A.I.G. Balks at Claims From Jet Ditching in Hudson
 

http://finance.yahoo.com/insurance/a...hing-in-hudson

by Mary Williams Walsh
Friday, June 12, 2009
provided by
The New York Times

For the first couple of days after his flight ditched into the Hudson River, Paul Jorgenson was just glad to be alive. But then he started to need his laptop, his wallet, his car keys -- all the essentials he had stowed under his seat and left behind in the sinking plane.

A pleasant woman at US Airways told him not to worry; he would be made whole for his losses. But then the matter shifted to US Airways' insurer, the American International Group, operating under government stewardship since its bailout last fall.

"Everything went downhill," said Mr. Jorgenson, a software executive in Charlotte, N.C., whose laptop and keys have not been recovered.

When a homeowner has a burglary or a driver has a crash, all it normally takes is a call to the insurance company and a description of the loss to activate the policy. But aviation liability insurance is different. It is activated by a finding of negligence on the part of an airline. If there is no negligence, then arguably there is no liability, and no obligation to pay claims.

Read the rest..
http://finance.yahoo.com/insurance/a...hing-in-hudson

However distasteful we may find this, as someone who has experience working for a big insurance company, this is actually pretty standard operating procedure. The insurance company (AIG in this case) is going to try to settle the claims as quickly as possible for cost reasons, but the process of paying out a claim can take quite a bit of time.

Again, people may not like the reality of the process, but this isn't surprising at all.

This isn't too surprising or upsetting to me, either.

The airline--outside of their obligations--gave each passenger $5,000. If they bought their tickets with certain credit cards, then they probably got additional insurance payouts and reimbursements as well. They didn't pay for their transportation back home, or any expenses related to getting home. Their immediate healthcare needs were also addressed. For that family of four, they received at least $20,000. Now they want the airline's insurer--AIG--to pay for therapy? As much as I am a believer in talk therapy and mental healthcare, it's not an entitlement and it's not the airline's responsibility to pay for it.

I'm sure I sound really harsh, but I am so tired of people whining and complaining about every single little thing. If the cause of the crash had been pilot error, I could understand their concerns. BUT, if anything the pilot prevented it from being a major catastrophe. Gah!

And now I will respond from a PR crisis communication standpoint. The airline, not its insurer, should be paying for counseling for all of those passengers. That should be in every airline's crisis plan, because it's the right thing to do. You think you wouldn't need a little therapy after being in a plane that was going down due to engine failure? The airline wants to claim glory for its pilot that landed the plane on water, yet it doesn't want to take the responsibility for the consequences of the plane landing on water? Hogwash. If the insurer won't pay for therapy, the airline should be, and they should be happy to do so. The consequence of this accident could have been much worse - they should be relieved that they aren't being sued for wrongful death in a class action lawsuit! US Air does not need this right now...they're already known for their terrible customer care.

I'm with Munchkin here. I don't think the PR is going to be that big a deal. Most people are fine with the fact that people aren't getting a windfall of money when they're just lucky to be alive. Especially since the airline was not only not negligent, it went above and beyond in making sure everyone survived.

You can talk about what could have happened, but none of that stuff did happen. The airline should only be liable to an extent for what did happen.

From a legal standpoint, I'm sure there's a nice little body of law on common carriers such as airlines and what sort of duty to pay they have with regard to these situations. They should pay whatever their liability at law is and not a penny more.

If there was going to be a PR fall-out, wouldn't it have happened months ago?

I didn't say that the people didn't need therapy. With their related medical bills, relocation, and item replacement costs covered, it would seem that the $5,000 from the airline--over and above anything that was required of them--could pay for the therapy. If I'm not mistaken, that's an entire year of therapy at $100/week, assuming 2 weeks off. That's a little higher than the going rate, and more than what an insurance carrier will pay for it.

For what it's worth, I'm pretty sure the airline loses this specific suit (wrongful death) just about never, unless the pilot was on prescription pain killers or something similar.

One thing that bothers me (admittedly, as an insurance law nerd) about the article is that they're confusing two different concepts. Making a claim on your own homeowner's policy for the loss/destruction of an item is a completely different thing than making a claim against someone else (like the airline) in a liability context. The article makes it seem like it's the same process, with the same timeline and same results. That's just not true.

As far as the PR aspect - I only worked in media/public relations for a few years, but from what I understand about crisis communications, a major aspect is the immediacy of the response; for example, if you did something wrong, make an apology quickly. Here, like Munchkin said, we're a few months out from that, so I'd think that they've exhausted their timeframe as far as approaching this from that crisis communications perspective.