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Practical Insurance Advice

Now is a good time for the Board review of risk mitigation- if you have not already done so. Documenting sound management of the company’s aviation function can produce benefits for the insured- advises Stuart Hope.

Stuart Hope   |   1st November 2012
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Stuart Hope Stuart Hope

Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker...
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Practical Insurance Advice: Preparing for Insurance Renewal in 2013
Now is a good time for the Board review of risk mitigation- if you have not already done so. Documenting sound management of the company’s aviation function can produce benefits for the insured- advises Stuart Hope.

As 2012 draws to a close- let’s look at some steps that can be taken to prepare for aviation insurance renewal in 2013. The goal is to work with your company’s aviation insurance broker to improve coverage by achieving one or more [preferably all] of the following: lower premium- increased coverage limits- and broader coverage.

The biggest mistake many insureds make at the time of renewal is failure to supply requested insurance information in a timely manner. Unlike most other lines of property and casualty insurance- aviation underwriters request a renewal application with specific data every year. This task is often viewed as a hassle to the aircraft owner and therefore is frequently put aside to deal with at a later time. The requested information- however- is vitally important!

Procrastination is the enemy. Without proactively replying to the request of underwriters- you put the brakes on your broker’s ability to achieve the goals set out initially. Be sure to complete the renewal application in as much detail as possible.

Remember that the reason the questions are asked is to discover uninsured exposures- not to create busy work. If you are unsure of the question’s intent- pick up the phone and call your broker for advice. If you are working on a Safety Management System (SMS)- IS-BAO certification or any other safety initiative within your flight department- attach an addendum to the application and describe it. The more documentation an underwriter has that your account is worthy of the best terms- the more likely you are to get them.

Arguably the biggest influence on an underwriter’s decision-making process is the pilot(s) who will fly the aircraft and what kind of recurrent training they receive. Initial and Recurrent training in turbine aircraft at least every twelve months is a requirement by the insurance carriers- not a suggestion. The preference by most aviation insurers is that the training be conducted every twelve months in a full-motion simulator designed for the make and model aircraft being flown.

They feel that the simulator training environment enables emergency procedures to be accomplished without placing the pilot- instructor or aircraft at risk. Further- a pilot can experience situations and emergencies more fully than is possible in the aircraft. There are insurance carriers that approve in-aircraft training with an approved training provider- but primarily this practice is available only on turboprop and small turbojet aircraft.

In a perfect world- the flight department of an insured would consist of well qualified employee pilots- highly experienced with many hours in the make and model aircraft being insured; those who have flown the aircraft at least 200 hours in the last year and completed recurrent simulator training for the make and model aircraft insured every six months. It’s not a perfect world- however- and in the current economic environment flight departments have resource constraints that limit their ability to operate at the perfect level. The bar has been set. The closer you can get to it- the better renewal terms you will receive.

Review the insured value of your aircraft. We’ve covered this in previous articles- but the goal is to insure your aviation assets for their current market value or lien amount- whichever is MORE. Probably your best source of information as to the true current market value of your aircraft is the aircraft sales broker who sold you the aircraft or a sales broker who specializes in your make and model aircraft.

Ask for quotes to increase your liability coverage. This represents your largest catastrophic loss exposure- the primary reason you are buying the insurance in the first place. The aviation insurance market remains very soft- and you’ll be surprised how inexpensive it is to increase this coverage substantially. If liability rates increase in the future- you can always lower the limit at that time. If you have only limited extra dollars in your aircraft budget for insurance- spend it here. Being under-insured can sink your ship.

If you feel your account “shows well”- have your insurance broker request an on-site visit from the insurance company’s underwriter. In the end- insurance is a relationship business like any other. A personal connection can be worth its weight in gold in establishing trust and goodwill for your flight department. Displaying your aviation program enables your broker to negotiate better renewal terms for you.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

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