John Neal, chief executive of the specialist market, said that there will probably be "significant debate" over whether insurance cover for international aircraft leasing companies will pay out for claims if Russian confiscates jets grounded at its airports.
More than 500 internationally owned jets leased to Russian operators have been trapped in the country since aviation sanctions were introduced following the country's invasion of Ukraine. The aircraft are said to have a total value of approximately $13 billion.
Speaking to journalists as Lloyd's announced its annual results for 2021, Neal declined to put a number on potential losses. But he said that the insured value is likely to be around 15-20% of the value of the assets.
"It will be a major event," he said. "There is no doubt that there will be losses of note that will materialize from war in Ukraine. But it will take a bit of time to know what those will be."
Russian President Vladimir Putin signed off a new law last week that would allow national aircraft operators to retain foreign-owned planes for use in the domestic market if the lessors have canceled contracts because of sanctions. The development "raises the risk of the jets being potentially unrecoverable", an investment bank, Berenberg, said at the time.
Neal said Thursday that legal disputes will probably center on whether there is insurance to cover such confiscations and on whether cancellation notices were sent early enough by insurers to effectively deny cover.
"There will be a significant debate over what is and isn't insured and when the notices of cancellations were issued, and I'm sure the settlements of some of these losses will end up in court," he said.
"We are of a mindset of trying to pay claims, but if you think about the complexity and the ravage of war, some of that is going to find its way to court," Neal added. "It will be years."
The comments echo those made by aviation insurance lawyers last week. One told Law360 that practically every partner with relevant specialisms in the City was involved to some degree with the matter of grounded planes.
--Editing by Ed Harris.
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