We’re seeing new entrants, innovative underwriting approaches and higher limits of liability for less money for owner-flown and professionally operated King Airs.
The King Air community boasts a robust population of owner-pilots. During my time actively flying the King Air B200 around the Midwest, I encountered an array of owner-pilots, from a United States congressman to one of my business mentors, who became a close friend. He owned and operated a King Air C90 and later a King Air B200, and we have shared enjoyable trips together with our spouses. Over the past 25 years, I have made many more friends among King Air owners who are also pilots. One such friend, now in his mid-70s, owns a well-equipped King Air 350, complete with many of the latest STCs. He began with a King Air 90 and volunteered as the testbed for Garmin’s G1000 STC in the early 2000s.
All these King Air owners have expressed similar thoughts, questions and concerns regarding training, risk management, insurance and various other topics related to their King Air experiences. However, their specific needs differ when it comes to coverages and limits.
These topics and frustrations tend to become more pronounced during a hard insurance market cycle. Yet, if you have consistently owned a King Air for the last 20 years, you understand that “this too shall pass” and the soft market will eventually return. Welcome to 2025, the year of the new soft market. We’re seeing more options for a customized experience for owner-flown and professionally operated King Airs, and new underwriting approaches and higher limits of liability for less money.
Debriefing the Aviation Insurance Association annual conference
The Aviation Insurance Association held its annual conference in Orlando during the first weekend of May. This long weekend involved speed dating with underwriters, educational seminars, keynote speakers and industry awards. By the time I flew home on Tuesday morning, it felt like my bag weighed an extra 10 pounds from the business cards collected and the notes from meetings.
At the conference, we specifically met with three new markets including one entrepreneur who is in the process of starting another aviation insurance company. The entrepreneur is in the early stages and has yet to announce a formal name. Two of the new carriers entering the market in Q2 and Q3 this year have the capacity to insure the King Air community, including owner-flown King Airs. Aviation is a small industry, and aviation insurance is even smaller. While these markets may be new to aviation, the underwriters are highly experienced, having worked as aviation underwriters with several existing carriers. One of my colleagues refers to the past six months as “underwriter migratory season” with all the new competition hiring underwriters.
So, what’s new? What competitive advantages do they offer? Why did they leave one carrier to lead another?
The theme among these new entrants is often the same: We have backing that will allow us to underwrite more efficiently, take care of our insureds and ultimately lead to favorable underwriting losses and lower premiums. Everyone appreciates lower premiums! Every insured desires the lowest rates, believing they will never have a claim, right? However, when a claim does occur, the premium you paid suddenly seems insignificant compared to the desire for the best coverage and claims experience possible.
One of the new markets, Class A, has a compelling business strategy. Class A is leveraging technology to identify those operating in a consistently safe manner, analyzing flight profiles, deviations from standard instrument departures, or SIDs, and standard terminal arrival routes, STARS, as well as approaches and weather conditions.
During our visit with their chief underwriting officer, they referenced a recent crash, stating, “We never would have insured that risk.” He presented multiple data points on his phone to support their underwriting model. If their technology can predict the majority of pilots who may crash, that leaves only hangar rash and FOD claims to adjust. Their underwriting results are likely to yield a nice profit for their shareholders and savings for the clients they deem worthy. An interesting fact about Class A is that their lead founder and CEO, Mark Haidar, is a turbine aircraft owner and pilot, truly living the business. You can read his opening letter on their website: classa.ai/ceo-letter.
The second carrier that opened its doors in the United States recently is Rokstone Aviation. Rokstone is working with a legacy market, Allianz, which has more than two decades of history writing flight schools, charter operators and professionally flown turbine aircraft in the U.S. Rokstone is now bringing this underwriting capital and experience to the owner-flown turbine community with Allianz’s backing. You can learn more at rokstoneuw.com/products/aviation.
Legacy aviation insurance carriers focus on reflecting upon their extensive years of underwriting outcomes. They protect their capital in various ways, including determining the limits of liability they will provide to aircraft owners and the ancillary coverages they will offer with specific limits. While I am oversimplifying their business strategy, these are two major pillars. For instance, one underwriting company prefers to sub-limit their passenger liability limits. In the event of a fatal crash, this drastically reduces the total payout. Several insurance carriers have also reduced ancillary coverage limits, such as extra expense. I have witnessed firsthand how extra expense payouts can approach or even exceed the amounts paid out for hangar rash or FOD claims.
Ultimately, profitable underwriting hinges on aligning the right price with the appropriate coverages and limits, along with a good deal of luck. Class A aims to disrupt the traditional business model by minimizing the element of luck in their portfolio.
Assessing value propositions
The King Air community will benefit from the new market conditions. It is important to recognize that one new carrier may not be the solution for all King Air owners. Finding the right value for your premium dollars remains an excellent strategy to refine. Your specific needs may differ significantly from those of your hangar neighbor.
Let’s explore what value propositions you should consider.
If you have a King Air insured for $1,800,000 with a liability limit of $2,000,000 for a premium of $15,644, is that a “good deal”? It could be if you never have a claim. But if we assume we will never have a claim, then why purchase insurance?
There are several ways to assess value while making an informed decision. My perspective may be somewhat biased, as I broker insurance for King Air owners regularly and witness claims almost weekly (across our entire portfolio, not just King Airs). In my experience, people buy insurance and subsequently file claims. While this is a simplification, it provides insight into my thought process.
Examining the $15,644 premium example, here’s what we discover that policy covers:
- Your aircraft is currently valued at $2,000,000 in today’s market for “like, kind, and quality.”
- Your friends who occasionally travel with you are worth significantly more than $2,000,000. Alternatively, you may dry lease to a business that transports high-net-worth passengers.
- Your aircraft is based in a community or flies to areas known to be susceptible to protests, strikes, riots or civil commotions, or in countries where “government seizure” poses a real threat.
- Your King Air is crucial for you and your spouse’s travel schedule. You have worked hard for many years and want the freedom to travel where and when you desire, which is why you own a King Air. Therefore, extra expense is a coverage you should seriously consider.
- Hot starts are specifically excluded from coverage.
A la carte pricing options are available to address any of the above concerns:
- To increase your hull coverage to $2,000,000 from $1,800,000 = $1,450.
- Increasing your liability coverage to $10,000,000 = $4,160.
- War hull coverage to protect against government seizure and social unrest = $800.
- Extra expense coverage in the amount of $200,000 with no per-day sub-limit to assist with chartering an aircraft while your plane is being repaired for a covered loss = $750.
- Removing the heat exclusion = $2,000.
If you want all these enhancements, the new premium adds an additional $9,160 to the original cost. However, you may not need all these options, so it’s wise to purchase only what you desire.
When you file a claim, depending on the nature of the claim, some or all these options may seem like no-brainers. Depending on your situation, some individuals in your circle may require specific coverages. For instance, lienholders may mandate war hull coverage. The FBO may require a waiver of subrogation for the fair market value of your King Air. Lessees may request you to have $10,000,000 in coverage. Your spouse may prefer not to travel on Spirit while the King Air is undergoing repairs due to a bird strike.
There are more than 40 different coverages and ancillary limits available. While you may not desire the “Cadillac” plan, some coverages may be essential if you understand the risks involved and how little it would cost to insure against them.
Owning and operating a King Air is a deeply personal and passionate endeavor. You likely know your maintenance technician by name and your FAA medical examiner’s name; these relationships are personal, and you trust them to help you make informed decisions. Your relationship with your insurance broker should be similarly built on trust and strategy. As one aircraft owner remarked during his last insurance renewal, “I will follow your recommendation provided we’re spending the money the way you would if it were your dollar being spent.” Although my hangar houses a Beechcraft Bonanza and a Piper Cub, this sentiment resonates with me and reflects my strategic approach to purchasing insurance. Much like a homebuilder building their own home.
As the aviation insurance industry faces disruption from new entrants, we may find the underwriting process becoming more personalized as well. Just as your family doctor analyzes trends and behaviors to predict your future health challenges, Class A and potentially others will soon offer you similar insights. One aspect that should remain unchanged is the ability to tailor your policy’s coverages to meet your specific needs and budget, creating the best value for you.