You may have already heard the buzz – aircraft insurance rates are on the rise and underwriting criteria is changing. The industry has been historically cyclical, and the market is now hardening; meaning that aviation insurance carriers are tightening up their requirements and becoming less competitive. The changes that we are now experiencing are the result of a combination of factors rather than past cycles. How does this impact your aircraft insurance or aviation business?
Approximately 17 years ago was the last time the aviation industry hardened. This was a result of several carriers exiting the market, cutting the number of aviation insurance providers almost in half. As a result, rates increased and underwriters were more particular on whom they would insure. It took several years for new carriers to enter the market and as they did, competition increased therefore offering some relief to the consumer. For the past few years, aviation insurance rates have been at an all-time low.
Unlike the past cycle, there are still plenty of markets providing aviation insurance. The cost of extensive losses compared to low premiums (loss ratio) in combination with the increasing cost of reinsurance has taken a toll on these companies. Previously when a company decided to raise rates, there was often another ready to offer a lower premium. This time, everyone appears to be standing firm on their rate increases. Typical rate increase range from 5-15% but can be anywhere from 20-50% on accounts with elderly pilots or with helicopters. Another class of aircraft seeing tightening is light sport. In addition, carriers have been less open to writing business with past claims.
Today, there are less aviation insurance agents and brokers to work with. For example, AOPA Insurance Agency was recently bought out by another company, Assured Partners. Of the remaining brokers, many are not aviation insurance specialists with pilots on staff like those at Aviation Insurance Resources (AIR). At AIR a knowledgeable pilot is your agent, and a human will always answer the phone. They do not have a call center or require customers to press 0 to talk to someone. AIR keeps up to speed with the changing market and works closely with all the major aviation insurance markets to provide pilots with the best available rates while still obtaining the broadest coverage.
Are you concerned about your upcoming insurance renewal? Or are you looking to buy an aircraft and not sure if the present market will be compatible with your plans? Give the pilots at AIR a call at 877-247-7767 or visit them online at www.AIR-PROS.com today!