreign parts and maintenance, and operators will likely be cut off from future international leasing and services.
The widespread inability to reclaim these aircraft is expected to trigger an unprecedented aviation insurance crisis, with potential claims up to $10 billion, which could lead to increased premiums and altered policies across the global aviation industry.

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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.”