AOPA Turbine Pilot Magazine - April 2020 - 103

P&E 

OWNERSHIP

On the rise
Why insurance rates are increasing 10 to 100 percent
BY THOMAS B. HAINES

AOPA HAS RECEIVED MANY CALLS in recent
months from members concerned about
the hull and liability insurance premium
increases they are seeing during their
renewal period. AOPA President Mark
Baker and other AOPA leaders have met
with numerous underwriters and insurance
executives to understand what is happening
in the insurance market to cause premium
increases of 10 percent to 100 percent or
more in some cases.
The change is a result of a "hardening"
of the insurance market after more than a
decade of flat to, in some cases, decreasing
premiums. However, as the insurance companies have sustained significant losses in
aviation and other markets in recent years
(think hurricanes, tsunamis, floods, earthquakes, and fires), losses have outpaced
premiums. That has caused some insurers
to exit certain markets, including aviation.
In order to be profitable, those that remain
have increased premiums-in some cases
dramatically, particularly in the ownerflown turbine market and for older pilots.
AOPA continues to be involved in helping to

educate insurance underwriters about the
continually improving general aviation accident rate as the AOPA Air Safety Institute
works to create training materials to help
pilots fly more safely.
To help understand the changes in the
insurance market, we turned to Bill Behan,
CEO of AssuredPartners Aerospace, AOPA's
partner in hull and liability insurance for
members. In the in-depth interview, he uses
his 40-plus years of experience to explain
the dynamic marketplace and hints that
more increases will come before things
begin to flatten out in 2021. He also offers
some suggestions for pilots on how to mitigate some of the increases they will face.
Please explain what is happening in the
global insurance markets and, separately, inside the aviation markets that is
contributing to the increases owners are
seeing in aviation.
Insignificant premium levels to support aviation industry losses are the prime culprit
for the increases AOPA members, as well
as others, are experiencing today. All the

aviation insurance premiums in the United
States last year totaled between $1.5 billion
and $1.6 billion. Those premiums included
space (satellites), airlines, manufacturers,
products, and general aviation. The aircraft
most AOPA members fly are in the pleasure
and business insurance niche, which is sustaining the least of the increases in premium
costs thus far.
How does the hardening market affect
owners' abilities to get higher liability
limits?
It is painful now for an aircraft owner to
secure liability limits higher than what
they currently have in most cases. It's not
a matter of paying a higher premium-it is
simply not available in most cases. There is
no set standard currently, but in canvassing insurers, their guidelines suggest they
will not incur a loss greater than $2.5 million for any pleasure and business policy.
Some insurers' threshold levels are as high
as $5 million but only for exceptional risks.
That is hull and liability combined. Some
companies have thresholds lower than that,
few higher. So, if you have a member with a
new $1 million hull, and they want to purchase a $2 million liability limit, that places
that insurer at a potential max exposure of
$3 million. That creates a series of underwriting hoops which the broker then has
to share with the client, addressing training, where the aircraft is maintained, pilot
age, et cetera. Every request for higher liability limits is scrutinized more fully today
not only for premium cost, but also for
whether it fits the underwriter's parameters for a higher limit.
Has the Boeing 737 Max situation
impacted GA premiums?
Absolutely, as have other airline-related
accidents.
What can individual pilots do to help mitigate potential premium increases?
Work with their insurance brokers to provide all the updated flight experience
information, aircraft information, and
training updates possible. Some aircraft
owners may want to consider higher hull
deductibles in order to trade premium concessions for self-insuring deductibles. Some
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AOPA Turbine Pilot Magazine - April 2020

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