F L I G H T F R I G H T :

AN OVERVIEW OF AVIATION INSURANCE AND RISK MANAGEMENT

Presented By:

&

Overview• The Team & Their Relationships • The Basic Coverages/Exclusions of an

Aviation Policy• Other Exposures/Coverages • The Details Agents & Underwriters Crave• Correct Limits?• Claims – Examples & Procedures• Conclusion

The Aviation Policy Team

• The Key Players– The Risk Managers…You!– The Leaders of your State’s Aviation

Department(s)– The Agency or Brokerage Company

• The Agent/Broker– The Insurance Carrier

• The Underwriter• Communication

The Aviation Agent / Underwriter Relationship

• Roles• Negotiations• Challenges• Partnership• Mutual Goals and Responsibilities to You• How the Team Can Work

Traditional Communication

RISK MANAGEMENT

CARRIER / UNDERWRITERAGENT / BROKER

FLIGHT DEPARTMENT(S)

Team Communication: How it can Help

RISK MANAGEMENT

CARRIER / UNDERWRITERAGENT / BROKER

FLIGHT DEPARTMENT(S)

Basic Aviation Insurance Coverages

• Hull • Liability• Med Pay• GVS• War/Terrorism

Basic Aviation Exclusions

• Wear & Tear• Heat• Depreciation of Value• Contractual Liability• Intentional Injury• Worker’s Compensation• Noise & Pollution• Asbestos• War, Hijacking, & Other Perils

War Risk Coverage - TRIA

• What do I get if I buy war risk coverage?

• What does TRIA coverage provide?

• Should I buy war risk coverage or TRIA or both?

TRIA Buyback

• Coverage for a certified “Act of Terrorism” defined by Section 102 of the Terrorism Risk Insurance Act of 2002 and as extended by Terrorism Risk Extension Act of 2005

War Risk vs. TRIA

• Occurrence coverage

• Cancellation clause

Other Exposures / Coverages

• Special Equipment• Cargo • Spares• Non-Owned Aircraft• Aviation Premises• Others

Non-Owned Aircraft Liability Coverage

• Why it’s important

• What controls should be in place

• What should I be asking/looking for?

Extra Expense Coverage

What is it?

Pays “extra expense” of leasing or renting a temporary replacement aircraft while the scheduled aircraft is being repaired.”

Extra Expense Coverage

• Extra Expense means that portion of the actual cost of leasing or renting a replacement aircraft which exceeds the cost the named insured would have incurred if they could have operated the scheduled aircraft had it not been damaged.

Personal Injury

• False arrest, detention or imprisonment• Malicious prosecution• Wrongful entry or eviction• Invasion or the right of private occupancy• Libel or slander, except if it is committed

with the insured’s consent if know false.

The Details Agents and Underwriters Can’t Live Without• Aircraft Makes, Models, Registration #’s• Aircraft Seating Configurations• Hull Values• Desired Limits• Purpose of Use• Annual Utilization• Who the Passengers Are• Pilot Information • Prior Loss Experience

What your Agent/Broker Should Want to Know

• Needs• Wants• Satisfaction• Game Plan

Agent/Broker Timetable

• Pre-renewal meeting/discussion• Underwriting information needed• Markets to approach on renewal• Underwriter meetings• Date renewal quote to be provided

Selecting the Correct Limits – The Four Primary Items To

Consider

• Aircraft Type(s)• Passengers• Operations • Location

Selecting the Correct Limits

• Aircraft Type(s)– Airline Equipment, Corporate Turbine, &

Piston– Each has unique roles– Policy limits will vary tremendously

Selecting the Correct Limits

• Passengers– Who are they?

• Employee or not?• Occupations, Income Levels, Family, Age

– What is the average passenger load?– How often do passengers fly?

Selecting the Correct Limits

• Operations– What exactly is the aircraft used for? Not all uses have the same exposure– Where does it fly? International Ops? Over water?

Low level?

Selecting the Correct Limit

• Location– Where is the aircraft based? – Key here is exposure to people and

property on the ground.

Selecting the Correct LimitTakeaway points

• There is no fixed correct limit to carry since all operations and aircraft are unique.

• Look at your own operation and the exposure that exists within it first.

• Different limits may be considered for individual aircraft or departments

• Available limits can have impact on settlements– Average settlement for a fatality on a U.S. based

airline $3M - $5M– Many settlements for fatalities involving small

piston aircraft are settled for $100K

Claims

• Causes of Loss– Pilot Error

Claims

• Causes of Loss– Pilot Error – Mechanical Failure

Claims

• Causes of Loss– Pilot Error – Mechanical Failure

• Not All losses result in Bodily Injury and a Totaled Aircraft.

ICE DAMAGE TO FAN BLADE. REPAIR COST: $70,000

PROP STRIKE. COST TO REPAIR: $23,500

POWER CART. COST TO REPAIR: $27,000

HELICOPTER ROLLOVER. COST TO REPAIR: $700,000

SLAT DAMAGE – UNREPAIRABLE. REPLACEMENT COST: $112,000

VERTICAL STABILIZER DAMAGE. COST TO REPAIR: $48,000

You Have A Claim…Now What?

• Policy Provisions – Be Familiar!

Claims: Items to Keep in Mind

• Contact Broker and/or Underwriter ASAP to report the loss.

• Your carrier may need to defend you! All involved should be careful discussing the loss. News travels very fast when an airplane is involved.

• Have pictures taken & preserve evidence• Actions you take may not be approved

(paid for) without carrier’s consent.

Claims: Items to Keep in Mind

• Have a distinct point of contact for the broker and claims team.

• Keep the communication lines open!!!

What You Can Do To Help

• Encourage Good Communication• Know the Team Members• Think Ahead• Use the Agencies and Underwriting

Companies as resources – you are paying us for more than a stack of paper!

Questions?