Germanwings lead insurer Allianz sets aside $300M for plane crash claims payouts

Germanwings insurers have set aside $300 million to pay expenses from last week’s plane crash.

The preliminary reserves are to cover claims from victims’ families, and costs for the lost jet and supporting the investigation, Allianz SE, the lead insurer for the carrier, said in an e-mailed statement Wednesday.

Deutsche Lufthansa AG, which owns Germanwings, said Tuesday that the co-pilot, whom prosecutors believe intentionally crashed Flight 9525 into the French Alps, had informed the airline six years ago that he battled depression.

Lufthansa is facing possible financial claims from the families of victims, which legal experts have estimated at around $350 million. The airline has already offered family members an initial payout of as much as 50,000 euros ($53,760) to help them cover immediate costs.

“The issue now seems to be what did Lufthansa know, and when did it know it, and — if there was any concern about the pilot at the airline — what did they do to follow up on this?,” said Addison Schonland, a consultant at AirInsight in Baltimore, Maryland. “It seems appropriate the German laws should be reviewed. Whenever a person whose job performance could impact the safety of others is diagnosed by a doctor with such a condition, that information needs to be shared with authorities for public safety.”

Studies Resumed

Andreas Lubitz told the airline’s flight training school in 2009, when he resumed his studies after a break, about a “previous episode of severe depression,” Lufthansa said Tuesday, acknowledging for the first time that it had been aware of 27-year-old’s mental illness several years ago.

The only other clue previously from Lufthansa about its knowledge of his condition came last week when Chief Executive Officer Carsten Spohr said Lubitz had stopped his training for several months. Spohr had declined at the time to provide any details, citing medical confidentiality. The airline has been under pressure since then to release more information about the co-pilot and said Monday that it was now doing so to “ensure a swift and seamless clarification.”

Allianz, Europe’s biggest insurer, said on March 24 that its AGCS industrial insurance unit is the lead insurer for the crash, sharing the coverage with a number of co-insurers. Aviation coverage is provided by a group that can consist of more than 10 insurers led by a lead insurer. The hull claims are being handled by a separate consortium because of the possibility that the co-pilot deliberately crashed the plane.

Suicidal

German prosecutors investigating the crash said Monday that Lubitz had been treated in the past for suicidal tendencies. They’re still trying to determine the possible motive after voice recordings indicated he locked his captain out of the cockpit before directing the plane into a French mountain slope last week, killing himself and 149 passengers and crew.

One possible explanation is that Lubitz harbored a mental condition that threatened to end his career. He was suffering from a psychosomatic illness, a person close to the investigation told Bloomberg. He had been certified by a doctor as unfit to fly on the day of the crash, something investigators said he never passed on to his employer. Prosecutors retrieved unfilled prescriptions for tranquilizers to fight depression in his apartment, Bild Zeitung reported.

Lufthansa’s statement Tuesday still left many unanswered questions. Thomas Jachnow, an airline spokesman, said he didn’t know if the flight school had specifically been informed about the suicidal tendencies, if the information about his past depression was passed on to medical staff or if the depression had been the reason for the interruption of his training.

Flight training

Lubitz, who started at the school in 2008, had to go through the selection process and medical tests a second time when he resumed his studies in 2009, Jachnow said. The medical examinations are done in-house by certified aeromedical examiners at Lufthansa’s main base in Frankfurt, he said, adding that less than 10% of applicants pass the exams.

Lufthansa said it was turning over the e-mail correspondence, medical documents and training details from Lubitz to prosecutors and vowed to “continue to provide the investigative authorities with its full and unlimited support.”

 

Apr 03, 2015 | By Richard Weiss, Oliver Suess

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