Withdrawal of aviation insurance

I received notification today that as a result of the tragic events in New York on September 11th, the insurance underwriter that covers my syndicate's glider is withdrawing cover for strike, riots, civil commotion, labour disturbances, malicious acts or acts of sabotage.

This prompts three questions:

1. In view of the reduced cover and, if we are to believe them, consequent reduced risk of having to make a payout, are they proposing to reduce our premiums?

2. The notification I received claims there is an increased risk of terrorist activity. Have they noticed that there has been a quantum leap in the level of airport security and policing generally where possible terrorist targets exist. Oh and have they not noticed that the USA is assembling perhaps the largest military operation since WW2 in the pursuit of eradicating terrorism? Consequently, it has never been harder for terrorists to achieve their evil ends. In the light of these facts, what evidence can the insurers produce to support their claim that there is 'increased risk of terrorism'?

3. In what sense could a gliding club be perceived as a target for terrorists?

We all know the insurance industry is one of the great rip-offs of all time. The financial vultures are benefiting from an appalling and tragic situation to prey on us and ensure their pockets remain amply lined. They will use any excuse, even the deaths of thousands; they must be loving it.

Hull insurance is what pays for your stolen L-Nav.

Because they can, no justification needed. A single glider club can, perhaps, 'self-insure' for hull damage, but not for liability. Sport aviation might represent a large enough constituancy for the formation of an insurance association, but it would be a huge job. Although AOPA would be the logical organization to do this, they appear to generate considerable revenue from the sale of insurance of all sorts and would probably oppose the idea.

Raphael Warshaw

(USA)

I tried to go with liability only on my Stemme but the underwriter (USAIG) would not insure for liability without hull too! On the other hand, Avemco would write liability only, but would not write 'smooth' coverage.

I've never had an insurance claim and have over 2000 hours (265 in the Stemme). Rip-off? Yup, and it'll probably get worse after the horrific events of last week.

Our partnership went with AVEMCO three years ago. They were $300.00 a year cheaper than brand X (SSA insurance) and we don't have to put the ship in storage for five mounths. $1000,000 Liability

I hope you are a better pilot than economist. Check the stock market prices on the insurance and reinsurance companies...the owners of these businesses have lost tremendously.

My limited sense is that aviation over the last 10 years has been actually losing willing insurers due to the inability to forecast risk and the small size of the soaring market. Uncertain risk and the inability to distribute internal administration costs over many policies creates high prices. High prices create disgrunted policy holders who then nickle and dime the insurance companies in retribution...a vicious cycle of adverse selection results leading insurance companies to back out of the market.

The differential between these high costs/prices and the tempting economics of self-insurance creates your perception of 'rip-off'. Eliminate these issues (alas no answer here) and competition will flourish driving prices lower.

If the carrier won't write liability without hull, raising your loss deductibles is another way to, in effect, 'self-insure' and maintain the liability coverage and defense benefit. JJ's comments re a 6 year breakeven looks right to me and begs the next question: How good of pilot are you?

Unfortunately, it isn't just a question of how good a pilot one happens to be. Sh*t happens. We had a major wind storm here in N. Calif. a few years back. One of the FBOs had all of his gliders and all but one of his towplanes essentially destroyed. He was self-insured, figuring he would be ahead even if he lost a glider every couple of years. That same airport came very close to being engulfed by a wildfire a year ago.

The aviation insurance industry is also making increasing use of bundling. I've attempted to reduce my costs by increasing the deductible and removing guest pilot and rental insurance, but the savings amounted to only $100/year.

At 17:10 21 September 2001, Larswan wrote:

I presume you are in USA, but the same happened at first in UK but is now restored at least in part. I got a letter today telling me insurance is altered to exclude war etc. and malicious damage.

I called my insurance agent (for UK readers, that's T L Clowes, who place insurance with Lloyds) and was told the letter was a universal reaction, until the insurance world sorted itself out, but another letter is now on its way restoring most of what was taken away. I specifically asked about vandalism etc. and was told I am still covered - I was about to cancel all my insurance except third party if it wasn't.

Chris N.

You must be an idiot to think the insurance industry is 'loving the deaths of thousands'. Steve Gibson Houston, Texas

Lar, I had been with Costello for twenty years or more. When I asked them for a higher deductable quote, they said, 'they couldn't do that'. I don't think they want us checking around. AVEMCO gave the same coverage with no storage time for $300 less. To counterbalance that we do have higher deductable (2500), but Costello made us put the ship in storage (for five months) to get the $300 higher rate. It would be easier if they would give us the requested rates so we could compare aples to aples. A group of ten private owners talked about forming an *insurance co-op *about twenty years ago. Seems everyone thought someone else in the co-op was a CRASHER and therefore didn't want HIM in the outfit. The only thing they all agreed on, was none of them wanted ME in the group, as I'm a known CRASHER (see *Black Ace* in forthcoming issue of Soaring)

If you haven't checked with Costello recently, it might be worth your while. I switched back to the SSA insurance a few years ago because Avemco was $300 higher than the SSA coverage, after initially being cheaper. I'm currently paying about the same as you are for the above coverage, but that may not be comparable to a partnership.

State Farm will insure my trailer for only $35 as an add-on to the car