Page 12 - July 2015 Volume 9, Number 7

With so many carriers to choose from,
which one
is right
for you?
by Kyle White
Irecently attended the Aviation Insurance Association’s annual conference in Colorado Springs. Working in the insurance segment of the aviation industry, this is an excellent event to attend and stay abreast of changes in the marketplace. The senior management team of every aviation insurance carrier doing business in the United States is in attendance, as well as some of the industry’s finest aviation attorneys. The three- day conference allows brokers, like myself, to meet with many of the underwriters, claims adjusters, and aviation defense attorneys to ensure we are up-to-date with the current market, trends, and legal liabilities the insurance buyer needs to be aware of.
Not surprisingly, the attendance for this year’s conference hit an all-time high. In the last 10 years, consumer options have grown significantly, which has been good for the buyer – the increased supply has forced pricing down, while increasing the broker’s negotiating power for enhanced ancillary coverages (i.e., broader policy content). At the same time, the demand for insurance has decreased. This does not refer to the number of aircraft needing insurance, but to the value of insurance necessary on each policy. For example, before the financial crisis in 2008, it was difficult to find a King Air B200 for less than $1,000,000, or a quality C90 for less than $500,000. Now, if you have $300,000 and can afford the operating cost, you can purchase a King Air 90, and find a variety of B200s for less than one million dollars.
10 • KING AIR MAGAZINE
The value of the King Air fleet impacts your insurance purchase. The reduced fleet value opens the doors to more carriers being able to offer coverage for your risk. Not all insurance carriers have the same “capacity” (the amount of coverage they can, or are willing, to provide). Although there are more than 20 aviation insurance carriers in the market today, only a handful can provide you with $1,000,000 of hull coverage, and even fewer can provide liability coverage above $100,000,000. So, when the values of aircraft fall, more options are available for the insurance buyer, especially if you require $50,000,000 of liability coverage or less.
There are now 10 more insurance carriers available to you today than a decade ago. You have over twice as many options! With so many selections, how do you choose? Understandably, many consumers default to the cheapest option. If you are only buying coverage to check a box, with no intention of incurring physical damage or getting sued, then that can be a good option. But, if you’re confident you’ll never have a loss, why purchase coverage at all?
Three Factors to Consider
Obviously, foregoing insurance would be foolish, so consider the following three areas to help you make an informed decision at your next renewal.
First, most likely you didn’t buy the cheapest King Air. You considered many factors, such as damage history,
JULY 2015
AVIATION INSURANCE