Aviation industry insurance provider USAIG is celebrating its 90th anniversary this year. The company was founded in 1928 by Reed Chambers and David Beebe, two former World War I aviators who saw the requirement for an insurance company that fully understood the needs of aviation. That July, they established the United States Aircraft Insurance Group, along with United States Aviation Underwriters (USAU), which remain intact nine decades later, generating the capacity to cover any size aviation or aerospace exposure.

When asked about the company’s durability, CEO John Brogan, who assumed that role last April after the retirement of David McKay, said it goes back to the very beginning of the company and the plans of its founders. “Since they could not find one insurance company that wanted to insure an aviation risk, they went out and found several companies that would share in the risk,” he told AIN. Those companies formed a pool known as USAIG, which is managed by USAU, and the structure remains the same, even if the specific insurers have changed. Today, that line up of insurance companies includes Chubb, Liberty Mutual, General Re Insurance and National Indemnity.

“The pool set up is really the secret to the longevity, because at any one time, any one company can decide 'aviation is too risky for us, we don’t want to insure it any more,' or they could go out of business and go away, and the pool still exists,” explained Brogan. “The company could never come or go at the whim of one executive or one company making a decision that they liked or disliked aviation.”

USAIG insures a wide swath of the industry, from gliders to satellite-launching rockets. “Starting in 1928, aviation was very young then, so if it’s flown, we’ve likely insured it," said Brogan. “Since helicopters have been flying in the U.S., we’ve been insuring them.” He estimates rotorcraft currently make up 10 percent of the company’s business.

Through the company's Performance Vector safety initiative, rotorcraft policyholders who participate in the program can receive training subsidies in the form of USAIG “Safety Bucks” to spend on simulator-based pilot or maintenance technician training at vetted providers. Since the program’s establishment in 1997, the company has awarded more than $6 million in training subsidies. To qualify for the program, an operator must have at least one turbine-powered aircraft on its policy.

Brogan noted that after an initial spike in aviation insurance premium costs following the 9/11 terror attacks, more insurers entered the market, leading to as many as four times the number there were before 2001. That influx and competition sparked a steady decline in premiums, which has caused an imbalance of late as premiums have not kept pace with aircraft prices. “The values of the helicopters have gotten much larger than they ever were before, especially in the offshore sector,” he noted. “You look at an S-92 or Super Puma and we’re talking $30 million ships, which was unheard of when I started in the helicopter world, and because these ships are so much bigger, they are carrying so many more people, which leads to a lot more liability as well.”

As most insurers carry diverse risk portfolios, given the spate of recent disasters, from the stream of hurricanes last fall to earthquakes in Mexico, to the damage caused by the enormous wildfires in California, Brogan expects that trend of declining aviation insurance rates to come to an end, as insurers contend with the losses they have experienced.