The consortium of insurers of Malaysia Airlines Flight 370 led by Allianz are bracing themselves for a huge payout in respect of insurance claims connected to Malaysia Airlines flight MH370 from KL to Beijing which has been missing since March 8.

The biggest aviation compensation claims ever made were related to the 9/11 attacks in the United States, with an average payout of US$2.13 million per passenger.

Previously, one of the largest insurance payouts for an aviation claim was for the American Airlines flight which crashed in Queens, New York in 2001 killing all 265 passenger and crew. Insurers paid a total of US$600 million for the insurance claim involving the crash.

“The loss of Malaysia Airlines Flight MH370 will likely mean big payouts from several insurance companies this year,” said an aviation analyst at a local stockbroking firm.

Insurers’ making up any consortium for this purpose would normally not disclose the amount of insurance taken because it could lead to costly litigation.

"Usually, the insurers and the airline company will not disclose the underwriting value, given the concerns over an extremely high claim from lawyers," said Hao Yansu, dean of the School of Insurance at the Central University of Finance and Economics who was quoted by China Daily.

Allianz confirmed on March 11, that it was the main provider of insurance for the aircraft itself, as well as the liabilities attached to the passengers and cargo.

However, the company declined to comment on the extent of its exposure or identify other insurers with exposure.

The insured value of the aircraft could amount to around $100 million, while the liabilities and compensation typically amount to a far higher amount, Reuters reported.

"The compensation will dent the financial performance of insurers. But such claims are rare events, thus have a limited impact on them in the long run," Hao said.

As both Malaysia and China are the contracting countries, the missing airplane is covered by the Convention for the Unification of Certain Rules for International Carriage by Air.

Malaysia became a signatory for the Montreal Convention which governs ticketed international travel in 2008. China signed in 2005.

The claim for the loss of the aircraft could also be huge. The current listed price of a Boeing 777-200ER is US$361.5 million, according to the Boeing Co website.

Further compensation from Malaysia Airlines depends on the reason for the accident. If it is established that the disaster resulted from a mistake by the airline, the compensation could be huge.

There were 154 Chinese passengers on board the missing flight and most of the Chinese passengers on the plane had purchased accident or life insurance policies, according to major Chinese insurers.

Ping An Insurance has the hardest passenger exposure, with at least 38 names on the aircraft manifest carrying the company's insurance policies, and possibly 15 more. China Life has confirmed having insured 30. Neither company has commented on the potential compensation amount involved.

China Pacific Life Insurance has confirmed 16 clients on the plane, with total compensation at about 5.44 million yuan .

"If it turns out to be a terrorist attack, some travel insurance policies may not apply. But the families of those who purchased life or accident policies would get compensation under any circumstances," Hao said.

Meanwhile Malaysia Airlines said it has sufficient insurance coverage to cover any legal liability arising from Flight 370.

In an email interview, MAS revealed that it had placed its insurance with a consortium of established and reputable insurers in the international aviation insurance market. This includes Lloyds syndicates and globally renowned insurance companies.

Further, MAS said it had enough insurance coverage to meet any eventual claims that may arise.

It has already been making early payments to the families of the passengers waiting for news of the search.

These payments however are entirely borne by MAS and is not part of any compensation that may be payable.