Aviation insurance underwriters don’t have complicated formulas. And they don’t work in mysterious ways. No, the fact is that most owners of personal light aircraft will see at least a 10-percent increase in their premiums this year, and light jets and some owner-flown turboprops will see 20-percent increases, according to Greg Reba, the head of Reba Aviation Insurance.
Reba said you don’t even really need a calculator to figure out new rates for 2021. The underwriters are flatly telling everyone to expect these increases, generally regardless of experience or airframe. There are exceptions, of course.
In past years as underwriters competed for business, they would usually be open to negotiations. An older pilot may be able to keep flying his Twin Commander, but he’d be expected to pay a higher premium, for example. Today there are fewer underwriters in the market and those that are left are less interested in taking on the exposure, so most are adopting a take-it-or-leave-it strategy. That same older pilot may be forced to take along a second in command, or the deductible might go from almost nothing to $25,000.
Moving up into an owner-flown turbine can be a more difficult proposition today than in the recent past when aviation insurance was a buyers’ market. The limits will be lower, and training requirements more strict, Reba said. The good news is that Twin Commanders are generally easier to insure than, say, a Cessna Citation Mustang or CJ. Reba has a lot of experience working with Twin Commanders, and sometimes the agent that interfaces with the underwriter can make all the difference.
Premium increases may be hard to control, but he has had some luck getting better coverage levels, and getting a transitioning pilot that critical first year of coverage. Even so, the bottom line for many underwriters is that a high loss history in recent years, combined with increasing costs for excess of loss for the companies have combined to squeeze owners with higher bills the last few years. “It all gets put into the stew,” Reba said.
In a future issue Reba will explain how owners can improve their standing with the underwriter, and what we can expect for future increases.
