Pilot Age and Insurance

[Parker_Woodruff]

Fellow MooneySpacers:

It's no secret that the insurance market has hardened.  I am writing to advise of the strategy I would take when Mooney pilots approach various age levels as we are starting to see certain pilots uninsurable due to age.

• For Single Engine, Retractable Gear Aircraft:
  • Before the policy renewal date which occurs before your 64th birthday:
    • My advice is to talk to your insurance agent about which carriers are not non-renewing pilots strictly on a numerical basis.
      • Then find out which of these carriers have been around for 15+ years and have shown a commitment to general aviation risks.
    • If you intend to keep flying under BasicMed, ask your agent which of the above carriers are accepting BasicMed regardless of the pilot age.
      • Pick the most reputable carrier and stick with them.
  • At age 65:
    • Some carriers are not accepting new business for SERG aircraft with pilots age 65 and older
  • Before each policy renewal date before your 69th birthday:
    • Check in with your agent regarding the steps at Age 64 (above) to see if the good carrier you selected is still staying the course.
  • At age 70-72:
    • Some carriers are not renewing pilots age 70-72 or older in SERG Aircraft
  • At age 75:
    • Some carriers are no longer allowing BasicMed.

 

In other words, if you're 63+ years old, insured with a flexible carrier (per above notes), and your agent offers you a reduction in premium to switch to another carrier, don't just switch to save a few (or a few hundred) dollars.  Be judicious.

Blue skies!

Parker

214-295-5055 (office)

Parker@airspeedinsurance.com

[Cruiser]

what about putting the plane in an LLC, and insuring with a named pilot that is not in the above ^^ categories, then flying the plane on the open pilot clause. ?

[mike_elliott]

2 minutes ago, Cruiser said:

what about putting the plane in an LLC, and insuring with a named pilot that is not in the above ^^ categories, then flying the plane on the open pilot clause. ?

Then if there is a claim, the insurance company would subrogate their losses against you and your assets. The open pilot clause, unless otherwise stated in the policy, simply means the claim will be paid, but then the insurance company has recourse against the unnamed open pilot to recover their losses. It is why I specifically require to be added as named additional insured with a waiver of subrogation on each of my clients policies. So far, this has not been a problem, has NOT diluted their liability coverage or have cost them any additional (with one exception). I also carry a large non owned policy that requires this and have even been able to umbrella another well known CFI under it once.

 

[Cruiser]

isn't this true even of a named pilot if they are not the owner ? 

 

[donkaye, MCFI]

44 minutes ago, mike_elliott said:

Then if there is a claim, the insurance company would subrogate their losses against you and your assets. The open pilot clause, unless otherwise stated in the policy, simply means the claim will be paid, but then the insurance company has recourse against the unnamed open pilot to recover their losses. It is why I specifically require to be added as named additional insured with a waiver of subrogation on each of my clients policies. So far, this has not been a problem, has NOT diluted their liability coverage or have cost them any additional (with one exception). I also carry a large non owned policy that requires this and have even been able to umbrella another well known CFI under it once.

 

Thank you Mike.  It allowed me to do one Acclaim Ultra training.  After that there was no insurance available for me even with my massive amount of Mooney teaching experience, experience that I believe is more than any CFI in the Country.  The only way I will be doing trainings with the more expensive new Mooneys now will be with a full Indemnity Agreement and verification that the Owner is capable of paying it.  So, if someone wants the benefit of that experience in the New Mooneys that's what it will take.  Luckily, I had no trouble getting insurance for my airplane this year.  Just a modest increase that I don't think had anything to do with age.

[MikeOH]

@Parker_Woodruff

Thank you for the tips!  While I'm not there yet, that age horizon is not nearly as distant as it once was

Do you have access to the carriers' actuarial data that would back up their new rules?  Or, do all of us just have to 'take their word' that older pilots are causing a disproportionate number of accidents; specifically gear-ups?

Same question with Basic Med: has there been any evidence that Basic Med pilots are crashing more (for ANY reason, let alone medical related)?  More specifically, are older Basic Med pilots crashing more than older Third Class Med pilots?

My cynicism smells a GIANT rat!

As much as I don't like their new 'rules' if the data is there to justify them, then I can, at least, understand that they are reasonable reactions.  That data better be statistically significant...not, "well two pilots over 65 crashed this year; and only one last year.  So, since the accident rate doubled no more insuring over 65 pilots!"

[PT20J]

Even Richard Collins listed the inability to get insurance coverage at the limits he wanted and at a reasonable price as one of the factors that caused him to quit flying in his early 70's. 

[carusoam]

Thank you Parker!

Best regards,

-a-

[MIm20c]

To me this reads making a move up the aviation ladder, or starting out, at 65+ might be harder (More expensive) in the near future. 

[mike_elliott]

15 hours ago, donkaye said:

Thank you Mike.  It allowed me to do one Acclaim Ultra training.  After that there was no insurance available for me even with my massive amount of Mooney teaching experience, experience that I believe is more than any CFI in the Country.  The only way I will be doing trainings with the more expensive new Mooneys now will be with a full Indemnity Agreement and verification that the Owner is capable of paying it.  So, if someone wants the benefit of that experience in the New Mooneys that's what it will take.  Luckily, I had no trouble getting insurance for my airplane this year.  Just a modest increase that I don't think had anything to do with age.

I am still able to do new Ultra trainings as well as the other Mooney Pros, Inc. instructors, but do anticipate at some point in the not so distant future I will be in Don's boat because of age and insurance. There are a couple of "unsold" new Ultra's, but I dont think the new management is including transition training as part of the sale any longer, at least they havent indicated to me they are.

 

[whiskytango]

@Parker_Woodruff Are the carriers refusing to write coverage for Hull, Liability or both for 70+ year old pilots of SERG aircraft?

[Jerry 5TJ]

18 hours ago, Parker_Woodruff said:

 

In other words, if you're 63+ years old, insured with a flexible carrier (per above notes), and your agent offers you a reduction in premium to switch to another carrier, don't just switch to save a few (or a few hundred) dollars.  Be judicious.

Thanks for the strategic advice to stay with an insurer. 

In the single engine turboprop world a problem has been that insurers are leaving the market.  I have had the same broker for decades but different companies almost every year recently so it has been hard to follow your advice.   

[Parker_Woodruff]

20 hours ago, Cruiser said:

what about putting the plane in an LLC, and insuring with a named pilot that is not in the above ^^ categories, then flying the plane on the open pilot clause. ?

That could be construed as a material misrepresentation if the pilot has an interest in the LLC

[Parker_Woodruff]

19 hours ago, Cruiser said:

isn't this true even of a named pilot if they are not the owner ? 

 

Some named pilots can be subrogated upon, some cannot. It depends on policy wording.

[Parker_Woodruff]

18 hours ago, MikeOH said:

@Parker_Woodruff

Thank you for the tips!  While I'm not there yet, that age horizon is not nearly as distant as it once was

Do you have access to the carriers' actuarial data that would back up their new rules?  Or, do all of us just have to 'take their word' that older pilots are causing a disproportionate number of accidents; specifically gear-ups?

Same question with Basic Med: has there been any evidence that Basic Med pilots are crashing more (for ANY reason, let alone medical related)?  More specifically, are older Basic Med pilots crashing more than older Third Class Med pilots?

My cynicism smells a GIANT rat!

As much as I don't like their new 'rules' if the data is there to justify them, then I can, at least, understand that they are reasonable reactions.  That data better be statistically significant...not, "well two pilots over 65 crashed this year; and only one last year.  So, since the accident rate doubled no more insuring over 65 pilots!"

They’re primarily gleaning from the FAA’s airline pilot retirement age for initial guidance, but also following the trends of the auto insurance market for actuarial data. There is very limited actuarial data in aviation. In fact, in Texas, auto insurers can demand you come in for a physical up to a certain amount of times per year.

[Parker_Woodruff]

4 hours ago, MIm20c said:

To me this reads making a move up the aviation ladder, or starting out, at 65+ might be harder (More expensive) in the near future. 

In general, make the switch to a higher performing aircraft before 65.

[Bravoman]

21 hours ago, donkaye said:

Thank you Mike.  It allowed me to do one Acclaim Ultra training.  After that there was no insurance available for me even with my massive amount of Mooney teaching experience, experience that I believe is more than any CFI in the Country.  The only way I will be doing trainings with the more expensive new Mooneys now will be with a full Indemnity Agreement and verification that the Owner is capable of paying it.  So, if someone wants the benefit of that experience in the New Mooneys that's what it will take.  Luckily, I had no trouble getting insurance for my airplane this year.  Just a modest increase that I don't think had anything to do with age.

An indemnity agreement wouldn’t negate all risk to you( unless the indemnitor had unlimited pockets) given the vagaries associated with bodily injury and wrongful death exposure. OTOH,  I guess the same can be said even if you are a named insured because the typical policy only provides 1 million in liability coverage.

[carusoam]

2 hours ago, Parker_Woodruff said:

In general, make the switch to a higher performing aircraft before 65.

The guidance I’ve been needing for a while...      TBM just delivered their 1000th plane...

 

Parker, in all seriousness... it is sure great to have your insight on how the insurance business and policies works...
 

Best regards,

-a-

[donkaye, MCFI]

On 9/26/2020 at 1:34 PM, Bravoman said:

An indemnity agreement wouldn’t negate all risk to you( unless the indemnitor had unlimited pockets) given the vagaries associated with bodily injury and wrongful death exposure. OTOH,  I guess the same can be said even if you are a named insured because the typical policy only provides 1 million in liability coverage.

Certainly the 1,00,000 liability cap is an issue, and I thought about that in regards to teaching at all, but you've got to live life.  If I'm in the airplane, that's a risk I have taken, if I want to enjoy teaching.  The known hull limitation is more immediate to me.  I don't expect anyone would want to take on that liability personally, so I said my experience won't be benefitting the new Mooney Owner, except for what I might post here on MS and BeechTalk, the only forums I am currently monitoring.  Luckily for me, most other Mooney values are in the range where I would be covered by my CFI Insurance.

[MikeOH]

7 hours ago, Parker_Woodruff said:

They’re primarily gleaning from the FAA’s airline pilot retirement age for initial guidance, but also following the trends of the auto insurance market for actuarial data. There is very limited actuarial data in aviation. In fact, in Texas, auto insurers can demand you come in for a physical up to a certain amount of times per year.

Interesting info, thanks.

So, due to lack of data they ignore their own losses and base premiums off of automobile actuarial data.  I would expect that data has been rather stable for a LONG time in regards to accident rates of older drivers.

In other words, it still does NOT explain the 40% increases we are seeing.

I don't believe in coincidence.  What must amount to HUGE payouts (already and for some time to come) related to the 737 MAX have to be coming from reinsurers that are common to both commercial and small GA underwriters.  I'm positing that those reinsurers have jacked their rates to ALL of the GA underwriters.  Some have chosen to exit the biz, the others are massively increasing our rates.

I suspect this large of increase in a single year is UNPRECEDENTED.  The idea this is just a 'natural' occurrence just isn't tenable.

[carusoam]

MS word of the day... presented by the insurance companies....

https://www.dictionary.com/browse/tenable?s=t

Thanks to MSer Mike.
 

Best regards,

-a-

[RobertGary1]

22 hours ago, MikeOH said:

 

In other words, it still does NOT explain the 40% increases we are seeing.

Several less underwriters competing for our business js really the explanation. Companies just find the business isn’t very attractive so they do something else. Nothing more complex than that.
 
Pretty textbook really. 
 

-Robert 

[RobertGary1]

On 9/25/2020 at 3:11 PM, Cruiser said:

what about putting the plane in an LLC, and insuring with a named pilot that is not in the above ^^ categories, then flying the plane on the open pilot clause. ?

The policies I’ve had limit open pilot to occasional use. The rule of thumb I’ve been told is the open pilot should not have their own keys. Not a hard rule but an easy one to describe in court. 
 

-Robert 

[MooneyMitch]

9 minutes ago, RobertGary1 said:

In other words, it still does NOT explain the 40% increases we are seeing

Hey...... watch it!!  My offered increase rate is only 38% !

[RobertGary1]

8 minutes ago, MooneyMitch said:

Hey...... watch it!!  My offered increase rate is only 38% !

Mine was only 20% but the previous year was 20% too. I’m maxed out on discounts (hours, rating etc) so not really anything I can do to reduce it. 
 

-Robert