Mark Huber is an aviation industry veteran who has worked in the flight training, aircraft sales, aircraft component, and airport development businesses. He has flight time in more than 50 different and diverse aircraft, including helicopters, aerobatic aircraft, vintage warbirds, jet fighters, business jets and turboprops, and transport-category aircraft. He has jumped out of several of these—on purpose—with a parachute. His defense and aviation journalism has been published in a variety of national and international periodicals.

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Mark Huber

Aviation Insurance Association board president James Gardner warned of continuing “seismic changes” throughout the industry and limited insurance cost relief for operators impacted by Covid-19.During a recent Helicopter Association International (HAI) webinar, he said that changes in the form of increasing premiums, higher deductibles, overall coverage and liability limits, and less competition would continue.

 


According to Gardner, these changes are being “driven by years of a soft market” that included artificially low past premiums, premium shrinkage brought on by a contracting market, and increased costs due to several high-profile cases and settlements, including the 2018 and 2019 Boeing 737 Max crashes and the $100 million award to an EMS helicopter medic who survived a 2015 Colorado accident with severe burns. Globally, the aviation insurance market shrunk from $7 billion to $4 billion between 2005 and 2019, while claim ratios and settlements have increased, creating a situation that is “not sustainable” for insurers, he said.&nbsp;&nbsp;

 


Beginning in 2018, insurers began dramatically increasing premiums by annual rates averaging 15 percent and finding more ways to offload risk. Some insurers have either exited the market outright or consolidated, Gardner said. The outlook for helicopter operators is particularly acute due to high loss ratios. “The bad news for helicopter operators is that your track record is not the healthiest in the world. Somebody said there is no such thing as a partial loss for helicopters and in many cases that’s true, so your loss ratios and loss rates are much higher than they are for fixed-wing,” he explained.&nbsp;

 


While Gardner said there are options for helicopter operators to reduce insurance costs during the Covid-19 crisis due to parked aircraft or reduced flying hours, he counseled against expecting the same kind of relief from insurers afforded to automobile drivers. If Covid-19 triggers a reduction in the premium base, that could in fact provide the impetus for additional rate increases, he warned.

 


Tour operators that have suspended operations are the most impacted, he noted, adding that at least one insurance carrier had stopped writing new policies for any helicopter operator that carries passengers. However, there are ways to mitigate the insurance bite on a case-by-case basis via policy provisions, modifications, and riders. These include rotors not in motion, rotors not in flight, layup credit, premium financing, monthly reporting and flight by the hour, and, in extreme cases, voluntary policy cancellation. But the bottom line, Gardner said, is that “operational excellence is the best insurance you can buy.”

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