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  #1  
Old 09-18-2019, 09:58 AM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 77
Default DID YOU KNOW about the latest insurance market changes?

Keeping with the theme of our recent posts, we wanted to continue keeping you informed on what is going on with the insurance market. Below is a letter written earlier this year from Jeff Bauer, Area Chairman for Gallagher Aviation.

In the first two months of this year, Gallagher Aviation met with management of the largest insurers of light aircraft. Several common themes emerged from these meetings.

There is a definite effort by all the markets to increase rates. I say “effort” because, unlike other segments of the aviation marketplace such as corporate and commercial aviation, there are more markets in the light aircraft segment, so it is somewhat more difficult to successfully raise rates due to the level of competition Therefore, several markets reported that they only received small single-digit rate increases in the first two months of the year, due to competitive pressures.

The downside of what would otherwise be positive news for owners of light aircraft is that many of the insurers are reporting only marginal profits in the light aircraft segment. This is in contrast to commercial and corporate aviation, where double-digit rate increases are resulting in sharply increased revenue for the underwriters. These markets have been able to hold double-digit increases for corporate and commercial accounts in part due to a number of eight figure jury verdicts or settlements in this space over the last 18 months. These large losses have affected all the markets, and thus stiffened their resolve to hold to higher rate increases to recoup their losses.

We do feel that continued marginal profits in light aircraft could result in markets reconsidering their commitment to this segment, perhaps not leaving the market, but instead becoming less aggressive and willing to offer reasonable terms. Fortunately, aviation insurers have traditionally favored the light aircraft segment because the relatively low aircraft values and liability limits vs. corporate or commercial aircraft limits their overall exposure to large losses. Also, given the large number of light aircraft vs. corporate or commercial aircraft, it is easier for insurers to spread whatever losses they do sustain over a higher number of insureds.

The other trend we have seen is less willingness by the markets to offer higher liability limits. This is a natural consequence of any hard insurance market, which is why we continue to suggest purchasing the highest limit of liability available so that you remain adequately protected. Insurers in a hard market will begin by refusing to offer higher liability limits to new insureds, so it is less likely that they will attempt to lower limits offered to their existing insureds.

So, for the remainder of this year we expect to see relatively small increases on renewals, keeping in mind that markets in this segment traditionally will respond to a series of accidents involving a given aircraft by quickly raising rates for that particular aircraft. Gallagher Aviation will remain in communication with these markets throughout the year and will keep our clients advised of any changes that could affect the cost of their insurance.
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Leah Ringeisen, Shanna Linton, Katie Escalante & Kim Schuler

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
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  #2  
Old 09-18-2019, 11:54 AM
Ron77 Ron77 is offline
 
Join Date: Jul 2017
Location: Kemah, Texas
Posts: 102
Default Modest Increases?

I just received my renewal quote with a 30% increase - no changes in coverage. A modest increase?

Ron B.
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  #3  
Old 09-18-2019, 12:16 PM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 77
Default

Quote:
Originally Posted by Ron77 View Post
I just received my renewal quote with a 30% increase - no changes in coverage. A modest increase?

Ron B.
Hi Ron, I'm not sure about your specific situation, but this did make me think of one other thing I wanted to point out on this post. It was briefly discussed in the original letter, but competition in the market has changed.

Prior to this year, current carriers were able to come down in premium because there was completion with the other companies. Now that all carriers are increasing their rates, it may look like your taking a significant increase when you may have had a decent decrease last year. For example, last year your insurance company brought their original renewal quote down $50 to meet a low rate from another carrier. Now you might see a $100 increase because they don't have competition and you are seeing the increase from last year and this year combined.

Of course, this is just one scenario. If a company came in lower last year, you may see a larger increase, because you were able to take advantage of the previous competition.
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Leah Ringeisen, Shanna Linton, Katie Escalante & Kim Schuler

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
*paid advertiser
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  #4  
Old 09-18-2019, 12:21 PM
Ron77 Ron77 is offline
 
Join Date: Jul 2017
Location: Kemah, Texas
Posts: 102
Default

Yes, I received a decrease last year.

Thanks for the inside information!

Ron B.
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  #5  
Old 09-18-2019, 01:07 PM
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snopercod snopercod is offline
 
Join Date: Aug 2016
Location: Asheville, NC
Posts: 1,872
Default

Quote:
Originally Posted by Ron77 View Post
I just received my renewal quote with a 30% increase - no changes in coverage. A modest increase?.
Same here. Never had a claim.
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  #6  
Old 09-18-2019, 04:15 PM
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snopercod snopercod is offline
 
Join Date: Aug 2016
Location: Asheville, NC
Posts: 1,872
Default Darth Vader: I am altering the deal.

Why does this YouTube video come to mind?

https://www.youtube.com/watch?v=jsW9MlYu31g
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  #7  
Old 09-18-2019, 05:14 PM
Pilotjim77 Pilotjim77 is offline
 
Join Date: Jun 2018
Location: CHESHIRE, MA
Posts: 121
Default

Quote:
Originally Posted by snopercod View Post
Why does this YouTube video come to mind?

https://www.youtube.com/watch?v=jsW9MlYu31g
LOL ROFL!
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  #8  
Old 09-18-2019, 05:33 PM
Av8safe Av8safe is offline
 
Join Date: Jun 2019
Location: Valparaiso, Indiana
Posts: 19
Default Insurance policy pricing

I can speak first hand, a I just got my quotes as I head towards a purchase. I am well qualified and my quote came in about 30% more than anticipated. Hopefully year two will improve.

Mitch
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  #9  
Old 09-18-2019, 05:40 PM
Kooshball Kooshball is offline
 
Join Date: Dec 2018
Location: NC
Posts: 43
Default

Let’s just hope that Mike Patey’s Draco claim doesn’t get spread around to all experimentals.
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  #10  
Old 09-18-2019, 07:02 PM
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Greenley Greenley is offline
 
Join Date: Jan 2007
Location: Dowagiac, MI
Posts: 346
Default

I assume that rates are higher the first year, with test flying, new higher performance plane, etc. Does that go down the second year with some hours of experience, if so, what are would be needed for rates to go down?
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My RV-10 is now painted and in phase 2, ready to travel!!!!!!
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