As we’ve been reporting ad nauseam, the hardened aircraft insurance market is presenting challenges for aging pilots and even younger, inexperienced ones looking to step up to high-performance pistons and turbines. So when reader Keith Rosema reached out and asked for advice on picking the right insurance agent, we asked two highly experienced insurance pros (who are also aircraft owners)—Scott Smith from Sky Smith Insurance and our own Jon Doolitle, a retired agent with over 30 years of experience—what to look for in an agent. Their advice was solid, and included some warnings about working with multiple agents when shopping for insurance. Herewith is their advice.
WORDS OF WISDOM
In this as in so many other things, one good approach is to speak with your flying friends who have been buying insurance for years. When you get the same name from more than one of your friends, you may be getting close. Pick up the phone and interview a few likely agents. See if you get along and try to get an idea of how they go about this business. I recommend that you pick one pro to represent you, rather than a shotgun approach.
Fact is, there are probably 80 to 100 brokerages nationwide. To contrast, there are only about 13 or so underwriters. There is also Avemco, which is a direct writer, like the Nationwide or Allstate insurance companies, to name two examples in the non-aviation market. They work directly with the aircraft owner, rather than through a broker.
Pilot age is becoming more of a factor for many of us. Ask candidates how the underwriter they are proposing treats pilots as they get older. Will they continue to offer the limits of liability you carry as you get older? What about pricing for older pilots? No broker has a crystal ball, but brokers who work with companies lately can give you an idea of which is likely to drop your limits or raise your premiums. This is extremely important, especially when purchasing a new-to-you aircraft. Don’t buy anything until you secure a policy, and work closely with the agent throughout the process.
When I am looking for an insurance professional for other types of insurance, I am looking for someone who has experience, who will help me understand what I am buying and who will help me if I have a claim, or if I add a partner or new avionics. Ask some important questions.
Does this quote include liability sublimits, or is it “smooth” coverage? Does this broker have a broad sense of the market? Will they take the time to explain it or are they just throwing numbers at me?
I am also looking for someone who will shop my particular insurance policy around the market. I have never changed insurers on my airplanes, but we have had our broker shop our insurance most years. As a former broker and underwriter (and an ongoing consumer), I know that insurers and brokers look at the problem of pilots aging differently, and a good broker will be able to advise you on that.
Underwriters do not need practice offering multiple quotes for the same pilot and airplane. That is why some of them will only quote to the first broker who comes to them with a plausible amount of information about a particular airplane and pilot. If you do change your mind about who you want to represent you, it just takes a two-line form letter before coverage is bound.
Your airplane probably represents a fairly significant investment. The liability your airplane can create is even more of an issue for many. I recommend that you take time to get to know an insurance provider, rather than just going with the lowest price.
Aviation insurance is just like any other type of insurance. Typically, you will find an independent agent to work your account. That agent will take your information and present it to the insurance companies. Underwriters, at each company, will then use their guidelines and rating structures to either give a quote, or decline the risk.
Currently, there are around 13 U.S.-based aviation insurance companies for different general aviation risks. Although calling them “aviation insurance companies” is not quite accurate. Quotes are processed through a managing underwriter that handles the quoting process, issues documentation, etc. Generally, they are called the “insurance company,” but actually, those underwriters typically have a separate company that is providing the capital. This is the underlying or so-called “issuing” company, which can be one major company or a group of companies. If you wanted to know the financial standing of any entity in this process, it would be of these underlying carriers because they are the companies that usually pay the claims (especially the big ones).
Confused, yet? I still have a hard time discussing these subjects, and I work with them every day. So which company gets your business? It depends on you, your aircraft, the specific use of the aircraft and some other factors. Each insurance company is better at insuring different types of risks. Your aviation insurance agent should be able to tell you the companies that offer the best coverages and rates for your situation.
A word of warning: When you shop for insurance, try to only use one agent. One of the things that makes aviation insurance unique is that once an underwriter supplies a quote to an agent, most companies will lock out all other agents. If a second agent asks the same insurance company for a quote on the same risk, then the insurance company will most likely send an involved response and won’t quote it for that new agent. So, if you start shopping around trying to get quotes from multiple agents, underwriters will become less accommodating if you are a special situation.
Many agencies have specialties or certain aircraft models that they like. A large portion of my business is with experimental aircraft and transition pilots. This does not mean I won’t quote other aircraft (we quote everything from single-seat experimentals to corporate jets), it’s just that these markets are something I enjoy working with. Because of that, I understand these areas the best and also know the best places (insurance companies) to take the risk to.
—Scott “Sky” Smith