Page 15 - March19

King Air Insurance
Discounts
by Kyle P. White
King Air owners frequently ask me about available
discounts for their insurance program. This has
become more prevalent as the insurance market
continues to show signs of hardening – coverages are
becoming less negotiable, rates are slightly increasing
and underwriters are becoming more critical of an
operator’s risk profile.
In the May 2018 issue of King Air magazine, I wrote
the article, “King Air Insurance Market Update.” The
article profiled the insurance environment for King
Air owners and operators over the last 15 years. In the
post 9-11 market, the typical premium for King Airs
has ranged from approximately $35,000 to $65,000,
depending on hull value, limits of liability and owner-
flown versus professional-flown. Recently the prices
bottomed out from several thousand dollars for a low
limit and low hull value King Air 90 to $20,000 for a
high hull value King Air 350 with high liability limits
flown single pilot by the owner.
Historically, the 30-plus ancillary coverages were easy
to add or increase. Last May, we specifically discussed
“Garagekeepers” coverage which provides coverage if
your guest’s car is damaged while in your hangar or
by one of your employees. For example, one of your
employees details the car as a kind gesture and damages
it in some manner. To save money on your insurance
renewal, we recommended adding Profit Commission
On Renewal (PCOR) – an endorsement that can be
added to your insurance policy. The PCOR endorsement
is designed to do two things. First, it shares in the
profit of your policy with the insured, assuming there
are no losses. Second, it creates loyalty between the
insurance company and the insured. In order to share
in the profits from the expiring policy, you must renew
it with the same carrier. For example, assume you pay
$20,000 for your insurance policy and during the policy
period there are no losses. The endorsement can read a
couple of different ways, one of which is “10 percent of
70 percent of the earned premium.” This means upon
renewal of your policy with the current carrier, you will
receive $1,400 back.
Into 2019, it is obvious the insurance market bottomed
out in 2018 and pricing is not only on the rise, but the
ancillary coverages we’ve written about over the years
are starting to tighten too.
The new market conditions are foreign to most in our
industry. We have become accustomed to getting what
we want for less than what we paid for it the previous
year. Driven by competition amongst the vast number
of insurance carriers, there seemed to be a significant
amount of flexibility and desire by each of the carriers
to write your business. This started to change when last
summer Berkley Aviation announced that they were
leaving the aviation insurance market.
The other insurance carriers absorbed the Berkley
Aviation clients and their needs, but in many situations,
at a price increase. Through conversations with
underwriting aviation managers at other companies, there
is significant chatter that their aviation underwriting
portfolio is struggling to meet their company’s targets.
In order to achieve an underwriting profit, they need an
obvious combination – more premium and less losses.
MARCH 2019 KING AIR MAGAZINE •
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