|
One of the common questions I get is how do the underwriters come up with the cost for a particular insurance policy. It is largely an individual company’s response to their particular loss ratios for a specific use. As always, they look at three areas that will help define the exposure. The lowest premium will be assigned to a very qualified pilot with several years of experience doing a specific use with regular training, a simple, low risk operation and an appropriate helicopter for that operation. An example is a non-commercial, personal transportation flown by a pilot with over 1000 hours in the insured make and model who attends some professional annual flight training program for the make and model ship being flown. This is a real “duh” for the underwriter and insurance company.
As the three pieces of the puzzle get moved around, it causes the underwriter to earn their livelihood. Let’s put that same well qualified pilot in an appropriate ship but change the use to external sling load for use in remote areas. The underwriter needs to look at their particular loss history for that use and try to arrive at a hull rate that both fits their needs as well as being competitive enough with other carriers so they can write some of these operations. They do not want to be too low so they end up with all of the helicopters doing this operation and not too high so they only write a few. But with the well qualified pilot and helicopter that is designed to do the operation, they will certainly want to write some of these policies.
The most difficult operations to write a policy for are the pilots who are just starting out in a particular line of business, doing their own thing, not associated with a larger flight operator, with an expensive ship and an operation that the pilot has minimal experience. This will limit the insurance agent to just a couple of companies who will consider this operation. You need to keep in mind that there are only about 6 to 8 companies who write the entire helicopter market.
All companies maintain their own minimum pilot requirements for a particular class of helicopter and they protect these requirements quite close to the vest as their proprietary information. But we have found that they vary and some will have more flexibility IF the agent can show a good reason to consider an exception to their minimums.
If an agent can show the underwriter a training program that the pilot(s) will undergo before performing the higher risk operations or look at having a well qualified pilot ride as co-pilot for a certain period of time, that will make a difference.
We often use the parallel of having a young son or daughter who is just learning to drive and providing them with a high performance Shelby Mustang 500 as their first car. They can afford it, so why not? Some young people take on the responsibility and are mature enough to handle the influences of their personal urges to really see what the car can do. But those who are not able to control those urges mess it up for everyone else who want to go this way. The comedian Bill Cosby said in an early routine that his Shelby Mustang came with 3 speeding tickets in the glove compartment so he can just fill in the date. But the underwriters struggle with figuring out which class of pilots they are dealing with.
I want to close with the comment I heard from other agents, that having a specific plan ahead of time will help an underwriter come up with a premium for your operation; anything can be insured with the proper plan.
If you have questions or comments, please call your agent or you can contact me directly. I would appreciate getting your direct input and reaction. You can email me at jefleming@aviationinsurors.com.
***The contents of this column are informational in nature and not intended as a legal interpretation of your coverage. Contact your agent for specific questions about your policy.***
|
