There has hardly been a better time to be a buyer of aviation insurance, as all signs point to a buyer’s market. Several factors are driving lower rates in this insurance segment, including fewer airline accidents, lower overall insurance claims, the economy, more underwriters entering the market, increased adoption of safety management systems and more sophisticated aircraft. AIN talked to David McKay, president and CEO of insurer USAIG, to get a better sense of this market. USAIG and McKay are here at the Paris Air Show supporting long-time customer Bombardier.
The Middle East Business Aviation Association (MEBAA) launched an aviation insurance group discount program for members on Tuesday at the Dubai Air Show.
Buyers of coverage for aircraft, aviation businesses and property have found a silver lining in the recession: relatively stable prices for insurance. Attendees at this year’s Aviation Insurance Association (AIA) conference confirm the news; too much available insurance capacity means that no underwriter has the power to raise prices.
There was no such thing as aviation insurance when Shakespeare penned, in Henry VI, “The first thing we do, let’s kill all the lawyers.” If there had been, the quote might have been a bit longer, according to many in the industry. Next to lawyers, everyone loves to hate insurance agents and underwriters.
In the months since September 11, the insurance industry has taken a beating. Some estimates–and they are still just estimates–put the total losses in excess of $100 billion.
Within days of the terrorist attacks, it was apparent that efforts by insurers to cope with the disaster would translate to higher costs and changes in coverage limits. So far, this is being proved out.
Following last September 11, aircraft owners and operators began bracing for massive hikes in insurance coverage and changes in the limits of that coverage. Now, a year later, their fears are being realized. But while rates have risen, sometimes triple those before September 11, the increases are not without some justification. The question is, just how much is justified?
“In the next 60 to 90 days, you’re going to see security in the United States like you’ve never seen before,” said retired U.S. Navy admiral Isaac Richardson in late June. “A portion of the nation’s reappraisal took a very hard look at general aviation…and the threat posed by general aviation aircraft as weapons.”
Corporate aviation operators at all levels received good and bad news from insurance representatives at the 26th annual Aviation Insurance Association conference held in Kansas City, Mo., on April 29 and 30.
Insurance premiums for professionally flown corporate aircraft have decreased slightly off their peaks of last year, but charter and helicopter operators and FBOs are not seeing the same relief, though their rates have generally stabilized.
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