Insurance creep

[Immelman]

Its nothing we're not aware of, but looking year after year.... its more shocking.

3 years ago my insurance renewal was $695. Now almost double that. None of the increases were shocking, just a slow, steady rise.

In turn, I requested a quote for liability only coverage, dropping hull.

In my note to the agent:
"13 yrs ownership, 0 claims, professional pilot, 6000+ hrs, ATP, CFI, class 1 medical, not of advanced age. I realize premiums are beyond your control, but sooner or later some push-back needs to start happening here."

[whiskytango]

Avweb posted a video yesterday of a round-table discussion of aircraft insurance executives.  This is definately a "hard market" for anyone who is looking to renew or get new coverage, and for those of us in the 70+ age group, it is not looking good.

[dzeleski]

Im slightly worried about my renewal in Dec and im 28. I had < 85 hours TT, no time in type, and no RT time. Im almost at 200 TT and have crossed 100 in type but covid delayed my IR plans for earlier this year as NY shut down for a while. Hopefully I dont get totally ripped apart.

[hypertech]

25 minutes ago, dzeleski said:

Im slightly worried about my renewal in Dec and im 28. I had < 85 hours TT, no time in type, and no RT time. Im almost at 200 TT and have crossed 100 in type but covid delayed my IR plans for earlier this year as NY shut down for a while. Hopefully I dont get totally ripped apart.

I am a @Parker_Woodruff fan, and maybe he can help you here too, but you should also call BWI.  I was in a somewhat similar situation a couple years ago before I moved to Parker.  My IFR checkride was delayed due to weather / maintenance.  BWI found me a company that would write the policy and then refund the difference to the rate I would have gotten had I been IFR rated as soon as I passed the check ride.  A couple weeks into the policy, I passed and they did just that.

[RobertGary1]

But at the same time up until a couple years ago premiums were dropping a lot each year. I was paying less than $1000/yr for $70K in coverage. That was probably not sustainable. 

 

-Robert

[Parker_Woodruff]

1 hour ago, Immelman said:

Its nothing we're not aware of, but looking year after year.... its more shocking.

3 years ago my insurance renewal was $695. Now almost double that. None of the increases were shocking, just a slow, steady rise.

In turn, I requested a quote for liability only coverage, dropping hull.

In my note to the agent:
"13 yrs ownership, 0 claims, professional pilot, 6000+ hrs, ATP, CFI, class 1 medical, not of advanced age. I realize premiums are beyond your control, but sooner or later some push-back needs to start happening here."

After broker commission, 100 policies priced like this will pay for 1 total loss of a $50,000-$60,000 airplane in which there are no bodily injury and property damage claims and no major claim expenses (before salvage recovery, of course).

Alternatively, 100 of those policies will pay for 1.5 gear up landings.

Now add in hangar rash, prop strikes, weather events, mechanical failures resulting in damage, crashes with bodily injury, crashes with property damage, and many other flavors to include losses covered by the ancillary coverages on your policy and it's no wonder that $695 is not sustainable.

[dzeleski]

10 minutes ago, hypertech said:

I am a @Parker_Woodruff fan, and maybe he can help you here too, but you should also call BWI.  I was in a somewhat similar situation a couple years ago before I moved to Parker.  My IFR checkride was delayed due to weather / maintenance.  BWI found me a company that would write the policy and then refund the difference to the rate I would have gotten had I been IFR rated as soon as I passed the check ride.  A couple weeks into the policy, I passed and they did just that.

As am I. Im actually already his customer. Im hoping my increased hours offset the increase in rates this year. We will see when I give him a call in a few weeks.

[Parker_Woodruff]

40 minutes ago, dzeleski said:

Im slightly worried about my renewal in Dec and im 28. I had < 85 hours TT, no time in type, and no RT time. Im almost at 200 TT and have crossed 100 in type but covid delayed my IR plans for earlier this year as NY shut down for a while. Hopefully I dont get totally ripped apart.

I'm hopeful rates will improve for you, but unfortunately one of my solid carriers doesn't write policies in New York or you'd be looking at 30-40% reduction this coming year.

[dzeleski]

5 minutes ago, Parker_Woodruff said:

I'm hopeful rates will improve for you, but unfortunately one of my solid carriers doesn't write policies in New York or you'd be looking at 30-40% reduction this coming year.

Well thats nice to hear. Thats super strange that they wouldnt write polices in a specific state, bummer too cause 30-40% would be awesome.

[Hank]

1 minute ago, dzeleski said:

Well thats nice to hear. Thats super strange that they wouldnt write polices in a specific state, bummer too cause 30-40% would be awesome.

Life, health, home, auto, etc., Insurance is regulated by each state. Agents are licensed by each state to sell to their residents. I have no reason to believe that aircraft insurance is handled any differently. 

[dzeleski]

4 minutes ago, Hank said:

Life, health, home, auto, etc., Insurance is regulated by each state. Agents are licensed by each state to sell to their residents. I have no reason to believe that aircraft insurance is handled any differently. 

True, but my airplane isnt registered in NY unlike a house, car, boat ,etc., its federally registered. You would think things would be standardized but I guess thats asking too much lol

[Parker_Woodruff]

 

21 minutes ago, Hank said:

Life, health, home, auto, etc., Insurance is regulated by each state. Agents are licensed by each state to sell to their residents. I have no reason to believe that aircraft insurance is handled any differently. 

Each policy form for each carrier is approved in each state.  New York is in the top 3 most difficult states to deal with for insurance companies.  I say this as someone who has 99 insurance licenses between myself and my agency.  The worst states:

New York: It's a government black hole.  Good luck cutting through the red tape which guards the black hole.

Massachusetts: Only the USVI and Puerto Rico are more expensive to get established.

California: It's expensive and a lot of paperwork, but they need your money so bad they make it really easy to accomplish

Virginia: Don't get me started on the business requirements for the beloved Commonwealth.

West Virginia: Issued me a 3 month license for $200 then demanded I renew around my birthday for $200 more.

Fun way to spend a lot of money...all these licenses...

[RobertGary1]

1 hour ago, dzeleski said:

True, but my airplane isnt registered in NY unlike a house, car, boat ,etc., its federally registered. You would think things would be standardized but I guess thats asking too much lol

Some of the old remnants from the original founders concept of a union of independent states.

-Robert

[philiplane]

How many years of $1500 premiums does it take for an insurance company to pay for one gear up, and stay in business? 

2020 is on track to see 60 Mooney gear incidents alone...

[ArtVandelay]

I don’t know why they don’t have just a gear up exclusion clause.

[Parker_Woodruff]

59 minutes ago, ArtVandelay said:

I don’t know why they don’t have just a gear up exclusion clause.

Some carriers have a higher deductible for gear forgetfulness or gear failure.

But insurance is there for basically every other mistake which results in physical damage to the plane...why not gear up losses, too?

[Immelman]

4 hours ago, Parker_Woodruff said:

After broker commission, 100 policies priced like this will pay for 1 total loss of a $50,000-$60,000 ... it's no wonder that $695 is not sustainable.

Thank you for that clear perspective Parker, amid my rant. 

Its still a bit of a bitter pill - this is basically up to what I paid as a brand new Mooney pilot/owner many years ago as a relatively low time pilot.

This is a tough call, hull insurance or not, for the 2020 renewal. If I had a new engine/prop/panel/paint I would.... but I do not. 

 

 

[Parker_Woodruff]

Just now, Immelman said:

Thank you for that clear perspective Parker, amid my rant. 

Its still a bit of a bitter pill - this is basically up to what I paid as a brand new Mooney pilot/owner many years ago as a relatively low time pilot.

This is a tough call, hull insurance or not, for the 2020 renewal. If I had a new engine/prop/panel/paint I would.... but I do not. 

 

I'm just glad it wasn't me paying when an untied C172 jumped its chocks in a storm and hit my M20K.  Even the non pilot error losses aren't cheap.

[larrynimmo]

Since gear up failures are driving the highest part of insurance cost, I for one am ok with the exclusion...hopefully carriers will disseminate the risk levels...like the say for Liberty Insurance...buy which coverage you need!  (I could do without the Emu)

[201er]

4 hours ago, Parker_Woodruff said:

 

Each policy form for each carrier is approved in each state.  New York is in the top 3 most difficult states to deal with for insurance companies.  I say this as someone who has 99 insurance licenses between myself and my agency.  The worst states:

New York: It's a government black hole.  Good luck cutting through the red tape which guards the black hole.

Massachusetts: Only the USVI and Puerto Rico are more expensive to get established.

California: It's expensive and a lot of paperwork, but they need your money so bad they make it really easy to accomplish

Virginia: Don't get me started on the business requirements for the beloved Commonwealth.

West Virginia: Issued me a 3 month license for $200 then demanded I renew around my birthday for $200 more.

Fun way to spend a lot of money...all these licenses...

@Parker_Woodruffis the state based on where the airplane owner’s residence is or the state where the airplane is kept?

[Parker_Woodruff]

1 minute ago, 201er said:

@Parker_Woodruffis the state based on where the airplane owner’s residence is or the state where the airplane is kept?

Most of the time where the airplane is principally based.

[Cruiser]

in the case of gear up accidents. These all include a complete engine teardown and re-assembly $10k - $20k of the cost. 

Is there any data that shows how many of these engines are returned to service with no evidence of damage ? Or are they all damaged in some manner ?

Would the FAA look at something like this ? 

[MikeOH]

6 hours ago, Parker_Woodruff said:

After broker commission, 100 policies priced like this will pay for 1 total loss of a $50,000-$60,000 airplane in which there are no bodily injury and property damage claims and no major claim expenses (before salvage recovery, of course).

Alternatively, 100 of those policies will pay for 1.5 gear up landings.

Now add in hangar rash, prop strikes, weather events, mechanical failures resulting in damage, crashes with bodily injury, crashes with property damage, and many other flavors to include losses covered by the ancillary coverages on your policy and it's no wonder that $695 is not sustainable.

@Parker_Woodruff

While this all sounds very logical, if true, why were those rates EVER offered?  The only logical explanation is that loss ratios have increased making those rate not sustainable.  Competition does not explain that all the carriers would sign up for rates that put them in the red!

Yet, I've requested, several times, for some, ANY, actual data that shows a loss ratio increase tied to whatever cause: old age, gear-ups, whatever.

But, crickets

And, sorry, but the 'smaller pool' argument doesn't hold water either: If I have a pool of 1000 planes and have 2 gear ups, and my pool shrinks to 500 I'll expect 1 gear-up if my loss rate stays the same.  Sure, half the premium income, but half the payout, as well.

[Missile=Awesome]

2 minutes ago, MikeOH said:

@Parker_Woodruff

While this all sounds very logical, if true, why were those rates EVER offered?  The only logical explanation is that loss ratios have increased making those rate not sustainable.  Competition does not explain that all the carriers would sign up for rates that put them in the red!

Yet, I've requested, several times, for some, ANY, actual data that shows a loss ratio increase tied to whatever cause: old age, gear-ups, whatever.

But, crickets

And, sorry, but the 'smaller pool' argument doesn't hold water either: If I have a pool of 1000 planes and have 2 gear ups, and my pool shrinks to 500 I'll expect 1 gear-up if my loss rate stays the same.  Sure, half the premium income, but half the payout, as well.

Why would an insurance carrier...that is for profit...share actuarial data with you?  They can charge whatever the market dictates.  When rates equal profit there will be more competition and competitive rates to retain business (soft market) will ensue.  It’s about a POOL not you Joe Mooney driver that has never had a claim.  I don’t like it, but I understand it.

[MikeOH]

5 minutes ago, Missile=Awesome said:

Why would an insurance carrier...that is for profit...share actuarial data with you?  They can charge whatever the market dictates.  When rates equal profit there will be more competition and competitive rates to retain business (soft market) will ensue.  It’s about a POOL not you Joe Mooney driver that has never had a claim.  I don’t like it, but I understand it.

Well, if they actually wanted to EXPLAIN a VALID rate increase it would be in their best interest, would it not.  To circumspectly imply it's old age (can't get insurance above, higher premiums, etc.) or "gear-ups" without data to back it up is disingenuous at it's best.

But, you are homing in on my point: They are SCREWING us simply because they can.

The rest of this posturing about "unsustainable rates" and "losses" (well, DUH, they ARE an insurance company) is just so much BS.  That's the business it has been since insurance was invented!

The other possibility that I will raise, yet again, that has not been addressed is the possibility that the secondary/reinsurance carriers have DRAMATICALLY raised their rates to our carriers which have no choice but to pass them on or exit the GA market.  At least I'd respect our carriers if they ADMITTED that....then we would know we were paying for claims in a completely different market (e.g. Boeing MAX payouts).  I'd still be upset, but not mad that I'm getting shafted "just because we can."