Aviation Insurance Market Heats Up

Premiums rise across the board—but owners can mitigate the changes.

Piper Cub
Owners of all aircraft types have been hit with increased insurance premiums in the past few months.Piper Aircraft

Over the past few months, many aircraft owners have received unwelcome surprises in their mailboxes—virtual or otherwise—in the form of notices of increased premiums from their insurance providers. While the average rate of increase has hovered around 7 to 10 percent, owners of certain aircraft—and those pilots of a certain age—have seen two-fold or even three-fold spikes this year. David Hampson, president of Schrager Hampson Aviation Insurance Agency provided an early warning on changes in the insurance landscape last year, which Flying published in our 2019 Buyer’s Guide, and we checked in with him to understand the dynamics behind those changes.

Since the publication of the article in early 2019, Hampson notes that “rates have continued along an ever-upward trend while underwriting has further tightened. We’ve had several insurers pull out of the industry altogether or substantially reduce their underwriting capacity, and most that remain highly vested in aviation have still not reached profitable levels on their business.” Hampson also calls out the claims associated with the Boeing 737 Max, which “are also going to have a ripple effect on the global aviation insurance market, which has yet to be fully realized.”

Hampson has witnessed the same owner groups that have been hit hardest as well. “While all sectors of the industry are being affected, those hardest hit by these market changes have been low-time pilots transitioning into high-valued aircraft, owner-flown turbine aircraft, helicopters of all types and older pilots.”

But they’re not alone, Hampson says. “Commercial operators with any significant loss history are also seeing annual increases high above what they likely have ever experienced before. While the insurance market is always cyclical, I predict that we’ll unfortunately see a further hardening of the market for at least another 1 to 2 years before rates start leveling off.”

So, what can a pilot do? “My best advice for aviation insurance consumers is to do anything you can to differentiate yourself as a preferred risk, which could include more frequent formal recurrent training (simulator-based if flying turbine aircraft), obtaining advanced ratings (especially an instrument rating), flying an aircraft with technologically advanced avionics (TAA) and flying more hours per year to stay proficient,” says Hampson.

Richard McSpadden, executive director of the Air Safety Institute at the Aircraft Owners and Pilots Association, echoes these thoughts and offers concrete strategies for aircraft owners as they negotiate the changes. “If people can be proactive on the things they do personally to make themselves a safer pilot, and express to the insurance provider that it’s not just lip service—that they truly ingest that style of flying,” it should help mitigate the problem, he says. McSpadden notes a few items that pilots can act on, such as taking an annual physical exam, and simplifying your flying as you age and your needs change. Limiting your flying to daytime only, or reducing the IFR you file to that when you can have a second pilot on board are two more options. McSpadden notes that it’s not just about how much your insurance may cost you—but whether you’re insurable at all at a certain stage of your aviation life.

McSpadden also calls out the power of recurrent training, and how type-specific training flows through all levels of aircraft, from piston singles to single-pilot jets. The Air Safety Institute launched in 2018 the Focused Flight Review program, partnering with a consortium of industry groups, including GAMA, EAA, the Recreational Aviation Foundation and the Seaplane Pilots Association. The FFR provides seven different profiles for pilots to use during a flight review that dive deeply into how they fly and address key elements for discussion and practice. “Insurance companies love it because it is so specific,” says McSpadden. It’s clear that, in the current market, those pilots who demonstrate a commitment to conscientious operations will weather the changes the best—a positive outcome for everyone.