Aviation Insurance Market Update

[Parker_Woodruff]

Most of you are aware (by word or by experience at this point) of widespread aviation insurance rate increases across almost all lines of business.  I've compiled a list of trends I'm noticing in the market:

 

• Light Personal Aircraft:
  • Rates on retractable gear aircraft have gone up.  Look for increases in the 5%-15% range if you are renewing with the same carrier.  If you are renewing with a different carrier due to one leaving the aviation market, expect a 20-25% increase.
  • Rates on Fixed Gear, 4-place aircraft have lagged on rate increases.  I'm seeing 5% or so most of the time.
• Commercially operated piston aircraft (flight schools, charter operations, etc.)
  • Most policyholders with good loss experience are experiencing rate increases in the 10-25% range.
  • Operators with high loss ratios are experiencing increases greater than 25% if renewing with the same carrier.  Operations renewing with a different carrier due to their expiring company leaving the aviation market are sometimes seeing rates double.  One carrier has elected to non-renew all flight schools.
• Pro-flown turbine aircraft
  • 10% rate increase for underwriter-deemed "desirable" risks.
  • More than 10% for older turbine aircraft.
• Workers' Compensation Insurance
  • Rates for businesses with favorable loss experience are going down.  There is greater competition in this segment and some state work comp funds have decreased their rates.
• Repair and Service Operations
  • Large increases in insurance rates (10-25% or more)
• Avionics shops
  • Small increases in rates (about 10%)

The insurance payout related to Boeing 737 MAX losses will far exceed global aviation insurance premium written.  This is hitting the reinsurance companies.  Most aviation insurance companies will be seeing premium increases for their reinsurance in 2020.  Look for a sustained "hard market" through 2020 and then some level-off in 2021.  The standard Property and Casualty markets are also seeing widespread increases and have been for quite some time.

As always, please reach out if you'd like a quote for your aircraft or aviation business.  Airspeed Insurance has some great developments coming in 2020.  As part of a major agency management system upgrade, we'll be introducing a mobile app that will contain all your policy documents and include other great functionality.

Parker Woodruff

Airspeed Insurance Agency

214-295-5055

Parker@airspeedinsurance.com

[gdwinc]

Thanks for the terrific summary (well terrific in terms of information, not so terrific in terms of having to pay more). I work for a workers compensation insurance carrier and I can attest that work comp rates are indeed soft. 

[kmyfm20s]

Nice summary!

Seems rediculous we would get lumped into the 737 Max debacle.

[RogueOne]

Thanks Boeing

[rbridges]

Yeah, pretty accurate with my new rate quote.  Unfortunately. 

[tigers2007]

At what point do we not get hull coverage? This is getting ridiculous.


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[1964-M20E]

Well I'll see what happens when my renewal comes next April May time frame.  As for hull coverage where do you stop?  You stop at the point you are wiling to take the risk to repair or replace the plane yourself.

I would live to get a helicopter but the hull coverage is 5 to 6 times the cost of liability coverage.  So when I feel I can take the risk on the hull I'll get one and just carry liability.

[ArtVandelay]

We already had a 15% increase last year, now getting another raise? I don’t see how foreign carriers accidents have anything to do with USA insurance companies.


Tom

[tigers2007]

It’s gotta be from the global underwriters.
I can’t even imagine the disgust a new Mooney owner will have when they get their first quote. These continued increases will have owners seriously consider rolling the dice. I read a blog about a CB twin owner who had no choice to roll the dice the first year and saved $3000. That’s a lot of dough to save on a 25 AMU Apache.

My breakdown is $24/hr for insurance. I guess I should fly more.


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[rbridges]

1 hour ago, tigers2007 said:

It’s gotta be from the global underwriters.
I can’t even imagine the disgust a new Mooney owner will have when they get their first quote. These continued increases will have owners seriously consider rolling the dice. I read a blog about a CB twin owner who had no choice to roll the dice the first year and saved $3000. That’s a lot of dough to save on a 25 AMU Apache.

My breakdown is $24/hr for insurance. I guess I should fly more.


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Did he get liability?  Is that an option?  It's not just the plane, it's the stuff it hits. 

[tigers2007]

34 minutes ago, rbridges said:

Did he get liability?  Is that an option?  It's not just the plane, it's the stuff it hits. 

Wow I was way off; it was $6000. Here is an excerpt from his blog. I found this a long time ago when I was interested in buying N1234P. Keep in mind this was written six years ago so the insurance rates have changed quite a bit too.

"I also took a risk some will call unnecessary, but that's neither here nor there. My first year of ownership she was uninsured. Had I insured right away, it would have been $6,000 for the year for a VFR single engine pilot with less than 150hrs. It was a risk I decided to take, and I'm very lucky to have had nothing pop up. After 50 hours insurance for the year is $2,110 liability-only, and now at over 100hrs in type it's $785 for liability-only. If you factor all of that in, this cheap twin has cost me three times its purchase price."

I would say this is a must read for any CB looking to acquire a CB twin: http://realcostofownership.blogspot.com/2013/08/my-cheap-twin-piper-apache-n1234p.html

[mooneyflyfast]

I just renewed with USAIG. 10% increase.

[Gone]

A low-time pilot acquaintance just told me that he was quoted $3,000 Cdn on an insurance package for which I pay $1,300 Cdn, and did include a 10% increase for me this year.  He will have a long row to hoe.

Here are the differences between us  His 150 hours to my 1,200.  His zero complex time to my 1,000 hours.  His PPL only to my instrument rating. 

There may be others. I do not know what extra efforts in training (besides the differences in rating) he may have taken but I have taken every AOPA Safety Institute course offered and I have done two MAPA PPPs, as well as close to 70 hours formation flying over the last 7 years, including one clinic every year since 2013.

Not easy for new(er) pilots.

 

[RobertGary1]

I can’t see not having liability. Not sure how you can even get a hanger or tie down without that. Every place I’ve been I’ve been required to show it. 

If i bought a cheap time building twin I’d probably only get liability. Why pay 20% of the hull valve annually when you can scrap the plane for nearly the hull. 
 

-Robert 

[Parker_Woodruff]

9 hours ago, ArtVandelay said:

We already had a 15% increase last year, now getting another raise? I don’t see how foreign carriers accidents have anything to do with USA insurance companies.


Tom

The biggest payout on this whole thing will be the grounding liability for the air carriers that can't fly their MAXs.

[ArtVandelay]

Right now my insurance is about 1%, if it reaches 2% I will have to think this over. I never had collision on my car (advantage of buying used), so I have rolled the dice before.


Tom

[tigers2007]

Maybe we can pool our money together and form a Mooney Mutual Insurance Company. We can wait until Uncle Sugar hands us $180 Billion like they did with AIG in 2008.

If mine new insurance bill is shocking, I might dump the hull coverage. Besides, most of our birds seem to have the most value in the radio stack. At least mine does. If I survive the upset, hopefully I'll have enough time to yank the radios before the fire gets to it. If I don't survive, then I guess I won't care.

[rbridges]

1 hour ago, tigers2007 said:

Maybe we can pool our money together and form a Mooney Mutual Insurance Company. 

 

can we add an exclusion for @Marauder?  I don't want our insurance paying for girlfriend damage to airframes.

[Jerry 5TJ]

2 hours ago, tigers2007 said:

Maybe we can pool our money together and form a Mooney Mutual Insurance Company....

Perhaps form a syndicate such as Lloyd’s? 

Let’s see, what’s the potential downside....say 20 of us go together, one $100M judgment, only a $5M cash call for each member.  

I’d demand a lot higher premium than most of us now pay before I’d play in that pool.   The water looks nice but the sharks are not tame.  

 

[ArtVandelay]

Perhaps form a syndicate such as Lloyd’s? 
Let’s see, what’s the potential downside....say 20 of us go together, one $100M judgment, only a $5M cash call for each member.  
I’d demand a lot higher premium than most of us now pay before I’d play in that pool.   The water looks nice but the sharks are not tame.  
 

Maybe the pool gets liability coverage via insurance companies and the “pool” covers hull ? If hull is $100K, only $5K per member?


Tom

[Jerry 5TJ]

39 minutes ago, ArtVandelay said:

Maybe the pool gets liability coverage via insurance companies and the “pool” covers hull ? If hull is $100K, only $5K per member?

The hull coverage is “easy” to underwrite as the maximum pool loss = total hull.  

Seems to me that the external liability side of the coverage is where you can lose your shirt.  And all your other earthly goods.  

[daytonabch04]

I just renewed my insurance this weekend (one year anniv of owning my plane).  I went through AOPA insurance my first year and was quoted $3600 for 240k hull. 

Now, I have 350 total hrs, 90 hrs tt, IFR.  My same insurance through AOPA (same underwriter came in same quote as last year..$3600.  $0 increase). 

I got a new quote through a different broker/underwriter and was quoted $1000 less.  240k hull, $2330 insurance (before state taxes).  $1900 for hull, $367 for 1 MM/100k, $60 for $5k medical coverage. 

No complaints from me as my annual insurance bill decreased over $1k.

Edited September 24, 2019 by daytonabch04

[ArtVandelay]

I just renewed my insurance this weekend (one year anniv of owning my plane).  I went through AOPA insurance my first year and was quoted $3600 for 240k hull. 
Now, I have 350 total hrs, 90 hrs tt, IFR.  My same insurance through AOPA (same underwriter came in same quote as last year..$3600.  $0 increase). 
I got a new quote through a different broker/underwriter and was quoted $1000 less.  240k hull, $2330 insurance (before state taxes).  $1900 for hull, $367 for 1 MM/100k, $60 for $5k medical coverage. 
No complaints from me as my annual insurance bill declined over $1k.

I’m sure I’m not the only one who would like to know who your new broker/underwriter is?


Tom

[MIm20c]

6 minutes ago, ArtVandelay said:

I’m sure I’m not the only one who would like to know who your new broker/underwriter is?
Tom

Less than 1% and only 90 in type with 350 TT?  Who do I need to sleep with? ... never mind that would double my rate. 

[EricJ]

A friend in the industry offered the opinion that a lot of weather-related claims (e.g., airplanes destroyed on the ground in hurricanes or whatever) and the fact that more people are flying due to favorable economic conditions has increased claims payouts.   We're seeing the natural response to that.