Page 16 - November 2022

“An insurance carrier’s appetite for certain risk profiles can also change over time. What they once viewed as an opportunity, may now seem like an un- wanted exposure.”
carrier would only be liable for 10% of any given loss, thus protecting them from the potential “bell ringer” claims. In the King Air market there are many liability limit variations between each carrier, but a good rule of thumb for a single pilot operation seems to be $10,000,000. This means if you have a $5,000,000 King Air and the $10,000,000 in liability coverage, the total carrier capital exposure is $15,000,000. This is a great opportunity to do a quota-share placement and avoid a plethora of
declinations to quote from underwriters because the risk is seen as too large.
Quota-share placing brings more stability to the consumer, as well as the marketplace. For example, if Travelers had come to market and subscribed to just a 25% share of a $40,000 policy premium, their piece would have been $10,000. If, at renewal, they felt they needed more money, they could have increased their pricing by, perhaps, 15% or $1,500. If other carriers left their pricing the same, this equates to a 3.75% increase to the King Air owner. Much more palatable than a 15% increase. On the flip side, if Travelers kept their 25% stake, but reduced their premium at renewal to $8,000, the total premium reduction would be just over 5%. Both scenarios offer more stability for annual budgeting of aircraft costs versus the unsustainable price decreases we saw 15 years ago, followed by the shocking increases that came to fruition a few years ago as the market attempted to correct.
An insurance carrier’s appetite for certain risk profiles can also change over time. What they once viewed as an opportunity, may now seem like an unwanted exposure. For example, I recently saw a post on social media where
an aircraft owner stated, “My insurance agent said my premiums went up because I’m over 70. But that doesn’t make sense because I’ve been over 70 for five years now!” Five years ago many carriers were comfortable taking on this risk profile, but it is changing in the current market. ›
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14 • KING AIR MAGAZINE
NOVEMBER 2022