The insurance market cycle has come a full 180 degrees from where it was in 2003, from very hard to very soft. The number of insurers competing for every GA insurance dollar has never been higher. As a result, rates are historically low. Underwriting guidelines are more relaxed than they have been in years.
On the other hand, aircraft insurance becomes more expensive and less available as pilots get older. But what exactly is the magical age that raises red flags in an insurance underwriters computer? The short answer: It depends on what you fly and the relationship you have with your carrier.
For underwriters, the fundamental question when deciding whether or not to sell insurance to someone— and how much to charge—is the suitability of the pilot-to-airplane combination. This is true of pilots of all ages, of course.
Given a universe in which airplanes, engines and other systems are quite reliable, and nearly 80 percent of accidents involve pilot error, the main issue for insurers is the pilot’s experience, training, attitude and proficiency. In other words, how likely he or she is to have an accident.
Just when does age become a factor? There are a number of studies that have looked at airline and GA pilots, and their conclusions about when pilots start to lose their edge vary, but they all agree on one thing: At some point, if he lives long enough, there is a noticeable decline in a pilot’s ability to guide an airplane accurately through space and return it safely to the earth.
Age causes decreased ability across a broad front, affecting everything from sleep loss, sight, hearing, short-term memory, motor skills, problem solving, division of attention, monitoring skills and a range of other cognitive functions. These losses of function happen at different times in different people. Some of these losses are attenuated by pilot experience, some are not.
Among academics and regulators concerned with aging pilots, there is discussion of using “functional age” as determined by testing in place of chronological age, but there is no agreement on what is an acceptable level of pilot performance, nor a reliable way to measure this level. One need only look at the history of the age 60 rule in airlines to see how difficult and sensitive the issue of pilot age is.
Still, insurance underwriters know what you and I know: Some folks are fine flying at 75, and others should quit at 65. Some folks are fine in a fixed-gear single, but find themselves lost in a pressurized piston twin or a jet. And some folks who have been flying instruments through the dark and the clag for their entire flying lives are now much more comfortable on sunny days. At some point, age will diminish every pilot’s ability to act as a pilot. For some, the symptoms are obvious. Sometimes it’s easy to spot these pilots on the radio frequency but for others, the symptoms of declining skills are far more subtle.
The Magic Number
We last looked at the issue of aging pilots 10 years ago, and some things have changed while others have not. The entire question of aging pilots remains extremely sensitive, and although we spoke to representatives of most of the major GA insurers, not one wished to be quoted or named. But all were willing to talk to us, and most seemed quite open about how they approached the issue of older pilots.
One change that has taken place over the last 10 years is the continued automation of the quoting process for light airplanes among the insurance companies that work through brokers. Ten years ago, there were three insurers that had quoting websites; now there are 11, with only two or three left where the quoting process is completely manual. For brokers, this means that there is less open communication with underwriters. Brokers who want to explain the special circumstances of their client have to work harder to make contact with an underwriter than they did 10 years ago.
The majority of underwriters said that they started to look at the issue of aging when pilots turned 70. Two said that in more complex airplanes, they started taking a closer look at 65. Most carriers seemed to look carefully at their own loss statistics, and most said they saw a slight uptick in accident rates among their older pilot clients. For the most part, this is five years later than it was 10 years ago, when 65 seemed to be the magic number. We think in part this is due to the soft market, but we think it is mainly due to the fact that the average age of pilots is continuing to increase.
Just how underwriters approached their clients who were 70 or older depended upon a number of factors, mostly related to the relationship with a specific client, or how much risk they felt they were taking. Interestingly, the very first variable looked at by insurers was whether a specific pilot was already a client, and how long he or she had been with them. Current customers of long standing got the most favorable treatment. One underwriter summed it up this way: “Somebody comes to us at age 70, there is no money in the bank. And how long are we going to get to keep him as a customer? We’re looking for people that will be with us a while.”
The complexity and cost of the insured aircraft was the next issue of concern on the minds of most insurers. “We start to get a little pucker factor when guys reach 70. We get more pucker when the guy is flying a Cessna 421 worth $500,000 than we do when he is flying a $50,000 Skyhawk,” was the way one insurer put it.
In the words of another, “Face it, bigger airplane, higher speeds, more seats, longer checklists and higher repair costs. If we have an older pilot who is slowing down a little bit, those are the airplanes we worry about first.”
What Scares Them
The limit of liability carried is another worry for underwriters. Underwriters said they gave more scrutiny to pilots who carried higher limits of liability, especially those who carried so-called ‘smooth’ limits, that is, coverage without sublimits for bodily injury.
Most companies said that they would reduce the amount of liability they offered to their customers somewhere on the north side of 70 years of age. One carrier said that he looked hard at his customers in complex airplanes once they reach age 65.
When an underwriter looks at an application form from an older pilot, he is looking for whatever signs that he can find that will paint a picture of this pilot for him. Is this 70-year-old pilot still near the top of his game, or should he hang it up? The underwriter does not have much to go on. As one underwriting officer put it, “Given the price of the product, its not like we get to meet each of these guys, never mind fly with them. We’re working with very little data. But the older pilot who is flying steadily, 100 or 150 hours a year, he is much more likely to be current and proficient, than the pilot who is only flying 10 hours a year. In a complex airplane, the 10-hour guy scares us.”
Claims history is another red flag for underwriters looking at older pilots. As one underwriter put it, “It’s not sudden incapacitation so much—those accidents are spectacular, but don’t happen all that often. The types of claims that we see that make us wonder about a pilot losing his edge are typically smaller in size. It may be a guy who starts an engine with the tow bar still attached to the nosewheel, or during his run-up, rolls into the airplane ahead of him or maybe he lands with the wheels up. It’s those kinds of things that raises eyebrows.”
And this observation points to the most frustrating part of the older pilot issue: It is often difficult to distinguish between a stupid pilot trick that could happen to a pilot of any age and an accident that results from the ravages of Father Time.
To further muddle the picture, there is also considerable evidence in the academic literature that older pilots do make use of their superior flying experience to avoid having to demonstrate their superior flying skill, and avoid accidents that happen to their younger counterparts.
Keep Em’ Flying
Overall flying experience and background is also a consideration. Underwriters are likely to give a 25,000- hour airline pilot with 2000 hours in his own airplane more leeway than a 500-hour private pilot as they both get up in age.
Pilots who carry higher limits are more likely to be required to submit to an annual FAA medical and EKG. One underwriter told us that he viewed compliance with his company’s annual medical requirement as an important indicator of the pilot’s attitude. He views the willingness to submit to an annual medical as a sign of that pilot’s willingness to go above and beyond.
In addition to the amount of flying, underwriters look favorably upon pilots who get training each year. In most pressurized or turbine airplanes, recurrent training will probably be required. The FAA WINGS program has fairly wide acceptance. Additional ratings or certificates are also looked upon favorably by insurers. Pilots who are flying only a minimal amount each year in a twin or retractable may be asked by their insurers to take a flight review or instrument proficiency check to brush their skills up, and as evidence that they haven’t forgotten how to fly.
If you are part of the growing wave of older pilots, or you are approaching the threshold, there are a number of steps that you can take in order to get more insurance for less money for a longer time. We recommend that you have a chat with your insurance provider. Find out how long you can plan to keep your current coverage if you stay with your current carrier. Will anyone else let you have your limit longer? Get your broker’s best guess of pricing stability as well. Discuss your plans for any aircraft upgrades that you are considering, and any specific concerns that you have going forward.
Stay the course. Find a good insurer when you are somewhere between 60 and 65, if not sooner, and stay with them. This is sometimes easier said than done, given that insurers from time to time have changes in appetite, but some companies are more likely to be stable than others.
Insurers are looking for a long-term relationship, because they are in this to make a buck. If you change insurers every year to save a little money, don’t be surprised if nobody is terribly interested in taking you on as a new customer on your 70th birthday.
If you have done your homework, you probably never need to fly without insurance, no matter how long you continue. Every underwriter we spoke with had clients who were still flying in their 80s, and two had clients that they knew of who were flying in their 90s. But there will probably come a day when your insurance company won’t offer you the limit of liability that you had in the past, or may not insure you to fly your turboprop by yourself. You may be able to postpone it, or make it cost less along the way, but realize that it will happen if you keep flying long enough. When it happens, you have a decision to make.
Last, be realistic. You may find one day that you are no longer comfortable flying to ILS Cat I minimums, or flying at night, flying in poor weather, or flying by yourself. There is a reason that airline pilots retire at age 65. If you are 70 and flying a jet by yourself, give that some thought. Be realistic. As one insurer said, “When you slow down, get a slower airplane.”