London: Boeing Co has some insurance in case its aircraft are grounded, but it is far too soon to say whether the problems with the 787 Dreamliner will lead to significant claims, the head of the planemaker’s lead insurer said on Wednesday.
A pool of four insurers stands behind Global Aerospace, the London-based lead underwriter of Boeing’s insurance program. The program includes a variety of coverage, such as manufacturer’s product liability and grounding liability.
Warren Buffett’s conglomerate, Berkshire Hathaway Inc , has a 27.875 percent share of the pool, second only to German reinsurer Munich Re Group AG, which has 49.445 percent. Japanese insurers Tokio Marine and Mitsui Sumitomo contribute the remainder.
The question now is what the grounding of the 787, already two weeks along with no end in sight, will actually cost.
“I can confirm that, in the aviation insurance market, we do provide some cover for so-called grounding liability. It’s a complex cover with varying triggers,” Global Aerospace Chief Executive Nick Brown said in an interview. “Really, it’s far too early to say whether it’s going to result in a claim to us, or what kind of magnitude.”
Brown said Global Aerospace would have the largest share of any claim and would handle the processing, but the policies are syndicated globally, meaning a variety of other insurers would participate.
Regulators around the world grounded the 787 on Jan. 16 after a series of incidents with the plane’s lithium-ion batteries, including a fire on the ground in Boston and a mid-air incident in Japan.
Earlier on Wednesday, Japan’s two biggest airlines said they had repeatedly replaced sub-par lithium-ion batteries on their Dreamliners in the months before the two incidents, raising more questions about Boeing’s choice of the technology.
There are 50 Dreamliners in service around the world, roughly half in Japan. The $207 million aircraft is considered a cutting-edge example of future aviation technology, but its development was delayed for years and plagued by cost overruns along the way.
At least one Boeing customer, Poland’s LOT, has said it would consider seeking compensation for losses caused by the grounding.