In a case like this, it's not everybody, but airline customers, and in rough proportion to how much they fly. Which is a decent way to distribute the costs.
I'm afraid that's just not true. That is certainly the principal, but in reality (in Europe at least) the costs are distributed across the entire consumer-base. The costs are "socialised".
I'm not sure I understand. Are you saying that if, for example, airline-related insurance claims increase, the insurance companies will raise their rates for all types of insurance, not just airline-related insurance?
So costs get socialised in three ways I can think of; firstly the direct increase in insurance charges to those who avail of flight insurance (this is the case which you mentioned) - but it doesn't stop there - this increases the "cost of business" and these costs are passed on. By the time these increased costs reach individuals the effect is negligible but it does affect the broader (Malaysian) economy. The second is through insurance companies increasing charges across the board. Insurance is a marketplace just like any other and in order to stay competitive in one market costs can be spread to another. The final is direct regulatory intervention where the wider customer base is directly charged a percentage (google "insurance levies").
So I opened with "I don't know what the story is in Malaysia but .." because the relative influence of each of these factors is profoundly regional, related to regulatory and government policy . But now that I think of it, even in a libertarian paradise the effect of the second one alone would be fairly significant.
I'm not talking about individuals buying flight insurance, but airliners insuring their planes. All airline customers indirectly pay for that.
I don't understand why or how an insurance company would raise rates in one area because of increased costs in a different area. If the costs in the first area haven't gone up, but they still raise rates, then they'll just be undercut by other insurance companies who don't raise rates, and lose business. And if they don't raise rates in the area where costs have gone up, then they'll lose money on it.
When I search for "insurance levies" all I can find are taxes on insurance premiums.
