Reflections On My Time In The Insurance Industry

For those of you who do not know me I have not always been in the insurance industry.  I spent 15 years in the aviation aftermarket before deciding to take a chance on aviation insurance. My goal was to try something new where I could use my experience to help the companies I had worked with deal with insurance issues that face our industry.  It has been an interesting journey but I have decided to jump back into the aviation aftermarket parts industry this month. I will continue to offer advice and guide my fellow aviation industry friends in the right direction if needed. Today I am going to write about some of the things I learned along the way and some tips you might consider when handling the insurance for your company.

1. Aviation insurance is its own market. There are a couple handfuls of companies that deal with aviation risks. Of those companies each has their own appetite for particular risks. Those appetites change at times based on market conditions and if they have had any claims from a particular class of business. When working with your broker ask how many insurers they work with.

2. You commercial general liability policy will exclude aviation-related business. This also goes for your umbrella policies. Review your policies and ask questions of your brokers. If they say it will cover aviation risks you should ask for that in writing.

3. Use an aviation specific broker for your aviation insurance coverage. Your commercial broker may be able to find you coverage but it will most likely be through a wholesale relationship. This works some of the time but you must be sure that the broker understands your business thoroughly. Using an aviation insurance broker that has a direct relationship with all of the aviation insurance markets is the best way to get the best coverage for your business. They have the experience and direct access to the aviation underwriters. Having this access allows them to know which market is best suited for your type of business. They know all of the questions to ask to prepare you prior to application. Always ask how many markets they work with and when you get quotes ask to see all of the quotes. There are several great agencies out there with brokers that have years of experience. It does not cost you anymore to get that experience but it could save you thousands in premiums and more in claims protection. Ask your friends in the industry who they recommend or do some research on the internet.

4. You can only work with one broker at a time. The aviation insurance market is relatively small compared to the general insurance industry. There are very few direct writing aviation insurance providers. When you reach out to an aviation broker understand that that broker is going to reach out to all of the markets for which they have relationships with. Once that broker reaches that insurance company the underwriters check to see if any other brokers have approached them with an application yet for your insurance. If there have been no previous applications from other brokers you are clear with the insurance company. If there has been another application you are blocked. Insurance companies will only work with one broker at a time. The first broker in will get a quote or a declination. So let’s say you tried one broker and you decided you did not like the quotes you were getting or the way they operated. You can switch brokers with a broker of record letter (BOR) but the new broker will get the same quote or declination the first broker received. The insurance companies do not change their quote unless there is some very substantial new information that the first broker did not uncover with the application. This is why it is very important to find the right aviation insurance broker from the start. Before they submit your application have some dialogue with them and make sure they understand your risks and needs very clearly. In aviation insurance there is generally a summary written of your operations that is presented to the underwriters. You can ask to see that submission to ensure you are properly being presented your underwriting.

5. Review when it is renewal time. It is very easy to just write a check at renewal time but you should really use this time to review your policy. You should review with your broker your current needs and see if there is any savings you can gain or more coverage that needs to be added. Before you just renew ask your broker if they have marketed your renewal to all available markets and what the responses were from those markets.

6. If you have a brand new business and you are not making much money getting extra insurance coverage may be the last thing you want to spend your money on but you really need to have coverage. In my experience some companies wait until they have a requirement (contract) for insurance before considering it and even then they do not feel they need it. Telling a customer you will look into getting insurance could make you look unprepared in their eyes. I have always said having the proper amount of insurance in place prior to having it be a requirement is the best way to go. It shows that you have thought about protecting your business and your customers' business. It is also establishes you with the insurance companies. It is much easier to get your limits raised if you have been established than to ask for high limits without ever having insurance prior.

7. Have a plan. I wrote about emergency response plans in my last article. While it is really hard to have a plan for every scenario your business faces it is essential to have a plan should there be an emergency or catastrophe that is directly related to your business. A little planning ahead of time could make the difference in your company surviving an incident.

While I am sad to be closing this chapter of my career I am happy for the experience I gained and the people I have met and helped. I have really enjoyed writing these articles and hopefully it helped some of you out there. I am happy to say I will be staying in the aviation industry and going back to what I have the most experience in (selling parts). I will still be around if you have any questions or need a direction on finding a broker. All the best to you and thank you for your time!