Binder Vol. 42 No.3 Fall 2017

VOL. 42 NO. 3 - FALL 2017

THE BINDER RECOVERY OF LIGHT AIRCRAFT 2017 AIA London Reception

AIAWEB.ORG

AOG PROTECTED

ARE YOU? AOG Protect is an insurance policy which indemnifies the aircraft owner or operator, covering part of the additional cost of a replacement aircraft in the event of an AOG incident.

Protect customer relationships Maintain operating profit Stand out in a competitive market

WWW.MOUNTFITCHETRISK.COM

IN THIS ISSUE Editor Nigel Wright

XL Catlin nigel.wright@xlcatlin.com

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EDUCATION UPDATE

President’s message REGIONAL RECEPTIONS

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CONTINUOUS IMPROVEMENT

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RECOVERY OF LIGHT AIRCRAFT

REGIONAL RECEPTION REPORT ATLANTA RECEPTION

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GOING ABOVE AND BEYOND

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UNDERWRITER DIRECTOR’S REPORT

AGENT BROKER REPORT MORE THAN AN ANNUAL PARTY

TRAINING DAY

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MORE CLAIMS THAN LIMITS IN CALIFORNIA

BOARD OF AVIATION UNDERWRITERS

ATTORNEY DIRECTOR’S REPORT

CLAIMS DIRECTOR’S REPORT

AIA ANNUAL CONFERENCE - LONDON

AVIATION HISTORY

The ideas and opinions expressed by authors of articles published in The Binder are wholly their own and do not necessarily represent those of the Aviation Insurance Association.

The articles are not provided as legal advice.

WWW.AIAWEB.ORG

Published by the Aviation Insurance Association 7200 W. 75th St. Overland Park, KS 66204

PRESIDENT’S MESSAGE Paul Herbers - AIA PRESIDENT, Cooling and Herbers

This is an ambitious and busy year for your AIA Board of Directors. Our agenda is focused on membership – to increase AIA’s reach to those who may not yet be members, while at the same time raising the value and quality of AIA’s programs for all our current members. We have a series of events on the calendar to promote these goals. Following our wonderful Annual Conference in San Diego last May, we have begun a program of Regional Receptions.

Dallas.

The first Regional Reception occurred in Dallas in June, and we welcomed more than 25 new young persons with an excellent speaker as well as a fun opportunity to network with our current members at the Cavanaugh Air Museum, and each of them became an automatic member of AIA for the remainder of 2017.

Atlanta.

As this is being written, we are in the final planning for the second Regional Reception in Atlanta in September. This is set to coincide with the AIA’s weekend course for the CAIP designation, sponsored by our Education Committee.

Registrations are very encouraging, and we will report elsewhere in this issue about the Atlanta Reception.

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London.

In addition, your Board will be traveling to London in early November, the midpoint between our annual conferences, for our biennial London Reception at Lloyd’s on November 9. This first week in November is always a special time in the London market, with Remembrance Day and the Lord Mayor’s Show at the same time that many clients have year-end renewals looming. Nonetheless, the London Reception promises to be as enjoyable, informative and well-attended as ever, with excellent speakers in the 1688 Room and a rousing reception to follow. We invite all of you, our members, to visit London with us. You can participate in AIA’s Reception, and during that week you can take advantage of meetings with friends in the London marketplace. If you do make plans, please let us know.

Santa Monica.

The Board will then resume activities after the New Year with a third new Regional Reception in Santa Monica, California in February, so watch for the announcements as those dates approach. We have reserved the Museum of Flight at the Santa Monica Airport for the event, which should promise to be an excellent experience for all who can attend.

Your AIA is healthy and strong. The Board voted earlier this year to contribute $50,000 to the AIA Foundation to improve the ability of the Foundation to sponsor its various educational programs. Following the Annual Conference in San Diego, that contribution was completed. We continue to look for avenues to broaden and improve the educational offerings of the AIA Foundation, as well as the AIA itself through its Education Committee.

Looking forward to spring of next year, we will set our sights for the 2018 Annual Conference at the brand new Four Star JW Marriott in downtown Austin, Texas, in early May. Be prepared for the Live Music Capital of the World, whose slogan is “Keep Austin Weird.” During this year and continuing into 2018, we ask each of you to consider how you might join with us to advance the interests of all our members now, and those of our new members to come in the future. Stay in touch!

Thank you, Paul

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Special

Recognition is Due

Paul Herbers - AIA PRESIDENT, Cooling and Herbers

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iven all the various activities in which the AIA Board is engaged, it is appropriate to take this opportunity to recognize the special efforts of certain members who may not otherwise receive appropriate recognition for their significant contributions to the AIA, and to express a hearty Thank You to each of them.

Special Counsel. Five years ago, Past President Franklin Bass initiated the position of Counsel to the Board, and AIA member Ray Mariani has graciously and generously served in that position ever since. He has provided legal counsel and assistance on demand and without compensation, to the board as a whole, to individual board members, and to the executive committee, usually on a moment’s notice! His contributions cannot be overstated, and we, the Board of Directors, owe Ray Mariani a true debt of gratitude.

Binder Editor. Likewise, for the past few years, AIA member Nigel Wright has volunteered his time and effort to that of editor to our magazine, The Binder. This magazine has benefited from a remarkable “facelift” in its appearance and style in recent years, as well as a significant growth in its content. All of this requires a keen eye to keep the magazine clear, unified, and accurate! Nigel has served admirably in this position, and the Board of Directors owes Nigel Wright a hearty Well Done and Thank You.

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Education Foundation. The AIA Education Foundation was established in 2008 to fund and administer scholarships and other educational programs for AIA’s members. Since 2012, AIA member Alan Smith has served as the Chairman, guiding the Foundation under direction of the board and providing much needed continuity to fundraising and outreach activities. Alan’s contributions deserve special recognition and appreciation from all of us, as he led the Foundation into an increasingly visible and active role in the AIA’s educational activities. Now that he is stepping down from this position, to be succeeded by Past President Frank Kimmel, we wish to express our sincere gratitude to Alan Smith.

Education Committee. The Education Committee, led

by AIA member Eric Barfield, consists of more than two dozen newer and longtime AIA members, dedicated to the development and presentation of all the CIE educational programs at the annual conferences, as well as preparation of the materials and conduct of the CAIP courses, Aviation Insurance 101, and development of the recent textbook Aviation Insurance Core Principles & Concepts. The committee works independently throughout the year on these projects, and we can only hope every committee member realizes how indispensable their work is for the benefit of us all. Ladies and Gentlemen of the Education Committee, named below, we sincerely thank you.

EDUCATION COMMITTEE Britt Kral Eric Barfield Mandie Loroff Mark Breitenbach Ray Mariani John Cunningham Mike McGrory Mary D’Alauro Tom Murphy Paul Davis Jason Riley Ted Dunlap Scott Ross Chris Fostiak Alan Smith Jim Gardner Nicole Stout Nancy Gratzer Luke Uithoven Laura Heft Alex Wells Doug Johnson Mitch Young Frank Kimmel

New Chairman for the

Education

Foundation

ONLINE MEMBERSHIP DIRECTORY

We are delighted to announce that Past President Frank Kimmel has accepted the position as Chairman of the Education Foundation. Frank succeeds Chairman Alan Smith, who has completed five years in the position. Frank Kimmel has a longtime association with the Foundation, serving not only as Past President of the AIA, but also serving on the Foundation board and the AIA Education Committee. As Chairman, Frank will have responsibility for administration of the Foundation’s scholarship program along with fundraising and outreach. He will undoubtedly tackle these duties with his customary high level of enthusiasm and energy. Thank you Frank!

Add your Photo

Help put a face to a name by adding your photo to the AIA membership directory located in the members’ only section of the AIA web site.

Uploading is easy through your profile page – however, if you need assistance or would prefer that AIA Headquarters upload your photo for you, we are happy to do so! If you would like AIA to assist you, please e-mail your picture directly to AIA Executive Director, Mandie Loroff at mandie@aiaweb.org.

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ATLANTA REGIONAL REPORT 2017 AIA Atlanta reception a success The second regional reception hosted by the Aviation Insurance Association was a tremendous success with more than 100 aviation insurance professionals in attendance.

The event began with a welcome by AIA President, Paul Herbers and AIA Vice-President, Jim Gardner.

One of the primary benefits of AIA is the education opportunities available specifically for those in the niche business. Eric Barfield, AIA Education Chairman, outlined the Certified Aviation Insurance Professional designation and expanded upon the efforts of the education committee in planning the education sessions for the AIA Annual Conference, in keeping the Aviation Insurance Core Principles and Concepts Textbook up-to-date and in reviewing ways to make aviation insurance education more readily available to those in the industry.

In an effort to provide more continuing insurance education, the keynote session for the event was approved for one hour of

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continuing education credits for the region. The keynote speaker, Mitchell A. Garber, MD, MPH, MSME and Senior Managing Consultant for Engineering Systems, Inc. gave his presentation entitled, “Any Doctor’s Appointment You Walk Away From…

Coverage Consideration of Aeromedical Issues.” The presentation outlined specific medical issues that could be of concern to aviation insurers. Examples of actual aviation accidents were used to demonstrate the potential impacts of different medical conditions and treatments, with particular emphasis on risks that could have been identified through an appropriate and comprehensive independent aeromedical review.

Following the session, the attendees enjoyed a cocktail reception to network with peers and meet the current members of the AIA Board of Directors who were in attendance.

Thank you to Atlanta-area members AIA Board Members: Jim Gardner, Greg Sterling and Nicole Wolfe Stout for their assistance making this event a success.

2018 LOS ANGELES REGIONAL RECEPTION

3:30 pm – 6:30 pm

LOCATION:

SAVE THE DATE

FEB. 8, 2018

Museum of Flying 3100 Airport Ave Santa Monica, CA 90405

If you are a member of the Aviation Insurance Association or if you are working in the aviation insurance business, join us for the 2017 AIA Atlanta Reception. This is an incredible education and networking opportunity, and the best part is, REGISTRATION IS FREE for members AND non-members!

This event is at NO COST to attendees and is open to both members and non-members of the Aviation Insurance Association. The only requirement is you must register for the event.

PRELIMINARY SCHEDULE 4:30 – 5 :00p.m.

Arrivals and Registration 5:00 – 5:15p.m.

Welcome and Opening Remarks 5:15 – 6:00p.m.

Guest Speaker - TBA 6:00 – 7:30p.m.

Networking Cocktail Reception

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AGENT/BROKER DIVISION REPORT

MORE THAN AN

ANNUAL PARTY chris arnold - Director-Elect Agent/Brokers Division

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peaking with many brokers and underwriters it is tough to find any one that will dispute that the AIA knows how to throw a good party. But is that all the AIA is, just a once a year party?

You, of course, are expecting a strongly written article stating how this is all a misconception and the AIA is so much more.

The truth is, it all depends on what you make of it.

I will take a brief look at what the AIA has to offer, most as it pertains to an agent or broker.

The AIA can just be a once a year social conference where you catch up with old friends and have a few cocktails. If you just go to the annual conference and go to the social events , excuse me, the “networking events,” (the opening reception, the golf or sporting clay’s tournaments, the underwriter parties, the closing party) and hang out at the bar every night until 2am you can still have a successful and worthwhile conference.

Trust me, I write from experience. I’ve tried this approach and still came away thinking I had a meaningful experience.

With just this approach to the annual conference it is amazing

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the relationships that I have built with underwriters and other brokers alike. We all know, or should know, that we are in a relationship business. There is no substitute for getting to spend a little time with those that you are working with on a daily basis and getting to know them on a personal level. It is also nice to meet some of your competitors and realize you have a lot more in common than you thought and that most aren’t nearly as evil as you’ve made them out to be. You may even become good friends with them.

So what else does the AIA have to offer?

In addition to the social aspects, the conference includes the continuing education classes where you can actually learn something that is pertinent to the aviation insurance industry.

Not the traditional generic continuing education that barely applies to anything that you do. The second official day includes various industry speakers. The second day also includes an agent/broker meeting and a Queuing up event. I’ve found that these are two things that a lot of people have no idea exist or they have never considered attending. This is pretty evident when looking around the room at attendance. I’ll admit some of these meetings have more substance than others but

it is a great way to get a general feel of what is going on outside of your world.

The Queuing up event also allows you to meet those underwriters at a captive event that you might not otherwise come across.

The Binder is the industry newsletter which you already know about since you are reading this literary masterpiece.

This newsletter allows you to venture outside of your world and gain some incite to the other disciplines who are represented by the AIA. The Regional Receptions are a relatively new concept which started with Dallas in June of 2016 at the Cavanaugh Flight Museum. Part of the idea behind these events is to reach those who may not have had a chance to experience the annual conference. Not only is this a networking opportunity but it is also an educational opportunity. The best part is that the registration for these events is free for both members and non-members.

The AIA offers various educational opportunities in addition to the CE at the annual conference. There are online courses which qualify for CE in every state; once again providing industry specific knowledge. Additionally, Aviation Insurance Core Principles and Concepts, is the aviation insurance professional course which you must complete, in conjunction with various other insurance industry courses, in order to obtain the Certified Aviation Insurance Professional Designation (CAIP.) The CAIP is the industry designation showing that you are going above and beyond the minimum requirements and are committed to bettering yourself.

is the Education Foundation Scholarships. Count me as one of the clueless as I had no idea of this until recently. The foundation provides four scholarships each year to students who are currently enrolled in an accredited undergraduate or graduate degree program and who have completed or are completing an internship program within the aviation insurance industry. While most will not receive a direct benefit from this activity, it is hard to say that this is not a good thing which will hopefully help to attract more qualified personnel into our industry.

“The CAIP is the industry designation showing that you are going above and beyond the minimum requirements and are committed to bettering yourself.�

There is nothing wrong with seeing the AIA as an annual social event. However, if you are looking for more than just a social gathering, the substance is there. There are even many opportunities for you to become involved should you so choose.

Another area that the AIA is involved in

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Attorney Director’s Report NICOLE STOUT - Director of Attorneys’ Division

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any of you have undoubtedly noticed our recent emphasis on broadening AIA’s reach in all aspects of the aviation insurance industry. For those of us who have been coming to the Annual AIA conference for as long as we can remember, we are starting to get the sense that AIA will be stronger and even better if we can recruit and involve the next generation of aviation insurance professionals. In fact, AIA needs young professionals to help us thrive and stay fresh. That mantra is not just for AIA, but for the entire industry. The aviation insurance business is challenging, unique and rewarding. How can we convey all that it has to offer young people who are just starting their careers and trying to choose a path for the future? We hope that AIA can lead the way. From the legal perspective, few law schools offer students significant exposure to aviation insurance or aviation law. It seems that most interest in aviation law comes from a personal experience. Some of us discovered it after we were practicing general insurance law and were lucky enough to get to handle an aviation case for the first time. Others had exposure to aviation at an early age and were able to make a profession from those experiences.

We are making considerable progress in reaching out to those that may be AIA members but do not regularly attend the Annual Conference and those that are not members. The Dallas Regional Reception was a success in every way that we intended. Most of the people that I met there had never been to an Annual Conference. The venue and format were easy and convenient for those not deeply involved in AIA to stop by, learn a little, and mingle with fellow professionals in the industry. The regional conferences are an economical way (free) to get involved and reap the benefits of AIA. As word gets out about the regional conferences, I expect that our attendance numbers will continue to rise.

By the time of publication, we will have had another regional conference in Atlanta on September 28, 2017, at the Le Mere-

dien Atlanta Perimeter. It was held in conjunction with the Aviation Insurance Core Principles and Concepts Course that took place at the same hotel September 29, 2017, through October 1, 2017. We hope that those of you in the Atlanta area or those that attended the weekend course could attend the reception to hear our guest speaker, Mitch Garber from Engineering Systems, Inc., and to network after the presentation.

We are excited about the regional reception concept and ask that you spread the word among your AIA and non-AIA member colleagues.

“In fact, AIA needs young professionals to help us thrive and stay fresh.”

We are in the final stages of preparing the CLE topics for next year’s conference in Austin. So far, we have an exciting line-up of guest speakers and panelists. If you would like to present a topic at an upcoming conference or would like to request a particular topic be covered, please reach out to me directly at nws@strawlaw.com. We are striving to keep the CLE presentations engaging and informative. We hope everyone leaves the CLE presentations learning something new or thinking about a legal issue from a different perspective.

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CLAIMS DIRECTORS REPORT

MORE CLAIMS THAN LIMITS IN CALIFORNIA STEVE TELLER - Director of Claims Division

By Garry L. Montanari and John H. Moon Michaelis, Montanari & Johnson

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hile policy limits underwritten are often adequate to resolve the claims that result from an accident, there are some times in which they are not. For example, an aircraft on final bg hnapproach loses its engine and crashed into a neighborhood. The occupants all receive fatal injuries and five homes are destroyed. The local utility company has a sizable claim for damage to equipment and the cost of restoring power. Two local businesses must close due to the power outage and have business interruption claims. The insured, the pilot and aircraft owner, cannot advise concerning settlement of claims.

The insurer acknowledges early on that the policy’s liability policy limits will not satisfy all potential claims. In California, an insurer faced with multiple claims must, with due regard to the interests of its insured, attend to the insured’s best protection against all claims (Kinder v. Western Pioneer Ins. Co.).

This may change by jurisdiction however, for example, Florida requires the insurer to settle as many claims as possible within policy limits.

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Settlement Options One option in California is to make a good faith attempt to settle all the claims within policy limits. This involves keeping the insured informed about all possible settlement opportunities, including obtaining the insured’s input on how to handle settlement opportunities and his possible contribution to the excess claims. All the insureds must be considered in this approach, since an additional insured has as much right to protection as the named insured.

In our hypothetical situation, the named insured is deceased.

While the personal representative can be appointed for the estate, it would not be uncommon for the named insured to have a family trust with no probate of the will. In such a situation, the trustee would be an appropriate representative to consult concerning a potential global settlement.

Another Option-Interpleader

The Interpleader Procedure

Another potential solution is to interplead the policy limits into the court by way of a complaint in interpleader. Interpleader is a procedure whereby a person holding money or personal property to which conflicting claims are being made by others, can join the adverse claimants and force them to litigate their claims among themselves (Hancock Oil Co. Of California v.

Hopkins and City of Morgan Hill v. Brown).

A stakeholder may file a lawsuit against the various conflicting claimants, requiring them to litigate their respective claims to the money it holds. CCP section 386(b).

Interpleader 101 The party initiating the interpleader is termed a “stakeholder.”

Once the stakeholder’s right to interplead is established, and he deposits the money or personal property in court, he may be discharged from liability to any of the claimants. This enables the stakeholder to avoid multiplicity of actions and the risk of inconsistent results if each of the claimants were to sue him separately (Cantu v. Resolution Trust Corp). The “claims need not have a common origin, but a stakeholder that asserts his own claim against the property deposited, however, will remain involved in the case. (Id.) Interpleader is proper whenever “double or multiple claims are made . . . by two or more persons . . . such that they may (expose the person against whom the claims are asse1ted) . . . to double or multiple liability” (CCP section 386b). Typical situations include a liability insurer whose insured is faced with several third party claims exceeding the policy limits (Lehto v.

Allstate Ins. Co.). The stakeholder has the right to interplead the disputed funds on receipt of conflicting demands. It owes no duty to attempt to resolve the dispute between warring claimants before incurring the expense of the interpleader (Cantu v. Resolution Trust Corp).

No Bad faith Liability Where competing third party claims asserted against an insured exceed the insured’ s liability insurance policy limits, the insurance company may file an interpleader action to apportion the policy proceeds among the competing claimants. The fact the insurer’s purpose was to reduce its costs of defending the insured against the multiple claims “does not render resort to the (interpleader) procedure an act of bad faith” toward the insured (Lehto, supra, 31 Cal.App.4th at 71; Schwartz v. State Farm Fire & Casualty. Co.).

A two-step procedure is generally followed: first, the court must determine whether the plaintiff may bring the suit and force the claimants to interplead; and second, if it is so determined, the court will discharge plaintiff from liability and then determine the rights of the various claimants to the property that has been deposited with the court (Morgan Hill). Promptly initiating an interpleader makes particular sense where the insurer is obligated to pay interest on the funds held. The sooner the insurer deposits the money in court, the sooner it will be relieved from further liability.

In the interpleader, the stakeholder may simply allege that it is holding money to which others are making conflicting demands; that it is unable to determine the validity of the respective claims, and fears exposure to multiple liability if it delivers the money to any of the claimants; and therefore requests a court order determine to whom the money belongs (Fidelity Savings and Loan Association v Rodgers).

A party to an action who follows the interpleader procedure may insert in his motion “a request for allowance of his costs and reasonable attorney fees included in such action. In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court. (CCP §386.6.)

After a complaint in interpleader has been filed, the court may enter an order restraining all parties from instituting or further prosecuting any other proceeding in a California court affecting the rights and obligations between the parties to the interpleader until further order. (CCP section 386(f).) Any amount which the stakeholder admits owing may be deposited with the court clerk. Such deposit has the effect of terminating any obligation for interest, or for damages for detention of property, after the date of the deposit. CCP section 386(c). Upon application of a party to the action, funds so deposited will be ordered invested in an insured, interest-bearing account. CCP section 386.1.

Although CCP section 386(c) authorizes a deposit “at the time of the filing of the complaint,” the statute is interpreted to allow the deposit to be made at any time without a prior court order (Wells Fargo Bank, N A. v. Zinnel).

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Still a Duty to Defend It bears emphasis that unless a policy clearly provides otherwise, a liability insurer has a duty to defend actions against its insured. The insured cannot avoid its duty to defend the action by interpleading its policy limits. (Mt. Hawley Ins. Co. v. Federal Savings & Loan Ins. Corp.).

Since interpleader is an equitable action, conflicting claims to funds or property or the value thereof so deposited is typically tried by the court as the first issue to be tried. The rights of the conflicting claimants are preferably tried first before the issue of the deficiency of the money deposited. (C.C.P. section 386e).

An Interpleader Success Story Returning to our hypothetical case, the insurer elects to interplead the policy limits and name as defendants all of the wrongful death heirs of the three passengers, the owners of record of the five homes, the utility company and the two business owners. At time of filing the insurer requests an order restraining all parties from instituting or further prosecuting any other proceeding in a California court effecting the parties to the interpleader action. The insurer also requests reimbursement of reasonable attorneys’ fees and costs incurred bringing the interpleader action.

After lengthy settlement discussions, the parties finally stipulate to allocation of the policy proceeds which, by this time, had

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generated interest on the principal. The insurer was awarded reasonable attorneys’ fees and costs and the judgment stated that any party not specifically mentioned in the allocation is deemed to waive his, her or its right to a share of the interplead funds deposited in the action.

While this did not necessarily preclude the claimants from bringing a separate action against the assets of the deceased pilot/owner, those funds were in family trust and the claimants ultimately decided to accept the policy limits as full and final settlement of all claims against the insured.

Garry Montanari received a Bachelor of Science in Aerospace Engineering and was an intern at NASA (Johnson Spacecraft Center) while obtaining that degree. He worked for Northrop Corporation (now Northrop-Grumman) on the F-5 and F-20 fighters. He has specialized in aviation law for the past 37 years with an emphasis on aviation products.

John Moon was admitted in 2007 and began his career at a top plaintiff’s firm in Los Angeles, specializing in mass pharmaceutical tort litigation. At Michaelis, Montanari & Johnson, Mr. Moon is currently working on complex aviation product matters.

PRESIDENT PAUL HERBERS Cooling and Herbers pherbers@coolinglaw.com

VICE PRESIDENT JAMES GARDNER The James A. Gardner Company, Inc. Jim.Gardner@jagardner.com

TREASURER JON DOOLITTLE Sutton James, Inc. jdoolittle@suttonjames.com

SECRETARY ERNEST DE SPAIN W. Brown & Associates EDeSpain@wbais.com

DIRECTOR OF AGENT & BROKERS DIVISION LUKE UITHOVEN Kimmel Aviation Insurance Agency, Inc luke@kimmelinsurance.com

DIRECTOR, ATTORNEYS’ DIVISION NICOLE WOLFE STOUT, ESQ Strawinski & Stout, P.C. nws@strawlaw.com

DIRECTOR OF CLAIMS DIVISION STEVE TELLER Aviation LS steve.teller@aviationls.com

DIRECTOR OF INTERNATIONAL DIVISION BRUCE CARMAN bcarman7@googlemail.com

DIRECTOR, UNDERWRITERS’ DIVISION GREG STERLING

DIRECTOR-ELECT, AGENT & BROKERS DIVISION CHRISTOPHER ARNOLD,

AIG greg.sterling@aig.com

Sutton James, Inc. carnold@suttonjames.com

DIRECTOR OF REINSURANCE DIVISION IAN WRIGGLESWORTH Guy Carpenter & Company Ltd ian.wrigglesworth@guycarp.com

DIRECTOR-AT-LARGE CHRISTOPHER MORIN Murray, Morin & Herman cmorin@mmhlaw.com

DIRECTOR-AT-LARGE MATT ROWLEY Berkley Aviation, LLC mrowley@berkleyaviation.com

IMMEDIATE PAST-PRESIDENT DAVID SALES Ed Broking LLP david.sales@edbroking.com

AIA EXECUTIVE DIRECTOR MANDIE LOROFF Aviation Insurance Association mandie@aiaweb.org

AIA GENERAL COUNSEL RAY MARIANI Murray, Morin & Herman raymarianilaw@gmail.com

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EDUCATION UPDATE

CONTINUOUS IMPROVREMENT ERIC BARFIELD - AIA Education Committee Chairman

“A good job and a good paycheck are where many high-achievers go to sleep” – Dr. Tony Kern

I

’ve used the above quote from professional development expert Tony Kern many times when encouraging others to avoid the trap of complacency. And I’ve repeated that quote to the man in the mirror on more than one occasion as I look to avoid the same trap myself. The aviation insurance community is indeed a place where high-achievers can find a good job and a good paycheck.

In fact, we want all the high-achievers we can find to be attracted to this profession. But whether industry veteran or industry newcomer, we can all use the occasional reminder to guard against the productivity-killer known as complacency.

The antidote to complacency is continuous improvement. A commitment to keep learning for the sake of be-

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ing better than we were yesterday. An intentional, steady pursuit of both personal and professional development that does help us improve but also sets an example for our peers to do likewise. Hopefully, the end result being that we collectively leave the industry in better shape than it was when we first embarked on our aviation insurance careers.

Your AIA already has a roadmap in place to help get you on and keep you on the path of continuous improvement through its Certified Aviation Insurance Professional (CAIP) credential.

The easy part of CAIP eligibility is to just keep showing up in this business for five years and be an active member in good standing with the AIA. Where the continuous improvement part comes in is the commitment to successfully complete five (5) specific courses each de-

“The antidote to complacency is continuous improvement.

A commitment to keep learning for the sake of being better than we were yesterday.”

signed to broaden your thinking and understanding of insurance in general and aviation insurance, in particular. The cornerstone course is now the AIA’s own “Aviation Insurance Core Principles & Concepts.” The other four courses are part of the Chartered Property Casualty Underwriter (CPCU) credential but it is not necessary to attain the actual CPCU designation, which requires eight total courses, in order to earn the CAIP designation.

For those who’ve already attained their CAIP, the AIA further awards “Gold” status to its members who continue to demonstrate their sustained commitment to the aviation insurance profession through industry leadership, regular participation in the AIA and other industry organizations, as well as ongoing involvement with industry educational programs – above and beyond the call of duty. This status is thereafter revalidated every two years to keep us from resting on our laurels. You can find more information on earning the CAIP and CAIP Gold credentials by visiting www.aiaweb.org/CAIP.aspx.

The education committee is committed to its own continuous improvement process of sorts. Recognizing that things do actually change in our industry we have established a biennial review cadence of the AIA’s new cornerstone course for the CAIP designation. The committee will spend the balance of 2017 and 2018 reviewing the current version of the Core Principles & Concepts text for accuracy and depth, while also updating it with new industry developments to make sure the material

stays relevant, practical and fresh. The goal is to have an updated version of the book ready to announce at the 2019 AIA Annual Conference, with the next updated version made ready by 2021 and so on. To spearhead this review process, each module has been assigned to a specific committee member whose leadership and work behind-the-scenes is very much appreciated.

Finally, the committee has also formed a working group to explore the feasibility of offering the Core Principles & Concepts course in a webinar format. While the new course has already been offered on three occasions in the traditional classroom format with great success (Dallas, Los Angeles, and Atlanta), we recognize the potential to appeal to and reach an even wider audience. At the same time, we are recruiting additional instructors who can help teach this important course and further deepen the available instructor talent pool. Stay tuned for developments on these initiatives.

Human fatigue has been a performance barrier and known factor in aviation accidents and incidents for a number of years. Let’s not let the complacency of “occupational fatigue” become a barrier to our ability to continue serving the aviation industry admirably with pride and professionalism. Let’s keep pursuing continuous improvement both personally and professionally and, if you haven’t already, I encourage you to begin pursuing specifically the CAIP or CAIP Gold credentials today.

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RECOVERY OF LIGHT AIRCRAFT: LOSS ADJUSTORS GOING ABOVE AND BEYOND

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NORMAN WHITE McLarens Aviation North America is one of the world’s largest markets for light aircraft and the spring, summer and fall months can be a busy time for loss adjuster’s in the region as many aircraft take to the skies and accidents occur. For our General Aviation team in Canada, aircraft recovery is a major aspect of our role as loss adjusters, yet the geographic make up of much of the region (isolated, forested and often covered in ice) means this can be a challenging segment of aviation claims management and potentially costly for insurers if not managed correctly. So how does a light aircraft recovery play out and how do adjusters deal with the challenges that can arise?

Pre-departure preparation Pre-departure preparation is key to a successful recovery. In fact, this is an area where experience and knowledge can have a major impact on reducing the overall cost of the recovery.

Most sites are accessed via seaplane, helicopter, snowmobile or all-terrain vehicles (ATVs). Costs can easily spiral if recoveries are poorly planned, or have to be repeated because of issues such as bad weather, lack of access, missing equipment, etc.

We normally receive a claim from the insurers once it has been reported to the broker, however we are often contacted by the Transport Safety Board (TSB) to enquire if we are the adjusters appointed to a crash. We are named adjusters on the biggest accounts for General Aviation in Canada and the TSB has 6 centers across Canada so we know all of them as we often work together. Once the TSB has either attended or decided not to attend, the aircraft and accident site is released to us for recovery.

It can take days coordinating before we even leave and identifying the appropriate experts to work with is a key aspect of this stage of recovery. We have a long list of repair shops, operators and other resources to assist us in recovering aircraft, but given that this is an area where costs can rapidly spiral, using partners that are local to the site of the accident (in relative terms, as local in Canada that can still be over a day’s travel!) is very important. We use local resources such as lumberjacks, divers, heavy machinery operators, barges, sonar operators and environmental firms - whatever is necessary to get the job done!

Over the past 40 years we have increasingly taken a more hands-on approach to the recovery process, bringing various elements ‘in house’ so as to have greater control over these external costs. As that has happened we have acquired a notable range of equipment, which includes our own compressors, generators, salvage lift air bags, ropes, cutting tools, slings for lifting aircraft by helicopter etc. We have over 750 recovery tools and equipment at our disposal.

Logistical challenges on-site We generally make arrangements to attend the site by seaplane or helicopter. If required a local aircraft maintenance service is engaged to assist with the recovery, disassemble and transport the aircraft to their facility so the damage can be evaluated and either a repair estimate made or, if the aircraft is clearly a total loss, they will store the aircraft until we sell the salvage. Depending on the circumstances the aircraft may have to be transported to the TSB laboratory in Ottawa for further investigation.

Of course, many of the logistical challenges that arise will depend on the specifics of the loss.

If a floatplane has crashed or overturned in a remote lake, for example, it may be found floating upside down with the bottoms of the floats on the surface of the lake. The aircraft would

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need to be towed to a suitable beach where it can be overturned and pulled up onto the beach using a long rope and a winch.

Once the nose / engine touches the beach, extra flotation is used to raise the tail (we use pillow type lift bags and a compressor to fill them). Once the tail starts to rise, the engine digs into the beach and we overturn the aircraft by pulling with a long rope and a winch anchored to a tree or rock. The floats are then pumped out so no water remains, the fuel is drained into cans and the battery removed. We then net the wings so it will not develop lift while being slung by helicopter. We arrange the slinging straps on the aircraft and then call in the helicopter which has either been waiting at the site, or standing by waiting to be called in. The aircraft is slung out to the nearest road (usually a logging road) and then disassembled for transport by truck and trailer.

includes spill kits, containment booms and Quatrex bags (designed to hold 5400 pounds of contaminated soil/debris) to help avoid environmental damage or claims. Being proactive on a fuel or oil spill can make the difference of no environmental claim to one costing upwards of $50,000. We dealt with one incident that involved 25 liters of fuel (a relatively small amount) spilling into a canal outside of Montreal which ending up costing around $60,000 to clean up.

If an aircraft has sunk, on the other hand, we may require sonar equipment to identify its location and the use of divers to float the aircraft back to the surface before it can be removed from the water.

Sometimes even when you’re on top of things, clean up costs which include soil and water remediation and testing - can add up quickly, so keeping control of the process is key.

In practical terms this can play out in a number of different ways. If an aircraft crashes in water, for example, the first thing we do, whether or not the recovery is organized, is to ensure that oil booms are in place to contain any spill that could occur up until time we recover the aircraft. Often, we also need to defuel the aircraft and have even done so in the middle of a lake to prevent spillage during recovery. If there has already been a spill we may have to bring in equipment in order to excavate contaminated soil or vacuum contaminants from the surface

Mitigating environmental liabilities Environmental liabilities are a key concern for aviation insurers, particularly in Canada where environmental law has become increasingly strict in recent years.

We have a large stock of recovery supplies available, which

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“Environmental liabilities are a key concern for aviation insurers, particularly in Canada where environmental law has become increasingly strict in recent years.�

of the water.

Preserving evidence if there is potential for legal proceedings If there has been loss of life or bodily injury, then the aircraft will need to be secured as evidence for any resultant legal proceedings. If necessary to prevent spoilage the aircraft will be kept in long term storage in a sea container until all claims have been settled and then disposed-of by way of sealed bids.

Conclusion In truth, there’s no such thing as a typical light aircraft recovery. Our team regularly deals with a wide range of aircraft, whether it be recovering a 50-seater turbo propelled cargo aircraft from a remote mining site or dealing with the fall out of a floatplane crashed in a mountain lake. That said, the above factors are those that we would consider for every recovery as a matter of best practice.

Norman White is a Senior Aviation Surveyor at McLarens Aviation. The article is dedicated to the hard working aviation loss adjusters in Canada.

About McLarens Aviation: McLarens Aviation is a leading provider of loss adjusting, survey and risk services to the global aviation industry. Clients include the aviation insurance market, aircraft operators, airports, maintenance and repair organisations (MROs), financiers, lessors, oil and mining companies, law firms and regulators. It has a team of over 85 in-house aviation specialists, operating across 31 offices, in 22 countries across the globe and manages in excess of 3,500 insurance related assignments each year. *** For more information visit https://mclarens.com/mclarens-aviation/

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UNDERWRITER DIRECTORS REPORT

TRAINING DAY GREG STERLING - AIG Aerospace

D

uring a recent home improvement mishap I was reminded of the old adage that, “A dull knife is more dangerous than a sharp one.” All education comes with a price and the “tuition” I paid was thankfully minor, but the experience nevertheless drove home the point that most things are both safest and perform their best when they are kept in top working order. This sage advice holds true as respects both sharp objects and people.

For most of us simply finding enough hours in the week to handle our various duties is enough of a miracle. The prospect of having extra time to devote to continuing education and training beyond state-mandated licensure minimums seems out of reach. But the inescapable truth is that if we would set aside regular time to improve our various business skills and enhance our product knowledge we would actually perform more efficiently. That’s why business training is often called a “time multiplier”. Just as sharp knife takes less time to cut through an object, a sharp businessperson can be more effective in their work week.

This is especially true in areas requiring technical document expertise such as underwriting. Most non-aviation underwriters work with policy forms and endorsements which have become highly standardized over the years. In contrast, aerospace aviation contracts can differ significantly between product lines as well as from company to company. Additionally, forms evolve over time and the various state regulatory environments are ever changing. On the flip side is the fact that, like the

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FAR’s, many contracts contain provisions which haven’t changed significantly since TV’s were black & white.

But let’s face it - reading through the nuances in policies and endorsements will never be as exciting as a Tom Clancy novel. Reading through policy forms and endorsements isn’t how’d we’d choose to spend a weekend.

Nevertheless they are the “tools of our trade” and understanding how the terms and conditions of our contracts afford and affect coverage are part and parcel to our chosen career. Could each of us quickly locate common policy provisions and endorsements? Could we clearly explain cross indemnity, damage to work performed, the subtleties of “In Motion” vs. “Not In Motion”, or the fellow employee exclusion, (which in some contracts is not an exclusion at all but an exception to the definition of “Insured”)? And can someone please tell me does “Loss” mean “Physical Damage” or is it the other way around?

Regardless of the complexity of the risk, it is the paramount goal of both broker and underwriter to issue a policy which meets the needs of the client and affords the coverage which was agreed to and expected by all parties. Luckily your AIA has great resources to assist those looking to deepen their knowledge. The Certified Aviation Insurance Professional (CAIP) course was created by the AIA to expand and enhance the knowledge base of professionals in our industry. It includes the new AIA the Aviation Insurance Core Principles & Concepts Course and workbook. While part of the work

required for the CAIP designation, the Aviation Insurance Core Principles & Concepts Course is also offered on a stand-alone basis. Normally presented over three days, the course is a great way to introduce key concepts to new trainees as well as provide recurrent training to more experienced professionals. Check the AIA website for dates and locations. As underwriters we are quick to require initial & recurrent training of the pilots we insure in complex aircraft. So too should we appreciate the benefits of training on our own complex industry.

There’s a great lyric from the Phil Collins song “Son of Man”. It says, “In learning you will teach and in teaching you will learn.” One of the most effective ways to learn something in greater depth is to teach it to someone else. Any CFI will readily admit that the process of teaching someone how to fly makes them a better aviator themselves. In the same vein when we prepare and present educational material to others we understand the material better as a result. This training can take many forms and run the gamut in terms of topics and time. It can be as simple as a monthly in-office “Lunch

& Learn”. It can be more structured in-house training designed to bring new hires up to speed. It can be recurrent training for more experienced staff to reinforce key material or a formal outside presentation for marketing or continuing education. Whatever the form, the process of focusing on a key concept, preparing & delivering the presentation, and addressing the enjoyable Q&A sessions afterwards, helps not only to build stronger and smarter teams but benefits the presenter as well.

As Yoda said to Luke, “Always pass on what you have learned”. One of the things I enjoy most about our industry is that it constantly affords us opportunities to learn. As we progress in our respective careers we are also afforded the opportunity and the honor to teach others. For the benefit of our customers, our companies, and ourselves let’s to renew our commitment to both and promote an industry which is both constantly learning and constantly teaching.

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NOVEMBER 9TH, 2017

If you are an international insurance professional, or if you are working in the states and want to learn more about the issues impacting the aviation insurance industry on an international level, join us for the 2017 AIA London Reception. This is an incredible educational and networking opportunity, and the best part is, REGISTRATION IS FREE! This event is at NO COST to attendees and is open to both members and non-members of the Aviation Insurance Association. The only requirement is you must register for the event with AIA in order to meet security measures at Lloyd’s of London. Pre-registration for the event closes on October 26, 2017.

Registration

Location

To register, visit the AIA Web site at www.aiaweb.org and follow these steps: · Click on the Conference button · Click on the London Reception button · Use the “Register Now” link on that page

Lloyd’s of London 1688 Room One Lime Street London

FOR MORE INFORMATION, PLEASE VISIT THE AIAWEB SITE AT

WWW.AIAWEB.ORG 7200 W. 75th St Overland Park, KS 66204 913-627-9632 mandie@aiaweb.org

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Sessions and Speakers 4:30 – 5:00 p.m.

Registration and Arrivals 5 – 5:10 p.m.

Opening Remarks Paul Herbers, AIA President

5:10 – 5:20 p.m.

CII Award Presentation David Sales, AIA Immediate Past-President

5:20 – 5:30 p.m.

Benjamin Weber Partner RE

Head of Aviation & Space at PartnerRe Mr. Weber has been an aviation (Re-)Insurance practitioner since 1986.

He started as Treaty Underwriter with Winterthur Re in Switzerland. He then joined PartnerRe in 1998 when Winterthur Re was sold to PartnerRe and has been longest serving head of department at PartnerRe. In addition, he served the International Union of Aerospace Insurers (IUAI) in various functions and became including its president in 2011 and 2012.

5:30 – 6:00 Rob Morris

Global Head of Consultancy Flight Ascend Consultancy Rob has more than twenty five years industry experience as a commercial aviation analyst. Prior to joining Flight Ascend Consultancy in January 2012, Rob was Vice President, Marketing & Analysis at BAE Systems Asset Management in Hatfield where he was responsible for market and strategy analysis in support of the regional aircraft lessor’s business winning process. Rob has also worked in the Aerospace team at the UK Government’s Department of Trade and Industry where he managed all aspects of market analysis and forecasting in support of the UK’s investment in a wide range of commercial aircraft and aero-engine programmes. He began his Aviation career in 1990 as a Marketing Executive at British Aerospace (Regional Aircraft).

6:00 – 6:30 MARTIN FOUGLER General Manager PNT, Spirent Martin is the General Manager of Spirent’s Position, Navigation and Timing division, which provides test solutions for satellite navigation systems, timing applications for networks and critical infrastructure; Spirent is the acknowledged world leader in provision of solutions for GNSS vulnerability and robustness. Headquartered in Torbay in the UK, the division has in-region support operations, selling globally via direct and indirect sales channels to governmental agencies, major manufacturers, integrators, test facilities and space agencies worldwide for applications based in space through to smart wearables. The division has multiple strategic partnerships with expert technology providers and research organisations.

In July 2016, the division was awarded the Royal Institute of Navigation Duke of Edinburgh Navigation Award for Technical Achievement. The division is also the recipient of two Queen’s Awards, is holder of IIP Gold accreditation and in 2016 was shortlisted for Business In The Community Awards: Inspiring Young Talent. The division has multiple industry accreditations and accolades.

Martin is a fellow of the Chartered Institute of Management Accountants and a fellow of the Royal Institute of Navigation.

Guy Buesnel CPhys , FRIN PNT Security Technologist, Spirent Guy is Spirent’s PNT Security Technologist, with the responsibility of developing Spirent’s approach to address the issues of GNSS vulnerability such as Jamming, Spoofing and Cyber-attack.

Guy has more than 16 years’ experience working protecting GNSS Receivers from emerging threats , having started his career as a Systems Engineer involved in the development of GPS Adaptive Antenna Systems for Military Users at Raytheon Systems Limited in the UK. Guy has a BSc Honours degree in Physics with Atmospheric Physics and a Masters Degree in Communications Engineering.

As well as being a Chartered Physicist, Guy was elected a Fellow of the Royal Institute of Navigation in 2015 for his services in the field of GNSS vulnerabilities.

6:30 – 8 p.m.

Closing Remarks & Cocktail Reception 25 Relax and unwind with your peers during the closing networking reception.

aviation history

BOARD OF AVIATION UNDERWRITERS ALEX WELLS - AIA Education Consultant

T

he Stock Market crashed in 1929 and marked the beginning of the great depression. Understandably, there was a decline in the volume of aviation insurance which did not increase appreciably until after the war years in 1945. According to the U. S. Bureau of Air Commerce (forerunner to the FAA) there were only 9,152 licensed aircraft in the U.S. as of January 1, 1938 and of this number the scheduled airlines operated 386. The values of these planes ranged from less than one thousand dollars up to three quarters of a million dollars.

The uses to which the aircraft were put were numerous and varied.

Throughout this period there existed an industry-wide organization known as the Board of Aviation Underwriters. On June 10, 1932, the Superintendent of Insurance for New York called a meeting of all insurance companies engaged in aviation insurance. The purpose of this meeting was to establish some coordination and unifor-

26

mity in rates and rules so that the required regulation of aviation insurance could be properly administered.

An industry committee was appointed to evolve a plan to accomplish this purpose. On September 27, 1932, a plan was submitted by Associated Aviation Underwriters, Aero Insurance Underwriters, National-Continental Aviation Insurance Association, United States Aircraft Insurance Group and The Travelers Insurance Companies. The New York Insurance Department accepted the plan on September 30, 1932. The name agreed upon was the Board of Aviation Underwriters. Assuming country-wide jurisdiction, it became a rather loose advisory rating and statistical organization and adopted articles of association containing rules and regulations. After numerous changes that took place in subsequent years, the Board of Aviation Underwriters ceased functioning in 1945. Thereafter the various companies and groups writing aviation insurance filed their rates directly with the New York Insurance Department.

Hull Coverage Hull coverage covered loss or damage to the aircraft specifically described in the policy due to the following perils: • Fire A – Fire on the ground only, excluding the running of engines.

• Fire B – Fire on the ground only, including the running of engines.

• Fire C – Fire on the ground and in the air, excluding fire following crash.

• Fire D – Fire under all circumstances.

Crash (or perils of the air) – Damage to the aircraft during flight due to collision with the ground, water or other object, including damage by fire or explosion caused by such collision and including damage due to stranding, sinking or water damage arising from flight.

An aircraft unreported for sixty days after take-off was deemed to have been lost by reason of one of the above flying perils.

Windstorm – Damage to the aircraft by tornado, cyclone or windstorm except while the aircraft was in flight or taxiing subsequent thereto.

Land Damage – Damage to the aircraft while on land, but not in flight or taxiing, caused by hail or by being struck by or colliding with another aircraft, vehicle or object (excluding any aircraft, vehicle or object owned or operated by the assured or his employees).

Mooring – Damage to water-alighting aircraft, while not in flight or taxiing, caused by windstorm, hail, standing or sinking or being struck by or colliding with another aircraft, vehicle or object (excluding any aircraft, vehicle or object owned or operated by the assured or his employees).

Theft, Robbery and Pilferage – Theft, robbery and pilferage, except by any person in the assured’s household or employ.

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Casualty (Liability) Coverage Casualty coverage was much the same as it is today: BI (ex. Passengers), PD and PBI. However, there was no single-limit of liability offered. A few years before establishment of the Board, policies did not include an ominous clause but merely covered the named assured for damage due to the specific aircraft while being flown by a named pilot. During the time of the Board, insurance attached to the specifically described aircraft while being flown by a specifically approved pilot and if such conditions existed then the insurance covered not only the named insured but also any person while riding in, any approved pilot while operation of the aircraft provided the operation was with the permission of the named assured. The pilot still had to be approved, which incidentally was not the case in automobile insurance.

Hull and Liability Rates Each aviation risk was rated on its own merits based on information received by the underwriters in the application for insurance. Advisory rates were set up for the average risk falling within the classifications of private pleasure, industrial aid or commercial. A majority of all aviation risks fell within these classes and the average advisory rate was quoted unless unusual circumstance were present. The New York Insurance Department permitted the Board of Aviation Underwriters to file a rate

range for each classification within which the advisory rates fell and within which each quotation fell. This filing was continued until sufficient experience had been developed to permit the establishment of standard average rates.

Aircraft were not confined to any particular territory and there were no territorial differentials in rate with the exception of windstorm insurance in Florida where the rates were loaded for coverage during hurricane season.

For coverages depending on the flying hazard, that is, BI (ex. Passengers), PD, PBI and crash, there was a differential in rate depending on the experience of the pilot approved by the underwriters to fly the plan. The fact that the experience of the pilot directly affected the flying hazard was confirmed by the Bureau of Air Commerce figures for the period July to December 1937 which show that out of 1,075 accidents in all flying operations except the schedule airliners, 55.3% of the accidents were due to pilot error. For scheduled airline operations where all pilots were experienced the figures for the calendar year 1937 show that out of 50 accidents only 18.2% were caused by pilot error, the greatest percentage of accidents, 25.4% being caused by the weather.

Average advisory hull insurance rates were as follows:

Basic Hull Rates COVERAGES

COMMERCIAL PRIV PLEASURE

IND. AID

EX. INSTR.

INCL. INSTR.

FIRE A

2.50%

2.50%

2.50%

2.50%

FIRE B

2.75%

2.75%

3.25%

3.25%

FIRE C

3.00%

3.00%

3.50%

3.50%

FIRE D

4.00%

4.25%

4.50%

5.00%

Crash (10% Ded)*

12.50%

13.25%

15.00%

18.00%

Windstorm (5% Ded)

0.50%

0.50%

0.75%

0.75%

Land Damage (2.5% Ded)

0.50%

0.50%

0.75%

0.75%

Mooring (5% Ded.)

1.50%

2.00%

2.50%

2.50%

Theft ($ 25 Ded.)

0.25%

0.25%

0.25%

0.25%

*Crash rates quoted contemplated a pilot with over 500 hours flying experience.

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These rates only applied to new aircraft at full retail list price. Where a new or used aircraft was insured for less than the retail price the basic rates were loaded in order to pay partial losses in full.

The formula used was as follows: Loaded Premium = (X x r) + (Y - X) x l

Where X = amount of insurance

Where Y = retail list price

Where r = basic rate

Where l = loading rate The loading rate was a percentage of the basic rate: Coverage Loading Rate

(percentage of basic rate) Fire 15% Crash 25% Windstorm 40% Land Damage 40% Theft 60% Mooring 40% The percentage loadings for fire and crash were comparatively low on the supposition that the majority of losses under these coverages would be total. The Board ruled that the amount of insurance could not exceed the retail sales price.

There was no specific rate differential based on the type of construction of the aircraft but this factor was considered by the underwriters when making quotations.

As most aircraft were tied down, few underwriters took into consideration whether aircraft were hangered or tied down.

Average advisory liability rates where the pilot had 250 hours flying experience, were given in the following table:

Basic Liability Rates COMMERCIAL PRIV PLEASURE

IND AID

EX. INSTR

INCL. INSTR.

BI ( ex.

Passengers)

$50

$60

$75

$80

PD

$50

$60

$70

$75

Passenger Liability

$30

$55

$70

$75

Min. per plane

$50

$75

$100

$100

COVERAGES

The above rates were for $5,000/10,000 BI (ex. Passengers) per person and per accident; $5,000 for PBI per seat with a limit times the number of seats; and $1,000 for PD. Rates for pilots with less than 250 hours flying experience were slightly higher. Separate tables were also established for Admitted Liability and Individual Personal Accident Insurance.

During the time that the Board was in operation and during the war years there were only two major underwriting groups writing insurance on the scheduled airlines. They were USAIG and AAU. The Board had no jurisdiction over their rates.

Despite the fact that aviation insurance rate-making made considerable progress during the Board’s operation there was not continuation after the war. However, they pointed out its termination that it was “hoped that future development of the aviation industry would eventually permit the application of actuarial science to this line of insurance”.

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SAVE THE DATE 2018 ANNUAL CONFERENCE APRIL 28 – MAY 1, 2018 - JW MARRIOTT

AUSTIN