I work in Aviation Insurance - AMA
Posted by Cleeecooo@reddit | aviation | View on Reddit | 186 comments
Inspired by a few misconceptions I read in THIS thread on how JAL bears the financial loss of a crash like the recent one we just saw, I thought I'd do an AMA given the niche industry I work in and its relevance to world events right now.
Few basics on how Commercial Aviation Insurance works:
- When a crash happens, the airline always pays out in the first instance - this is to ensure that inoccent third parties aren't left waiting for years. Airline will be reimbursed by their insurance company.
- Subrogtaion: Investigation/court case will then follow in the background where the airline insurance may get money back from the insurers of the 'at fault' party. In the case of JAL, their insurers may end up getting money back from the Coast Guard's insurers/the Japanese Govt.
- The three main policies:
- Hull & Liability (All Risks) - Hull covers (you guessed it) the physcial hull. Liability refers to passengers, and any third parties (people on the ground, property damage etc). This coverage does NOT cover any malicious acts.
- Hull War, War Liability (XS 52). Similar to the above, but ONLY is in force for malicious acts (think war, pilot suicide, etc. This will pay out in incidents of accidental shootdown too).
- Agreed Values - Airlines and Insurers agree every year what the value of each insured frame is. This is the value that's paid out in a loss - market value is irrelevant.
- Will JAL's premiums go up? Yep. But the principle of insurance is to mutualise the losses of the few across the many. So everyone's insurance will be going up next year.
- Is aviation insurance profitable? Not really.... insurers in this market have lost money in about half of the last 10 years. (note: some will have made consistent profits, whilst others will have made consistent losses).
- Every single large airline has a good chunk of its insurance placed in London. The Global hub for any specialist/niche insurance is Lloyd's of London.
WellManneredMinotaur@reddit
What are some good resources for learning about/getting involved/hired in the aviation insurance niche?
Cleeecooo@reddit (OP)
Flight global is a pretty good resource for aviation in general.
On the insurance side you've got things like The Insurance Insider and The Insurer. Unfortunately they're rather expensive and rather dry.
Cirium is a data and news company that specifically caters for Aviation expensive but I don't know how you'd go about getting a subscription as an individual.
jbenbrook99@reddit
Hey, I work in Aviation insurance too 👋🏻
WellManneredMinotaur@reddit
What are some good resources for learning about/getting involved/hired in the aviation insurance niche?
Cleeecooo@reddit (OP)
There's more of us! :o
Which part of the chain are you?
MeGrimlockSays@reddit
I was from the insurer side, part of the team that handled the QZ crash before I got out.
jbenbrook99@reddit
I’m a claims broker but fortunately JAL isn’t one of our accounts. I’m only 24 but have worked on PT Lion, Swrijaya &. UIA total losses in the past 5 years!
maddie_johnson@reddit
What made you want to work the job you work?
Cleeecooo@reddit (OP)
Always loved avaition, but did an Econ degree. So while browsing for jobs was looking for something finance related, that still had aviation exposure.
Beafybrian@reddit
Hello I know this is an old comment but as someone who also did a business degree(finance) and also loves aviation. Any recommendations on how to get into the industry? I work in insurance on the carrier side for Workers compensation ( submit data to gov bodies), looking to get into the aviation field. Thank you
itiswednesdaymadudes@reddit
I know I'll probably not get an answer anymore as this post is over a year old - but here goes: What type of education path did u follow? What jobs have gotten you to where you are right now? I'm studying insurance & actuarial and I really want to pursue this in the aviation industry.
Cleeecooo@reddit (OP)
I did economics at uni, then went into a grad scheme at a broker, emphasising I wanted to be in the aviation dept. Most people don't know what they want to do when they enter insurance so I think that helped me get put where I wanted to.
I have since moved to Affinity insurance and left aviation, but that's due to getting a better opportunity.
If you're going down the actuarial route, I'd suggest you look at the insurer side. But from what I understand, you'll be quite removed from any actual aviation related discussions.
itiswednesdaymadudes@reddit
Thank you for coming through! Actually, I really want to follow through with insurance itself and not actuarial - because it simply isn’t that interesting to me in comparison. I live in Belgium and the master’s degree that I wanted to pursue, no longer exists. Also, the entryway to aviation insurance here is a huge leap here. So I’m pretty puzzled as to how I have to navigate to it 😅
Cleeecooo@reddit (OP)
From what I know the Belgian Aviation Insurance industry is basically non existant. There's a few insurers who have small lines across Europe (like HDI in Stockholm or La Reunion Aerienne in France) but the vast majority will be based in London. So if this is really what you want to pursue that's probably going to be your best bet!
itiswednesdaymadudes@reddit
Yes that’s true! I am planning to move to london later but obviously I have to start here, and wondering where to start.
Cleeecooo@reddit (OP)
An international broker like Marsh, Aon, Willis, or Gallagher wouldn't be too bad an idea. Much easier to do an internal transfer as you'll have access to their internal job boards.
yeezymaxi@reddit
What makes a good broker? How does one become a good broker?
I'm a recent school leaver, 22 this year and am an aviation trainee broker at a top broking firm. I managed to get an interview with my company as my father is a loss adjuster in the industry.
Everything has been going alright so far. I've been here for about 6 months but have only started on my renewal accounts for a few weeks. There have been a few hiccups here and there (e.g. forgetting certain steps, and errors in quote slips) but that is to be expected from someone new (I think).
These minor mistakes however have made me doubt myself. Do I actually belong here? Am I built for this? Or did I just get here because of who my father is in the industry?
I'm not an extroverted person by nature, I prefer observing and listening but if needed, I'm able to carry conversations decently with people at networking events. The best brokers/underwriters I've met are extroverted people (in my opinion) and have so many stories to tell, which makes me doubt myself even more.
Would appreciate your wisdom and any advice you are willing to provide.
Cleeecooo@reddit (OP)
Are you London based?
yeezymaxi@reddit
any tips and wisdom?
Cleeecooo@reddit (OP)
Sorry, didn't see this. I think the main things are to learn lessons from how our clients train their staff. I think that Aviation is one of the best industries to learn about human factors that can help you in your professional career. i.e. Use checklists for everything, every time. Make sure you have templates and standard ways of doing repeated tasks - and always do it in the same way each time wherever possible.
Everyone new makes mistakes, just try not to repeat them - and don't be scared of asking more senior colleagues how to improve. 6 months is nothing career wise - I'd maybe start worrying after 18 months if nothing changes.
I also felt like you in terms of everyone being extroverted while I was more introverted, but there's definitely nothing wrong with that. I think you just remember the extroverts more than the introverts - and all that matters is what your performance review says.
That being said... I ended up leaving aviation because I started feeling like the people who confidently bullshitted were rewarded more than they should be. It's up to you whether you feel that's an environment you're currently in, and want to continue in.
I think good broking revolves around having very good relationships with people and this mostly seems to pay dividends the longer you're in the industry. The main tip is know everything about your client. If you don't know something, NEVER BS an answer and just make sure you find out quickly and keep the underwriters in the loop. Having a good and thorough pre renewal presentation is also very helpful. Other than that, it's knowing people well and you'll get the hang of it after a few renewals (let's say 2-3 per client). Honestly, it's not fundamentally not that difficult a job.
Finally - nepotism may get your foot in the door but it won't help you excel. If you're doing well and getting good feedback, I don't think you need to worry about whether you belong :) Best of luck
yeezymaxi@reddit
Hey there, thanks for this.
Yes fundamentally it isn't very difficult, it's mostly the time-sensitive tasks that clients want/need that give me the most pressure.
yeezymaxi@reddit
No sir I'm based in asia
yeezymaxi@reddit
Nope, I'm Asia-based. Why do you ask?
yeezymaxi@reddit
No I live in Asia
Extension_Toe_5493@reddit
What licenses are required to do your job?
Cleeecooo@reddit (OP)
None - just CPD
Extension_Toe_5493@reddit
Oh I thought being an insurance broker required some licenses, but now that I reread your post you never specified what it is you do in aviation insurance - I just assumed 🤦♂️
Cleeecooo@reddit (OP)
TBF it does in some territories, like I think in the USA you need a license. But for me in London it was just on the job training.
flynavy_13@reddit
Would military flight hours flown in turbine, complex and retract aircraft count towards the insurance requirements for a personal civil plane.
Does having a lot of that time lower insurance premiums?
lsthrowaway69@reddit
How is it decided whether an incident is a hull loss? Obviously it’s pretty clear for this JAL crash but I assume there are some close cases.
Cleeecooo@reddit (OP)
It's done on a % of total agreed value (ie 85%+ = Hull Loss). In edge cases (like that BA 777 engine fire in Las Vegas a few years ago) you would get an independent loss adjuster to go in and price up the fix. I believe the insurer has the right to dictate whether it's a write off or repair, but in reality it would probably be a conversation with all parties involved.
Brocolique@reddit
Hence the considerations regarding overinsuring the aircraft, might be harder to reach the constructive total loss level and insurers might want to have the aircraft repaired.
Turbulent-World-9224@reddit
Yeah it will be when the cost of repair/replacement outweighs a certain percentage of the hull value. After the Insurer appoints an independent loss adjuster, they will then co-ordinate with the aircraft owner and/or operator to determine repair costs while reporting back to the insurer.
While all decisions (hull loss, payout amount) will ultimately be at the insurer's discretion, they tend to follow along with the loss adjusters recommendations as the loss adjuster will have the Technical knowledge insurers lack.
DramaticPelican@reddit
How does one get into aviation insurance?
Emily_Postal@reddit
You don’t mention how the reinsurance market works in aviation. Could you speak about that a bit?
Cleeecooo@reddit (OP)
If you take a look at my reply HERE on how large insurance companies spread risk within their own company, it's very similar.
Reinsurance is the insurance that Insurers buy, and it's just another way of pooling risks at a much higher level. Reinsurance costs are one of the largest drivers of costs for Insurers, and sometimes reinsurers will dictate what the Insurer can or can't underwrite.
Few different standard agreements exist - sometimes it's taking a % of all of an Insurers claims (quote reinsurance), other times it's just reinsuring a very specific risk (treaty reinsurance). Another way is to only pay claims above a certain limit (Excess of loss layer). And then you can also combine all of the above to your heart's content.
Then the level above Reinsurance is Retrocedant insurance where you just add yet another layer of insurance jargon!
SexySmexxy@reddit
so ultimately who sits at the top of the insurance pyramic.
And why do i assume Tax payers
Cleeecooo@reddit (OP)
All roads lead to the government!
Although something truly catastrophic would have to happen for it to get that bad - I don't think there's been an incident that has come event remotely close.
The biggest one in memory was regarding Asbestos, which threatened Lloyd's of London - but that was still dealt with in the end
Imlooloo@reddit
How much does a typical carrier pay per year to fully ensure an A350? I’m paying around $600/yr for $50K hull loss on a SEL rental policy.
Cleeecooo@reddit (OP)
Not really comparable, as they don't do it on a per aircraft basis. Airlines are rated on a vague matrix of: Total Fleet Value, Passengers, Departures. And ofcourse the total limit they're buying. The majority of the premium rating is for the potential Third Party Liability that an airliner crash could cause, which isn't really comparable for a GA aircraft.
Added to that the larger the airline, the better Economies of Scale they get in their insurance placement.
To give you a vague idea, taking some of the most competetive rates in the market an airline could pay as little as: $400 per $1m of airframe value; OR $1d per departure; OR 5c per passenger.
Generally speaking airlines will be buying a minimum of USD 750m total limit for 737 size operators, up to USD 2.5Bn for the A380s. Most international airlines will be at the 1bn - 1.25bn mark.
Imlooloo@reddit
Great insight to an obtuse aviation operation for sure!
So let’s take Southwest for example with a fleet of 770 737s. At a Billion $ per craft liability at $400/$1M hull liability that rounds to about a yearly cost of $380M in insurance costs. Just over $1M a day. In the ballpark?
Cleeecooo@reddit (OP)
Not quite - as the billion is for the entire policy year.
It's a weird metric, but generally speaking the LCCs tend to do best on their premium per passenger metric, so that's what I'd use.
They carried roughly 130m passengers in 2022, at 6c per pax that gives a premium of around USD 7.8m a year.
Imlooloo@reddit
6 cents per pax/year- That seems so cheap to me considering this particular LCC has 4,000 flights a day! I guess it shows how safe the US commercial operations are!
sardoodledom_autism@reddit
How many people have you seen try to total planes like they do boats when they can’t afford them just to collect insurance?
It seems like it would be a lot harder to setup and get away with
Cleeecooo@reddit (OP)
Personally I haven't seen anything (other than Trevor Jacobs), but that's probably more due to the fact that we deal with Aviation companies instead of individuals with a Cessna.
Emily_Postal@reddit
Aviation companies meaning the leasing companies?
Cleeecooo@reddit (OP)
A whole variety! Ranges from a refueller, to an ATC, to major manufacturer, to lessors. They all need Aviation Insurance policies.
My point was more we deal with businesses, rather than individuals, and they are less likely to commit fraud.
mothernaturesghost@reddit
Where does an individual with a Cessna get insured? Bundle it up with Progressive?
Anticept@reddit
Not OP, but you find an aviation insurance broker. Avemco is about the only direct insurer, everyone else goes through brokers.
aerosidswe@reddit
If you are denied boarding because of presumptions that were proven wrong, and miss the flight because of that, are you entitled to any compensation. This was discriminatory too
Cleeecooo@reddit (OP)
Short answer is it depends where you were and why you were denied boarding. I would suggest you kick up a stink on twitter with all the relevant details for the quickest resolution.
mofeus305@reddit
Do insurance companies have different requirements for required pilot hours when it comes to part 91 vs 135?
Cleeecooo@reddit (OP)
Not really - they just need compliance with the relevant regulations. However, if you have a policy of only hiring really experienced pilots then you're likely to get a favourable rating from insurers.
Go2FarAway@reddit
When an oil tanker went aground, the captain was liable & served a sentence (community service) and paid personally. Will any of the pilots face jail or financial liability?
Cleeecooo@reddit (OP)
Generally speaking there aren't criminal charges brought about in aviation - there's more of a focus on a "just culture" to encourage reporting and improve safety in the future. There have been a few rare examples in history (I believe in Italy) of criminal prosecution for pilots.
Low-Ad4420@reddit
Are insurances kinda like cars with quotes very dependant on model, colour, historic crash statistics, etc or is it a more directly negotiated deal?
I mean there is a lot of regulation and safety procedures each manufacturer needs to pass so maybe historic incident track records are not as important.
Cleeecooo@reddit (OP)
It's much more bespoke and done on loss record, as well as soft factors such as how professionally run an airline is, or how mature their Safety Management Systems are.
Although models of aircraft kinda do come into the mix in that you'll struggle insuring something Russian built compared to a Boeing or Airbus, for example.
Te_Luftwaffle@reddit
Since the insurance companies are losing money, how confident are you in your job security? Is it a constant loss of money, or is there a cycle of profitable and bad years?
Cleeecooo@reddit (OP)
It's a cycle of losses in general, and not all insurers lose money. I'd be more nervous if I was part of an insurance company who were having a few bad years of losses as they have a habit of suddenly closing for business.
The marketplace is very small though, and most people seem to land on their feet. It's a bit of a merry-go-round of employment with people jumping between the few firms in the market.
startingoverthisname@reddit
In the very rare case of a plane going missing, e.g. MH370, how long do insurance companies wait before declaring a hull loss and paying the claim?
Cleeecooo@reddit (OP)
Not sure on the exact timings of payment, but I imagine relatively soon after it was clear that the frame itself was certainly lost.
In the event of MH 370, it was initially decided that the All Risks and Hull War market would pay the claim 50/50.
It was then later paid 100% by the War market following the evidence on the Captain and his flight sim logs coming out.
TravelerMSY@reddit
It’s an industry quirk, but don’t you think it’s funny that an “all risk” policy doesn’t cover all possible risks?
Cleeecooo@reddit (OP)
Makes it all the more fun when you're learning the industry!
Another thing we do is exclude something in one line, only to re-include 90% of it in the next line!
Weekly-Language6763@reddit
I don't know if the question was answered at the start of the conflict, but when Russia essentially stole planes from lessors did they have theft insurance?
Cleeecooo@reddit (OP)
It's actually an ongoing issue! Part of the wording in the War coverage specifically covers "state seizure of assets," but the War markets are denying the claim, suggesting that they should only be liable if the aircraft are destroyed.
Another factor muddying the waters is that the All Risks sections tend to have a higher insured limit than the War sections of insurance.
So from an Airline/Lessor POV, you want this loss to fall under the All Risks section to be able to claim more money.
Here's an FT article that goes into the detail very well: https://www.ft.com/content/4574876a-a2a2-4128-acf5-07ad19a0e45e
And a key excerpt:
macreadyrj@reddit
Who decides when a conflict is a "war"? Is there a generally agreed-upon definition in the insurance market?
Cleeecooo@reddit (OP)
There are wordings behind the contract which goes into further detail, but generally speaking any intentional malicious act would be considered war. Also most times people don't go to war without declaring it... until this "special military operation" which is part of why this will be going to court so the lawyers can decide exactly what a war is.
Newyew22@reddit
Fantastic question! I’m curious to hear the answer.
Go2FarAway@reddit
Hot air balloons have disappeared from local scene. Insurance was one oft cited reason. Are balloons any greater risk than GA airplanes?
Cleeecooo@reddit (OP)
Definitely - you have much less control, and the passenger mix is usually the same
Mech_145@reddit
What’s the name of your yacht?
Cleeecooo@reddit (OP)
Cleeecooo Of The High Seas
captain_hoomi@reddit
who pays for passengers baggage loss? Is it on passengers to have travel insurance or airline have to pay?
Cleeecooo@reddit (OP)
The airline is liable for a certain amount, which is governed by the Montreal Convention, and they also are obligated to reimburse you for a set amount for anything you need to buy (clothes, toiletries etc). However, I'd always recommend having travel insurance too as it's pretty cheap and maximises your protection. Some airlines make it a real pain to try and claim.
FuckTheLonghorns@reddit
I feel like I'm having a stroke trying to pronounce "subrogtaion"
Did you accidentally misspell something? I keep rearranging those letters in my head and can't come up with a different familiar word, maybe it's an industry thing
Cleeecooo@reddit (OP)
Whoops - corrected!
FuckTheLonghorns@reddit
Hope that didn't come off as rude! I didn't have anything else to ask after reading the other comments and enjoyed the post, but that was killing me 😂 genuinely couldn't figure it out
Cleeecooo@reddit (OP)
Not at all :)
Cessnateur@reddit
OP inadvertenly transposed two letters. It should be "subrogation."
FuckTheLonghorns@reddit
Unfamiliar term for sure, but that's more intuitive to say! Appreciate it
Sirslawter@reddit
It’s spelled subrogation and pronounced sub-row-gay-tion
It’s a legal/insurance term
FuckTheLonghorns@reddit
Definitely not a word I've heard before, but that makes much more sense and yeah that pronunciation is much more intuitive 😂 thank you
Redd_Skyy@reddit
What's the meaning of life?
Cleeecooo@reddit (OP)
42.
badmother@reddit
Sorry for the downvote, you were on 43 ;)
Cleeecooo@reddit (OP)
I respect the hustle
scotchegg72@reddit
What factor does the participants working in a second language play here?
Cleeecooo@reddit (OP)
The only way I'd see that coming in is if someone had a legal obligation to ensure the appropriate language skills, and that legal requirement was not met.
scotchegg72@reddit
So it’s not mentioned in any insurance policy? I’m surprised. Knowing the poor quality of general English ability in Japan, I’d expect some assurances of if I were insuring their ability to understand instructions in English.
Cleeecooo@reddit (OP)
Unless an insurer asks, I don't think we ever discuss English levels to be honest
Oakley7677@reddit
It's almost impossible for pilots over 70 to get insurance for their personal airplanes. It seems to be getting worse every year. How long before it starts getting hard for people int he 60's to get insurance?
Cleeecooo@reddit (OP)
That part of the market (General Aviation) is generally pretty badly loss making, hence the reluctance from underwriters to keep offering it. I don't see anyone suddenly deciding to enter that part of the market, so I would guess that it'll keep getting graddually worse....
Although GA isn't really my part of the business, so take my words with a large pinch of salt.
Anticept@reddit
Speaking from someone who discussed this with my broker. GA insurance is down to just a few underwriters left. That's why costs are rising and policies are getting more strict.
There are new companies trying to break into it but their liquidity is in question, so she doesn't get quotes from them unless requested.
Cleeecooo@reddit (OP)
Yeah no point buying insurance if the company can't avtually pay out in the event of a claim!
FewBike4040@reddit
Why have most airline insurers lost money on average? Not like there are so many major incidents each year that are leading to regular insurance payouts.
Cleeecooo@reddit (OP)
Combination of lots of market capacity from insurers (so very strogn competition on prices) as well as attritional claims.
A "small dink" can easily run into 10s of millions of dollars. Allianz did a report some time ago which found that the average bird strike costs USD 450k!
Previous estimates have suggested that around 50% of the total USD 1.7bn Airline premium is lost covering attritional accidents under USD 10m. Minor liability (spilled coffee, slips and trips etc) is around USD 600m, leaving not much for the occasional total hull loss like this one we've just seen.
You then need to bear in mind that they need to be building up funds for the occasional Total Loss with everyone on board dying.
FailedCriticalSystem@reddit
That seems low if we are talking commercial airliners. That doesn't account passengers and new flights right?
Cleeecooo@reddit (OP)
Good question. I actaully got the number wrong, it's $360k average. I couldn't find the details on what they included, but I think this is the whole insurance claims, based on this passage in p.15:
Full report HERE
I think it is also counting birds hitting windshields, which will probably drag the average down considerably.
FailedCriticalSystem@reddit
Thats a very indepth answer. Thank you.
Don't you wish planes had horns?
Cleeecooo@reddit (OP)
I'd prefer a siren!
I_had_the_Lasagna@reddit
Bird strikes are actually pretty common, and usually fairly minor, anything much smaller than a goose is gonna get shedded in an engine like tomatoes in a blender, then vaporized in the combustor if it makes it that far. The end result is a cleanup, an inspection, and maybe some compressor blades that need filed down. Modern engines are specifically designed for the fan blades to sling the shredded bits of bird out and around the core to minimize damage. If a bird strike does damage the core past it's operation limits, then the engine is getting changed which is going to be a very expensive process.
Major_Jobbie@reddit
Should I tell you if I add a sweet after-market head unit to my A350? Will my premium go up?
Cleeecooo@reddit (OP)
Oh yes - you should absolutely tell your insurers about all of the above-and-beyond stuff you do for safety. You could tell them about how your near miss log emphasised gaps in crew awareness in critical phases of flight, so you stumped out for fancy HUDs for all pilots to reduce the risk.
Premium may even go down!
mothernaturesghost@reddit
This has me thinking about Air Force One. Does the military have insurance? Seems like no. They aren’t going to tell you all the secret awesome stuff they added to their plane for insurance purposes.
Cleeecooo@reddit (OP)
A few smaller militaries and coastguards do have insurance. But for the most parts militaries are self insured by their governments. No real point in paying private companies when you've got essentially an unlimited tap of funding!
xj98jeep@reddit
I know of several large Federal agencies that self-insure their cars & trucks and I bet they all do, so it wouldn't surprise me if they also self-insured fancy stuff like AF1
RhombusCat@reddit
How about the engines, are they insured separately? In this case I'd expect a payout for the losses on these, but are there other special coverages for engines (e.g. FOD ingestion event coverage)?
Cleeecooo@reddit (OP)
Few different scenarios:
When attached to an aircraft, the engine is considered part of the aircraft.
If you removed an engine from maintenance, it's considered part of the aircraft until the next engine has been attached. At that moment the old engine becomes considered a Spare. Spares are usually covered too under the All Risks Policy.
In the event an engine exploded and brought down a plane, then the airline policy would pay out, then it would eventaully fall onto the engine manufacturer's insurance policy (Products Liability coverage).
Finally, if you're an engine lessor, then you'd also have your seperate coverage for your engines - but this would be to sit on top of an Airline Operator's policy.
Firefighter_RN@reddit
Whoa. So they can subrogate claims back to manufacturers? Is that for any part failure? Can they subrogate to individuals if they had inadequate insurance (someone runs a Cessna into a 737 and manages to destroy the hull?)
Cleeecooo@reddit (OP)
Yep for any part failure. Let's say it's a single fan blade in a GE 90. It would first be the airline that pays, then their insurers Subrogate to GE's insurers, who would then Subrogate against the insurers of the faulty fan blade.
Same case for the individual in the Cessna, except it would be their insurance that would pay the full policy limit. If this isn't enough then the Airline insurers are stuck with the rest of the claim.
DeedsF1@reddit
Very good idea O.P. I learned quite a bit as I know nothing about Aviation Insurance for lessor and lessees.
fltof2@reddit
Is there a connection between GA insurance and airline insurance? If a 737 crashes, does that effect premiums for a Cessna 172 some GA pilot owns? Is a Gulfstream jet a corporate flight department owns insured like an airline or GA?
Cleeecooo@reddit (OP)
See my reply below: https://www.reddit.com/r/aviation/comments/18z3iqw/comment/kggkg2d/?utm_source=share&utm_medium=web2x&context=3
To answer the second part, most private jets are consideres GA, although there are charter operators like NetJets that have the scale that they'd be somehwere between GA and airline.
fltof2@reddit
Thank you, most informative!
SlowDownToGoDown@reddit
How would you price insurance for a super-midsize charter operator. N-reg, Part 135.
Hull is say $10MM.
$300MM smooth for liability (HNW pax)
90 hours a month of flying in the Americas.
Cleeecooo@reddit (OP)
Fraid I don't know off the top of my head as GA is a bit out of my area of familiarity.
The rating factors an insurer would look at would be: Pilot training, previous losses, aircraft being operated, and probably the routes. From what you're describing, sounds like an operator with not a lot of aircraft, and lots of liability!
SlowDownToGoDown@reddit
Thanks
inthegravy@reddit
Are Hull War and War Liability 2 distinct types of policy or did you miss the 3rd?
Are the malicious act policies split out because some airlines choose not to take these, or have differing payout limits attached, or something else like historical convention?
Cleeecooo@reddit (OP)
They are indeed 2 different types - just grouped them together for ease of explanation!
Hull War is not mandatory (although I think everyone buys it). There's a few reasons to split these coverages out, one of them being that a company may focus on Hull War only and not want to do the All Risks.
For XS 52 (War Liability) this came about after 9/11, where insurers were suddenly stuck with a USD 3Bn loss for covereage they were essentially throwing in for free on the Hull All Risks policy. It then became clear that this needed to be its own market with its own premium base, and underwriters with actual expertise in the class writing the business.
inthegravy@reddit
Thanks for the explanation. Are there normally limitations to the liability coverage for freak events, like if a plane hit a nuclear reactor or a packed stadium?
Cleeecooo@reddit (OP)
The key exclusions are for War coverage. If there's intentional detonation of a nuclear bomb this won't be covered.
If war breaks out between any of the superpowers (they're defined, but can't remember exactly who they are) then coverage ceases immediately, but aircraft in the air have coverage until they land.
I can't think of any relevant exclusions on the All Risks side. Catastrophic losses like packed stadiums and nuclear plants are exactly what the insurance coverage is designed to be there for.
okonom@reddit
So Tom Lehrer was accurate when he sang "Lloyd's of London will be loaded when they go"?
54H60-77@reddit
Any stories you can share about fraud? Like what kind of fraud is prevalent in insurance. Also, do you deal with any maintenance related claims?
Cleeecooo@reddit (OP)
I don't see a lot as we deal B2B, rather than to the general public.
From my motor insurance days the main two things I saw a lot of were faking whiplash and PTSD. Whilst many people suffer genuinely from these terrible conditions, it's something that fraudsters have latched on to as a way of getting a quick buck out of companies. Clear examples are a car gettign hit at 2-3 mph and the driver suffering from months of "debilitating" whiplash. That claim was litigated and a private investigator foudn the person casually hopping over a waist high fence on a walk...
He probably would've gotten away with it if he was claiming £3-4k instead of £30+
Similar with PTSD - very hard to disprove, and if you keep the claim amounts sensible it's likely that you will get away with it.
That United plane that suffered an engine explosion - many passengers claimed they were terrified to fly after that. (again, genuine possible conditoin) But their claims were denied when confronted with the fact they got on another plane right after the event...
Please note - I'm not suggesting anyone commits insurance fraud - it's a scummy thing to do, can invalidate the genuine parts of your claim, and drives premiums up for eeryone.
However, you should absolutely claim everything you're entitled to, and not be scared of asking for things like physiotherapy etc to put you back to how you were before an accident.
phluidity@reddit
You remind me of my own auto accident. I was broadsided by someone doing 50 mph who ran a stop sign (they were texting on their phone. They claimed otherwise). I legitimately had whiplash which was backed up by X-rays. 18 months after the accident (and more than a year past what I had claimed for) I got a call from the adjuster who wanted to do an assessment as they wanted to re-open the original claim so they could deny it. Fighting the insurance company twice really pissed me off.
safebeach725@reddit
Are some aircraft models more expensive to insure than others of comparable vintage? I imagine that like cars, some aircraft cost more to repair, get in more accidents etc.
Cleeecooo@reddit (OP)
Not massively (although I wasn't in the business during the days of the DC10). It's done more on an operator basis, and their previous claims record. Some underwriters may have exceptions with certain types of aircraft though.
KincFe@reddit
How much does an A350 cost?
I saw in the news that JAL will get $130m from insurance for the loss of hull but AFAIK that's lower than the purchase price for this variant.
Cleeecooo@reddit (OP)
I can assure you JAL will not be making a loss - the A350 definitely will cost less than that (including IFE, seats and all other internals). I'm not sure what the purchase price with Airbus is, but the "Agreed Value" will cover a resonable replacement cost of everything in that plane.
Cessnateur@reddit
Are bizjets from any particular manufacturer notably more or less expensive to insure? If so, which ones stand out, and what's the reason for the difference?
Also, how difficult (or easy) would it be for the owner of a Pilatus PC-24 to extend coverage to operation from grass airstrips (a unique capability of the type)?
Cleeecooo@reddit (OP)
Afraid GA is a bit out of my range of "expertise". The main thing driving the price is the total limit being bought, and the operations (are they carrying loads of HNW execs in one time).
You would have differentiation between single engine turbo props, and a Dassault 7X. But probably not so much between the Dassualt and a G650 presuming the same aircraft values.
As for grass strips, Insurers would ask about the nature of operations, and if it's declared that it's on grass strips and the aircraft is compliant I don't think they'd make a distinciton based on the exact type.
SPANISH_INQUISITI0N@reddit
What would it cost to insure the USAFs entire fleet?
Cleeecooo@reddit (OP)
I'm trying to do some back of the envelope calculations, but the USAF fleet is so ludicrously large that I can't even begin to fathom this!
I'd say you definitely won't get War coverages for the USAF (duh) but the Hull All Risks might actually be pretty cheap overall. The frames aren't operated that regularly (compared to a domestic 737). Pilot standards are very high, and there's no passenger liability. Most people on board would be employees of the US Govt. Most aircraft are away from populated areas, minimising ground casualty chances.
So as a bit of a cop out, I'd say for every $1m Air Frame Value they'd get an insurance premium of $250. I think the total value of the fleet will be closign in on a trillion dollars, but the numbers are making my head hurt.
FlyJunior172@reddit
Is there anything on the insurance/backend that’s actually driving part 91 and part 135 SIC hiring minimums to well over 1500 hours/ATP minimums? 135.243(c) already essentially defeats the purpose of the commercial pilot certificate, but the SIC hiring minimums deal the final blow.
Cleeecooo@reddit (OP)
Nope.... purely Congress on that one as far as I'm aware!
FlyJunior172@reddit
Interesting, because there are no minimums for SIC anywhere in parts 91 or 135 other than commercial pilot with appropriate category and class ratings
lemoncats1@reddit
Any reason why it is being run despite not profitable for some?
Cleeecooo@reddit (OP)
Yep, there are adjusters that speicalise in aviation.
The main reason there are so many people still in despite losses is that some take a long term view, and they may have paid losses but they think if they stay in the market long enough, they will recoup these losses.
On a large placement then you're right - they'll pool resources. Most major airlines will have 10+ insurers on their placement, each taking shares of anywhere between 1% and 5% for the biggest ones.
tangers69@reddit
Do you think insurance companies ever cover commercial aircraft with single pilot?
Cleeecooo@reddit (OP)
Yeah - definitely. It's just a question of price, and the regulation will be the real stumbling block. Part of the reputation of the Lloyds London insurance market is that it can cover niche risks that other parts of the world can't or won't cover.
Rawinza555@reddit
Do you call the airlines about their aircraft extended warranty?
Cleeecooo@reddit (OP)
I've been trying, but nobody's picked up
logicbomber87@reddit
It’s true that if the airplane is not parked correctly in the T spot, the insurance will not cover if something happens while on ground/transit? (eg, truck collision)
Cleeecooo@reddit (OP)
Not really - but there could be an argument to be made that whoever was doing the ground handling was the one at fault for the eventual crash. This would be determining the "Proximate Cause" ie, the event that set in motion an unbroken chain of events that led to the Occurence.
eg - catering truck hit a wingtip - but only because ground handler didn't park correctly.
BelethorsGeneralShit@reddit
How far out into the ripple effects of damages to insurers pay?
Say a Delta plane has a wingtip strike with a United plane. Nothing terrible, but both planes are taken out of service for a while. All the passengers have to be put up in a hotel. Those planes can't make it to their destinations, so the people that were going to take them on future flights later in the day have to possibly put up in hotels, etc... Is the insurance paying for all that, or do the airlines just eat it as the cost of doing business? Does it make any difference if it's a Delta plane hitting another Delta plane?
I assume there's a dollar value that needs to be reached before an airline will make a claim? Just like with out car or homeowner's insurance, we wouldn't bother filing a claim for minor issues. At the airport I work at, a catering truck cut off a taxiing aircraft a while back. The aircraft slammed on brakes, which caused an FA to fall and break her wrist. Her going to the hospital put the aircraft under the minimum required FAs and the flight was canceled with pax being put up in hotels and all of that. If the catering truck company couldn't be identified, would insurance be paying for that, or would the airline just eat it?
Cleeecooo@reddit (OP)
Yep - loss of use and the consequential losses are covered (although if passengers had their own personal travel insurance they might end up claiming on that directly).
Whilst there are deductibles (they haven't moved from the 70s and are easily blown through) most airlines make a business decision on whether to claim.
There are some airlines that as a matter of practice don't claim on insurance for anything short of a catastrophic loss. Others have their internal insurance company for that (called a "Captive").
The reason being that the insurers don't do things for free - if they're paying your claims they want those claims cost and profit on top. So the question for airlines is do they allocate all of their capital into doing what they do best (run an airline) and let the insurance company handle their claims for a fee?
If you're a massive airline with loads of spare cash you may be best saying that you'll take on all of the risk for the first $10m of any claims, then insurance covers you for the rest.
Alternatively, sometimes insurance rates are so cheap that even a big airline would be stupid not to buy insurance for even the smallest claims.
So to answer your question... It depends :p
cAR15tel@reddit
So what do ya’ll really think about agricultural aviation?
An absurdly high crash and fatality rate for a small industry.
Cleeecooo@reddit (OP)
Awful! Low premiums, low market appetite, and non-loyal customers.
Best hope as an Insurer is to just write as many as humanely possible and cross your fingers. Not great from a Broker point of view because so few of those insurers exist. And awful from the Crop Duster's POV as they'll never be happy with the pricing (yet somehow happy with the risks they're taking...)
Cessnateur@reddit
How about air tanker/firefighting operators? I can't imagine it's inexpensive to insure transport-category airliners that drop slurry atop raging forest fires while flying at treetop level through smoke and among terrain.
Cleeecooo@reddit (OP)
Pretty similar, but the values of aircraft are much higher for those - so there's usually more premium on the table for insurers, making it much more attractive for more of them to write the risk.
gravy_dad@reddit
Does your firm do life insurances, or just airline/airframe insurances? Or do you know if they are readily available to pilots in England (where I think you said you were from)?
I'm a commercial pilot, and I cannot find anyone in Australia who will consider me for income protection or trauma, purely because I'm a pilot. I think the 7 or 8 business I've called, have all talked to the underwritters and come back saying it's unavailable to pilots, but no one can tell me why.
Cleeecooo@reddit (OP)
It's just not something that's very profitable for insurers - especially as pilots get older or have pre-existing conditions.
My firm does have a few people dedicated to placing Pilot and Crew Accident/Loss of License cover - but this is only sold B2B (ie. we would do this for an airline to offer as a benefit to their employees). From my understanding, getting an employer to give you the cover is your best bet.
maddie_johnson@reddit
how did you get into this job? was any schooling needed?
Cleeecooo@reddit (OP)
Like most people in the industry I fell into it by accident when just applying for random jobs. You don't need schooling past 18 (A Levels in the UK) and quite a few people came in straight after thy were done with school.
BigDiesel07@reddit
Can subrogation be pursued in this situation?
Cleeecooo@reddit (OP)
For the recent JAL crash? Almost certainly based on what we seem to know right now (ie that the Navy plane was at fault).
LazyPasse@reddit
How do the data sets that insurers maintain with respect to aviation accidents differ from those maintained by the NTSB?
Cleeecooo@reddit (OP)
The NTSB is interested in things like granular data on phases of flight, why accidents happened, and any way to improve safety recommendations.
The Insurers are more concerned with costs - both what's been paid, and what they think they need to hold aside to be paid later. They don't care that much about the granular data on why crashes happened, and are done on an Client by Client basis.
Tbh, I was shocked how little data the brokers or insurers have - even about claims they have actually paid sometimes!
Latter_Object7711@reddit
Will this affect GA insurance premiums? An insurance broker once told me 9/11, the 737 MAX accidents, and the Russian state seizure of aircraft all had an effect on GA premiums. Are air carriers and GA grouped together in this regard?
Cleeecooo@reddit (OP)
Yep, it's all interconnected! If you imagine a hierarchy chart, many insurance companies will be split as follows:
Layer 1: Life vs General Insurance
Layer 2: General splits into things like - Property, Motor, Specialty
Layer 3: Specialty splits into something like - Aviation, Marine, Construction etc
Layer 4: Then Aviation splits into something like - General Aviation, Space/Satellite, Airlines, Aerospace/Products.
Each one of those layers will probably be done in a way where they want to make a profit on each layer, but with the understanding that not every part will be profitable at every time.
So what that means is a loss in a segment in a layer will need to be balanced by a premium increases in another segment (737 Max filtering into GA).
If the losses are REALLY big, then you'll see effects spill across layers. For example, there was a year of really bad wind storms in the Property market, which put upwards pressure on all aviation prices.
That's all very oversimplified, and doesn't even go into re-insurance - but should give you an idea of the principles involved and why it's all interconnected.
denny-1989@reddit
What’s the weirdest/strangest claim you’ve heard of?
Cleeecooo@reddit (OP)
For a while a covereage "Non-Occurence Grounding" was given out basically for free. This stopped when someone actually used it. It's weird because you're claiming for an event that hasn't happened, but hypotehtically could, so you fix it and take money from insurers?!
Another one was when a bus shelter (on airport property) collapsed, paralysing the person who was under it, and ruining their ballet career. Very unfortunate incident (and bizarre to be under an aviation policy). Then the US jury had to decide what that person's life was worth, which was USD 380m or something incredibly high like that. Which is sobering when you compare it to an actual fatality in a less developed part of the worth.
Anticept@reddit
Got to love how inconsistently juries award for losses in aviation because they think it's a rich industry.
itchyblood@reddit
That’s a strange one- did the plaintiff not sue the airport that manages the property?
Cleeecooo@reddit (OP)
Sorry, should've been clearer - the clietn in this case was the airport. But a bus shelter still isn't somehting I would usually think falls under aviation!
garethrory@reddit
Why can’t I seem to get hired in the industry. I’m US based with 10+ years of various insurance experience, most of the common designations and I’m a commercial pilot. Everyone just seems to waste my time.
Cleeecooo@reddit (OP)
That's surprising to hear! Usually the firms seem to love hiring brokers or advisors with direct operational expereience! What sort of roles and companies are you applying for?
garethrory@reddit
Underwriting or claims. I don’t live in one of the ‘key’ cities. Most companies have remote roles but seem to prefer office based.
I won’t dox myself, but I’ve applied to all the big companies, working through the specialty ones now.
I’ve run into some bad recruiters..
Turbulent-World-9224@reddit
With your pilot experience, a loss adjusting role could be of interest? With your experience on both the airframe and insurance side you could be great at bridging the gap between owners/operators and insurers!
garethrory@reddit
I’ve tried. I really do think my insurance background and flight training bring a lot of common ground to the business and the customer.
I know from browsing LinkedIn that I have comparable to better training than people in similar roles.
I’ll keep networking until I land something or have the hours to head to an airline. I thought it would be a great QOL job with young kids and a spouse in a demanding career.
Cleeecooo@reddit (OP)
Ah I see, best of luck in your search. I'd say the insurance firms are still pretty outdated in their thinking regarding remote jobs for new employees. Recruiters all suck anyway!
mothernaturesghost@reddit
I need upvotes to post cool photos of planes I’ve seen. My question is, can you give me those upvotes?
aviation-ModTeam@reddit
A brief note to highlight that this user has not been confirmed by the mod team.
kilkenny99@reddit
How badly was the aviation insurance business hurt by Russia basically stealing all those airliners when the sanctions hit after the Ukraine invasion? Were all those airlines & leasing companies being paid full replacement value for those planes (and pretty much all at once)?
jonisborn@reddit
Who killed JFK?
Cleeecooo@reddit (OP)
Contrary to popular belief, it was in fact a particularly pissed off Polar Bear with a rifle.
jonisborn@reddit
I knew it!!
maddie_johnson@reddit
What are the pros and cons of your job?
Cleeecooo@reddit (OP)
Pros: Insurance in general seems to have pretty good work life balance. The job is very social, with lots of people skills needed. I find insurance pretty interesting in general - especially when it comes to solving problems. Lots of market dynamics which keeps the job interesting and different every day.
Cons: Aviation in particular is a very small market and extremely niche. The diversity in the industry (ethnic, and diversity of thought) is pretty abysmal. Technological adaptation is also very slow for us on the insurance side (ironic considering how much our clients are embracing it).
Redbandito37@reddit
You with AON or Marsh? Dealt with them a lot, I’m on the Lessor side.
idkwhatuwantmetosay@reddit
Does the airline insurance also cover the loss of items of the passengers/cargo damaged in an accident?
Cleeecooo@reddit (OP)
It does indeed! There's standard conventions on minimum liabilities (read more about the riveting 1999 Montreal Convention HERE)
Although you'll probably get the full value of whatever is lost if you're a passenger on a crashed aircraft.
Chen7982@reddit
Why do men have nipples?
Cleeecooo@reddit (OP)
Because biologically we start like women do, and thus develop in the same way with the nips.
ycnz@reddit
So.. is there a no-claims bonus? What's the excess like on an A350? How hard do the insurers fight paying out?
Cleeecooo@reddit (OP)
Kind of! The claims record is always taken into account, and usually insurers will consider the claims/premium ration for 3, 5, and 10 years when making decisions. The better your claims burn, the better the total premium you get.
Excesses are standard in the market: USD 1m for a widebody, USD 750k for A320/737 size, USD 500k for E190/CRJ900 size, and USD 250k for E170.
In terms of fighting to pay out, generally speaking they're pretty reasonable (although I'm sure the claims team may disagree....). If they are unreasonable, they can always be removed from the placement the next year, meaning they've paid a loss and then won't be able to recoup their money in future years.