The Binder; February 2015 by Aviation Insurance Association

THE BINDER VOLUME 40 NO.1

in this issue: UPSET TRAINING LIVE TO FLY ANOTHER DAY!

UPDATE

THE FAA ON DRONE REGULATIONS

ASAP

FOR CHARTER OPERATIONS

REGISTRATION FOR AIA IS NOW OPEN and Max Torque is pleased to be a supporting sponsor

Max Torque is a full-service, seamless provider of solutions for the aftermath of aviation incidents. We provide solutions and services in-line with the complex environmental regulations which affect aviation incidents. There are a number of strict regulations set by the EPA, DOT, and other agencies which must be followed in the event of an aviation accident or incident, to help protect the environment and minimize damage. Following such an occurrence, underwriters and insureds need a knowledgeable partner with the aviation experience and environmental expertise to guide them through the difficult clean-up and investigation process. Max Torque is that partner. We invite you to visit us at our booth to learn more. We look forward to seeing you in Colorado Springs.

Max Torque is proud to sponsor the Monday Night Party, Opening Reception, Keynote Speaker, Meeting Hospitality Room, WiFi, and Coffee Mugs.

Houston, Texas

Lakeland, Florida Lakeland Linder Regional Airport

800.696.7272 Fax: 281.715.5105 maxtorquellc.com

TABLE OF CONTENTS 02

President’s message

Foundation report

agent/broker’s division report

ASAP for Charter Organizations

UPSET TRAINING: LIVE TO FLY ANOTHER DAY!

Treasury report

industry news

AIA Eagle Society Announced

attorney’s division report

aia board of directors

Crossword puzzle

UPGRADES AND REFURBISHMENT VALUE

UPDATE: THE FAA ON DRONE REGULATIONS

claims division report THE DEVIL IN THE DETAILS

2015 AIA Conference announcements

Editor Nigel Wright

Catlin Underwriting Agencies, LTD nigel.wright@catlin.com

Industry news WILDLIFE RISK MITIGATION EFFORTS

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

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.

PRESIDENT’S MESSAGE FRANKLIN BASS

Catlin underwriting agencies, ltd

ur Annual Conference, set for May 2 – 5, at The Broadmoor in Colorado Springs is fast approaching. The good news is that the early registration has been extremely active. The bad news is that if you delay too long, despite our best efforts in planning, rooms will become scarce. However, there is an easy remedy to this dilemma: sign up now, with no penalty, if you decide to cancel for any reason (see insert in The Binder for exact terms and conditions). We have a fantastic venue and terrific program, and we are going all out to make this a very special conference. I trust our members enjoyed the last issue of The Binder featuring a new format and the major upgrade in our articles in both content and style. Kudos to our Executive Director Mandie, who led this initiative (which is continuing) to make The Binder an eye-catching, interesting, and relevant read. I would also like to thank our Editor-in-Chief, Nigel Wright, for his help in taking The Binder to the next level. I want to take this opportunity to congratulate the recently announced 2015 inductees to the Eagle Society. The induction will take place during our annual conference at The Broadmoor in Colorado Springs. As with last year’s inaugural class of inductees, we have a large group. This is a result of playing “catch up” with the number of people the Board thinks should be honored. As you probably noted, we have reached back into AIA history and have inducted many people who have been retired, but still so deserving of this honor. One of our themes for 2015 and going forward is to reach out and keep our former leaders part of

the AIA family. In this regard, the Board has invited two time past President and Pinnacle Award Recipient Joe Benero, and his wife Linda, to join us at The Broadmoor. I personally am very excited to have my friend and mentor attend this year. It is somewhat poignant for me, because it was Joe, who many years ago, introduced me to aviation insurance and the AIA. It will be a thrill for me to conclude my presidency with Joe and Linda in attendance. The Board has also extended another invitation to recently retired David Binks and his wife, Brenda. David is also a past President and Pinnacle Award Recipient. We hope many of our past and retired members come to The Broadmoor to see their old friends and colleagues. On a sadder note, this year we unexpectedly lost vibrant and active members of the AIA, notably Al Orgain, and my former partner, Bill Brown, as well as some retirees who were active in the past in the AIA. This year we will start a new tradition by having a “Minute of Remembrance” during the general session when we will read the names of AIA members who have passed in 2014, followed by a moment of silence in their memory and honor. If you know of an AIA member, former or current, who has passed in 2014, please let our Executive Director Mandie know so we can honor their name and memory. As always, I thank you for the opportunity to serve the membership of the AIA. This is your organization, and you should always feel free to contact me, or any Board member, to express your concerns, ideas or just to let us know how you think we are doing.

Upset Training:

Live to fly Another Day! Jonathan Doolittle Sutton James, Inc.

have never been in a spin unless they trained to be flight instructors or took aerobatic lessons. Most stall training is aimed at avoidance, rather than recovery. We go to the horn, or if we’re really feeling brave, to the buffet, and then fly the airplane out. We rarely completely stall the airplane, especially in crossed-control or other aggravated configurations. So is it any wonder that when confronted with the sudden loss of control of the airplane, we don’t typically react well enough to live through the event?

Although it isn’t cheap, APS’s emergency maneuver training will give you the chops to recover from virtually any unusual flight upset.

n a 2007 study going back more than 50 years, a Boeing group identified loss of control in-flight as the number one source of fatal airline fatalities. The Nall Report of the following year tells a similar story for general aviation airplanes. We need only look briefly at the headlines to find confirmation that this is still true. Loss of control- in flight, or LOC-I to accident experts, includes everything from ordinary stalls to control surface hardovers and wake turbulence encounters, any time the pilot loses control of the airplane in flight. LOC- I accidents happen across the spectrum

of civilian pilots from students to 20,000 hour airline pilots, and all the rest of us in between. That LOC-I is still the largest cause of fatal accidents all these years later says a lot about the way that we train. The airlines have incorporated loss of control scenarios in their training, but there are limits to what current simulators can do. General aviation has not really addressed the issue, although the FAA may soon require upset training. The quality of training available to GA pilots varies widely. Most pilots

The world of aftermarket training has recognized this problem, and several organizations offer EMT or emergency maneuver training. I recently completed one such course at APS Emergency Maneuver Training, headquartered in Mesa, Arizona,

agent/broker division report where “live to fly another day” is the motto and mission statement. APS is one of a handful of schools around the country that offers upset or EMT training to pilots of all backgrounds. APS is one of the few that is 141 approved, and that is also dedicated to this type of training. I completed the APS Professional Pilot Upset Recovery Training Course, which included the core upset recovery program, spin training, and instrument recovery training. While there are a number of schools that offer this type of training, APS offers an excellent value based upon the qualifications of the instructors, the quality of the curriculum, and the suitability of the airplane used. All of the APS instructors are former or current military instructor pilots, and a number have airline experience as well. I flew with the company’s president, Paul “BJ” Ransbury and the Director of Flight Training, Clarke “Otter” McNeace. Both flew F/A-18’s, both have thousands of hours in the Extra 300, and both have strong academic backgrounds for the material they are teaching. Before each flight, they conducted a thorough briefing. There was a great deal of stress on making sure that we understood the physics of the upset as well as the recovery. There was also repeated emphasis on the steps of the recovery procedure. After each flight, we were debriefed. We found that the debriefings were excellent reinforcement. The instructors seemed to have almost total recall of the specifics of the flight. The airplanes are also equipped with video cameras mounted on the right wing, vertical stab, and inside the cockpit. Particularly after the spin flights, video was used for the debriefings along with the instructors’ comments. Students go home with DVDs of all of the flying that they did during the course.

I found the curriculum to be a good balance of academics and a rote building block approach to use in the airplane. I was furnished with the course manuals months before arriving and was urged to read them and re-read them before starting the course. I found that this helped substantially to speed up my learning. Everything that we were taught in the classroom sessions was carefully related to what we would see and do in the airplane, but there was a considerable underpinning of aerodynamics. None of this is rocket science, but we came away with a much better understanding of the fundamental importance of angle of attack, as well as the effects of g-loading, roll-yaw coupling, and negative roll damping.

For upset and spin training, APS relies upon Extra 300L’s, complete with shark’s teeth. While the point of the training is to learn to recover

...leaving you looking down at rocks and desert, and no blue sky, the proverbial ‘face full of dirt.’

In addition to the academic side, APS provides a building block approach, which they call the ‘All Attitude Recovery Technique,’ a five-step procedure which allowed us to proceed one step at a time from total chaos to recovery of the airplane to a stable upright attitude. As the name implies, this technique is used for almost every situation except for fully-developed spins. For spins, APS uses the NASA spin-recovery technique. One of the most important parts of the training was the ‘say and do’ approach, which forces the student to name each step of the recovery process as he does it. We found that if we could say it, we could eventually do it as well. By the end of the course, the combination of increased understanding and repeated practice with the techniques made us feel that we probably would have the chance to “live to fly another day.”

within the limits of Standard or Transport category airplanes, the Extra’s unlimited aerobatic capability and limit load of plus or minus 10 g’s make it an ideal airplane for this type of training. There is no maneuver that can’t be recovered from, and your internal organs will probably fail before the airplane does. The huge margin between the g’s that you pull in the course and the g-load available made us feel very comfortable. If you haven’t flown an Extra before, you are in for a treat. Aside from the light stick forces, which took us a few minutes to get used to, there are few surprises. It goes where you point it and does what you think it will. If you have never flown with a stick before, you will find the transition painless. APS has a military feel to it, and it is noticeable throughout the course. The instructors and some of the students wear flight suits. Most flights start as a formation flight of two airplanes out to the practice area, then break up into north and south working areas. At the end of the lesson, both rejoin for the brief flight back to the airport. If you are interested in trying your hand at formation flying, this is a good time for it. Missions, as APS refers to the flights, are crafted so that there is no time wasted, and yet we never felt that it was a problem if we wanted to see

agent/broker division report a given maneuver yet another time. If we didn’t do a maneuver correctly the instructors would point out our errors, and we would keep doing it until we had it right. There were a number of maneuvers put into the syllabus as demonstrations, and we thought that these were well chosen and great teaching tools. My personal favorite was the zoom maneuver, which basically consists of pulling the nose up to about 30 degrees, and then pushing until you are light in the seat, about ½ G. The airplane flew a gentle arcing parabola, and as airspeed dropped, we were encouraged to move the controls in order to see that when unloaded, the controls remained effective 20 knots below the published 1-g stall speed. This was an excellent graphic reminder of the effects of g-loading on angle of attack and hence upon stall speeds. The greatest benefit of the course is that students, accompanied by an extremely experienced instructor in a very capable airplane, are able to safely explore areas of the envelope well beyond what they will see in normal operations, or what they could live

through if they saw it by themselves for the first time. The skidding turn stall is performed by starting a turn, and then feeding in increasing amounts of inside rudder while gradually adding aileron against overbank and back pressure in an attempt to keep the nose from falling. When the stall comes it is spectacular, and it happens at a speed well above the published stall speed, rolling the airplane onto its back quite briskly, and leaving you looking down at rocks and desert, and no blue sky, the proverbial ‘face full of dirt.’ Using the all-attitude upset recovery technique, the student goes from step to step, fixing the upset by saying and making one control input at a time. Another unusual attitude covered in the course is the spiral dive. When our instructor gave us the controls, the airspeed was almost 200 knots, and the g-load was about 3.8, well beyond what you would want to do intentionally in your own airplane, but not so different from what might happen in a real situation. I enjoyed the businesslike approach that the instructors took toward the training. They carefully briefed the flight, and then flew the mission as briefed. In case we missed anything,

we then sat down and debriefed. There was a good balance between academics and the rote learning that must be at the heart of any emergency procedure where the pilot is not likely to be thinking clearly. I loved the airplane. While the point of the course was to learn how to recover the kind of airplane that you actually fly day in and day out, it was nice to know that if you screwed up a maneuver or a recovery, you wouldn’t hurt the airplane. The experience I gained during the course is invaluable. In order to remain proficient in the recovery procedures, my sense is that I will have to return every two years or so. The APS courses are not cheap. The 2-day, 3 flight Basic Upset Recovery course lists on the website for $2,890. The Standard Emergency Maneuver course lasts 3 days and includes 5 flights, and lists for $4,820. APS also offers training in formation flying, aerobatics, and simulator training as well. In addition to the Extras, APS now offers in-airplane upset training in a Douglas A-4 Skyhawk, as well as simulator-based upset training. I felt that given the experience of the instructors, the curriculum and the airplane, that the price of the courses I took was an excellent value. If it only saves me from one upset, I have money in the bank. I would recommend this school to any pilot who is interested in learning more about coping with upset recovery and who would like to “live to fly another day.” I will certainly be back next year. Reprinted from February, 2010 Aviation Consumer with the permission of Belvoir Publications, Inc.

AIA Eagle Society members Announced In 2014, the AIA Board of Directors established the “Eagle Society” to honor those members, who have given so much, to the AIA and the aviation insurance community. An AIA Eagle Society Member will have demonstrated their dedication to the AIA with their actions and deeds on behalf of the AIA, as well as having made substantial contributions to the aviation industry and/or demonstrated achievement in their career in aviation. Membership in the “AIA Eagle Society” is conferred by nomination by the President of the AIA, and awarded with the concurrence of the majority of the Board of Directors. The AIA is pleased to announce the new members of the AIA Eagle Society.

Patrick Bailey, Bailey & Partners Eric Barfield, Hope Aviation Insurance, Inc. Bill Bertles, QBE North America Aviation Steve Blakey, Starr Aviation Mark Breitenbach, Catlin Underwriting Agencies, Ltd. Michael Brookman Bill Brown, Locke Lord LLP Anthony Cowan, Caledonian Insurance Group, Inc. John D’Angelone, Global Aerospace Eric Donofrio, XL Insurance Lawrence Galizi, Aviation Risk Management Associates, Inc. Perry Gray, Swiss Re Corporate Solutions Marion Hope, Hope Aviation Insurance, Inc. Stuart C. Hope, Jr., Hope Aviation Insurance, Inc. Leo H. Howe, PW Aviation, LLC Peter Jarrett, Berkley Aviation Daniel Junker, Partner Reinsurance Europe SE Robert Kern, Kern Wooley, P.C Richard Kimmel, Upshaw, Williams, Biggers & Beckham LLP

David Kraus, XL Insurance Larry Maloney, Caledonian Insurance Group, Inc. David McDonald, McDonald & McDonald Bill McGloin, QBE the Americas David McKay, USAIG W. Timothy McSwain, Allianz Global Corporate & Specialty Russell Mirabile, XL Insurance Charles R. Morin, Engineering Systems Inc. Jason Niemela, Berkley Aviation, LLC Albert Orgain IV, Sands Anderson PC Kim Stufflet, Preferred Aviation Underwriters Mike Sweeney, Retired Charles Tooley, The James A Gardner Company Inc. David Tyler, Colemont Insurance Brokers Benjamin Weber, Partner Reinsurance Europe SE Doug Winegardner, Sands Anderson PC Robert Winn, Engineering Systems Inc. M. Eugene Wooley, Kern Wooley, P.C

The Eagle Society installation will be held during the 2015 Annual conference at The Broadmoor in Colorado Springs, Co.

update: the faa on drone regulations deborah elsasser

director-elect, attorney’s division

n the last issue of the Binder, Ray Mariani provided an in-depth analysis of the legal and regulatory issues facing the civilian unmanned aircraft systems (UAS) industry. U.S. business interests have expressed frustration with the FAA’s current prohibition of non-recreational civil UAS operations and the government’s inability to devise a regulatory framework for commercial drone operators. On February 15, 2015, the FAA finally released its Notice of Proposed Rulemaking (“NPRM”) for the commercial use of “Small Unmanned Aircraft Systems.” The proposed rule would create a new part in Title 14 of the CFR. The proposed Part 107 encompasses rules governing airman certification and registration of civil small UAS for operation within the United States. These proposed rules would replace generally the airworthiness provisions of Part 21, the airman certification provisions of Part 61 and the operating limitations of Part 91 in respect of small UAS operations.

U.S. business interests have expressed frustration with the FAA’s current prohibition of non-recreational civil UAS operations_ 8

The proposed rule sets forth operational limitations, which are summarized as follows: The UAS:

•

Must weigh less than 55 pounds

•

ust remain within the visual line of sight of the operator M or visual observer

•

ust remain close enough to the operator to be capable of M seeing the aircraft

•

ay not operate over any persons not directly involved in M the operation

•

Must be operated during local daylight hours

•

May not be operated in Class A airspace

•

ay be operated in Class B,C, D, and E airspace with ATC M permission

•

May be operated in Class G airspace without ATC permission

•

Must yield right of way to other aircraft

•

C an be operated at a maximum airspeed of 100 mph

•

C an be operated at a maximum altitude of 500 feet above ground level

•

C an be operated in weather conditions with minimum visibility of 3 miles from control station

•

ay not be operated from a moving vehicle or aircraft M except from a watercraft on the water

•

May not be operated in a careless or reckless manner

•

P re-flight inspection must be done by operator

attorney’s division report

The proposed rule would require an operator of a small UAS to be at least 17 years old, pass an initial aeronautical knowledge test at an FAA-approved knowledge testing center (and a recurrent test every 24 months), undergo vetting by the TSA, and obtain an unmanned aircraft operator certificate with a small UAS rating. Commercial uses outside the parameters of the rule would require an exemption from the regulations. The proposed rule would not apply to: air carrier operations; external load and towing operations; international operations; foreign-owned aircraft that are ineligible to be registered in the United States; public aircraft; certain model aircraft; and moored balloons, kites, amateur rockets, and unmanned balloons. In addition to the proposed Part 107, the FAA is considering including a “micro UAS” classification, such as exists in Canada. The micro UAS classification would apply to unmanned aircraft made out of frangible material, weighing 4.4 pounds or less, and which would operate at an airspeed of 30 knots or less and a maximum altitude of 400 feet AGL. The public will have 60 days from the date of publication of the NPRM in the Federal Register to comment on the proposed rule. The NPRM may be found on the FAA’s website at www.faa.gov/regulations_policies/rulemaking. We look forward to discussing this and many other industry developments at the AIA Annual Conference, May 2-5 at the Broadmoor, Colorado Springs. See you there!

The Devil in the Details eric rank Aviation LS

he use of a checklist often seems to be a burden, similarly to how exceptional record keeping can also seem to be a burden until actually needed. No one anticipates having a loss, but, as with most aspects in aviation, one must plan for the unexpected. One needs to be prepared for the unexpected events that life might throw at one, be they a relatively small incident involving one person or a catastrophic accident involving multiple parties. In most instances, the insurer who issued the insurance policy will require the same basic currency documentation regardless of the scope of the loss in order to provide their insured with the protection that they purchased under the said insurance policy. Protection is a team effort that requires both the policy holder and the insurer to maintain their duties to each other, to make the team work. The best way to be prepared for their

responsibilities is for operators to be proactive. An operator should maintain copies of all pilots’ and aircrafts’ basic currency documents kept in a known safe place on the ground, never in the aircraft. Such basic currency documentation would include the following:

• • • • • • •

Biennial Flight Review FAA Medical Certificate Pilot’s License Airworthiness Certificate Aircraft Registration Annual Inspection For aerial applicators: Pilot’s Chemical Applicator’s License Part 137 Certificate for the Operator

Let’s be honest: keeping records of important documents and licensure related to flying an aircraft is as riveting as watching paint dry, and something one looks forward to as

much as a root canal. It’s seemingly repetitive, meticulous, and at times, borders on excessive to the point where the average pilot puts it on the back burner in life or dismisses the necessity of it all. However, much like getting into a car and fastening a seat belt, pilots fasten theirs before flight. No one expects to lose an engine on takeoff or take a bird through their forward windscreen, but the stark reality is this could happen on every single flight in an aircraft, and as such, everyone needs to be prepared. Of course, there are some occupations within aviation that have the reputation of being a riskier profession than others, such as an aerial applicator or cargo pilot, and some that are generally considered quite safe, such as flying for one of the major air carriers. However, time and time again, history repeats itself to remind

claims division report assigned to me for investigation. The loss was a straight forward drift claim involving a helicopter that was applying herbicide to a pasture that inadvertently drifted into a neighboring field, resulting in relative minor property damage to the crop in that field. The loss reportedly occurred quite some time before the insured turned in the loss; however, this was due to the nature of the chemical sprayed and its effects on the crop. Nonetheless, such late notice did not prejudice the investigation from being timely completed.

to search for the other aircraft’s insurer along with their adjuster, by contacting various recognized aerial applicator brokers.

During my initial call to the operator to discuss the basic facts of loss, the operator advised me that the pilot had unfortunately perished in an accident involving another operator’s aircraft since the date of loss. I advised the operator that this shouldn’t be an issue as long as the operator could provide the basic currency documentation that their insurer would need in order to confirm coverage under their policy. In fact, I advised the operator that I had already pulled the pilot’s license and medical certificate from the FAA’s website to limit the amount of documentation they had to send to me, but I still needed documentation from the pilot’s logbook, specifically the pilot’s Biennial Flight Review that was current at the time of the loss. The operator advised that they didn’t maintain copies of such documentation, and it would have to be secured from another source. Since that time, I sent a Freedom of Information Act (FOIA) request to the NTSB, contacted the operator of the aircraft to whom the other aircraft was registered, and even attempted

While staying safe is the most important duty for an aerial applicator, being prepared for when events don’t go as planned is a close second. As the saying goes: “the Devil is in the details”; if no attention is paid to those details, there might be hell to pay. It may be a responsible approach to preparedness to secure and maintain an insurance policy, but such insurance can only provide the level of protection that everyone expects when the policy holder prepares and maintains their own records in advance of any of life’s unexpected events.

While staying safe is the most important duty for an aerial applicator, being prepared for when events don’t go as planned is a close second. all of us in the aviation community that large commercial aircraft do crash generally with the pilot counted among those who perished, and the aerial applicators and cargo pilots can be the most cautious and meticulous operators in the sky, sometimes never experiencing a loss. Many pilots think: “Accidents happen to other people. It will never happen to me.” This attitude of invulnerability is inherently dangerous, not to mention if, heaven forbid, the unthinkable actually does happen. Poor record keeping can evolve into a nightmarish waiting game for a pilot or operator, as the insurance company has to perform the tedious task of back-tracking to sort out all the necessary items to even consider covering the loss. This is especially important in the aerial applicator industry wherein pilots, and even in some instances aircraft, move from operator to operator as differing crops in differing regions of our country come due for attention, be it planting or harvesting. However, keeping track of such records for pilots and aircraft as they move from region to region, from one operator to another, or from one job to the next, is lost in the scramble of getting the job done. Such was the case in a loss that was

As of the date of my writing this article, I still have not received the pilot’s documentation. The remaining options are to wait for the NTSB to post their Factual Report (which could take months) or try to contact the deceased pilot’s family in the hope that they understand what I am looking for (which could reopen the emotional wound of losing their loved one). During this search, the claimant has been extremely patient but is quickly growing impatient. This could eventually result in an unnecessarily filed legal complaint, and the spread of bad word-of-mouth for the operator, all for a relatively minor claim.

Eric graduated with a BSc in Aviation Science from St. Louis University in 2003 and worked as a chemical loader for an agricultural operation whilst studying. In 2003 he joined AIG Aerospace and spent 11 years with them as an Adjuster and Branch Manager for the Southeast region of the U.S.. Originally based in Atlanta, GA. he has relocated to establish a presence in Chicago, IL for Aviation LS, an Independent Loss Adjusting Company. Eric holds a Commercial Pilot’s License, Single and multi-engine with instrument rating.

The Aviation Insurance Association is THE place to make the connections that matter. In addition to the knowledge you will gain from the education sessions, the available networking opportunities are what truly makes this conference the place to be for those working in the aviation insurance industry. This is the one time per year when all facets of the industry are together at once. It is your opportunity to renew old acquaintances, build new relationships and your business. The 2015 AIA Annual Conference is the best venue to trade experiences, create business partnerships, and discuss the current state of the industry from each segment of the association. Network with your peers over cocktails during the opening reception and learn what is to come for the aviation insurance industry during the general education sessions. In order to add more value for our attendees, this year the continuing insurance education sessions, which provide up to eight hours of credit for agent/brokers and adjusters, will be now approved for continuing legal education credit. That is a grand total of 12 hours of CLE credit in some states, including one hour of legal ethics.

2015 AVIATION INSURANCE ASSOCIATION CONFERENCE

KEYNOTE KEYNOTE SPEA Pete Bunce

President & CEO General Aviation Manufacturers Association In April 2005, Peter (Pete) Bunce became President and CEO of the General Aviation Manufacturers Association (GAMA), which is headquartered in Washington, D.C., with additional offices in Brussels, Belgium. He and the GAMA staff travel worldwide engaging regulators, policymakers, and elected officials to promote general aviation and advance the interests of GAMA’s international membership of more than 80 airframe, avionics, engine and component manufacturers, as well as the world’s leading business aviation maintenance, repair and overall companies. Pete retired from the United States Air Force in March 2005, with his last assignment as the Director of the Air Force Congressional Budget and Appropriations Liaison. During his 26 year Air Force career, Pete flew F-15s and A-10s, while commanding several large operational fighter units.

Bruce Landsberg

Senior Safety Advisor Aircraft Owners and Pilots Association Landsberg is the former President of the AOPA Foundation and the Air Safety Institute after leading those activities for more than 22 years. During his tenure, the organization has been nationally recognized with numerous awards for aviation safety leadership and educational program excellence. The Foundation assists AOPA to preserve the freedom of flight including safety programs, preserving airports, improving the image of general aviation, and growing the pilot population. Bruce continues as Senior Safety Advisor to AOPA and the Air Safety Institute writing the monthly “Safety Pilot” column in AOPA Pilot magazine, as well as a popular blog in AOPA ePilot. He also continues his liaison duties the FAA, NTSB, National Weather Service, and various industry groups.

FOR A FULL SCHEDULE OF EVENTS AND TO REGISTER PLEASE VISIT OUR

NEW THIS YEAR! Full refunds for cancellations will be granted to everyone who registers DURING THE EARLY BIRD RATE, up to the day of the conference, as long as AIA is notified in writing. Full refunds for those who register after the early bird rate will be granted, as long as the AIA is notified in writing by Friday, April 3rd. No refunds will be issued for regular registration cancellations received after April 3rd.

Register now for the 2015 AIA Annual Conference, and you will be sure to see that AIA continues to be THE conference for those in the aviation insurance industry!

SPEAKERS KERS Joe Trotti

President & CEO, Global Marine and Aerospace AIG Joseph J. Trotti is the Chief Executive Officer of Marine & Aerospace at AIG. In addition, he is also the Specialty Line Head for EMEA, and in that capacity, is responsible for Aerospace, Marine, Package, Environmental, Trade Credit, Political Risk & Surety in Europe, Middle East and Africa. His career has spanned more than 27-years in the insurance industry serving both brokerage and underwriting firms. He has successfully led businesses in both the US and UK producing industry & segment leading results. Prior to rejoining AIG, Trotti served as CEO of Global Specialties at the Willis Group, a NYSE traded company with approximately 17,000 associates located in more than 400 offices across 120 countries. Prior to his work at Willis, he served as an Executive Vice President at AIG, and Senior Vice President at ACE (CIGNA)

WEB SITE AT WWW.AIAWEB.ORG

Mark Tilman

Colonel (Retired) United States Air Force Chosen as the nation’s 12th Presidential pilot, Colonel (Retired) Mark W. Tillman served as pilot and commander of Air Force One from 2001-2009. Col. Tillman was at the controls of Air Force One through numerous national events. Most notably, he protected the President on September 11, 2001, by keeping him out of harm’s way and connecting the flying oval office to the nation’s first responders. In yet another historic event, he was the first pilot to fly the Commander-in-Chief into a war zone. The challenge was unprecedented--transport the most targeted man in the world into the heart of terrorism. One mistake would have left the President open to attack and cost the lives of US service members. Col. Tillman personally orchestrated and executed the covert operation with flawless success. His planning, done in complete secrecy, allowed for a complete surprise to the entire world. Col. Tillman’s distinguished career spans 30 years in the United States Air Force.

Wildlife Risk Mitigation Efforts in Latin America and the Caribbean Christopher Barks

Federal Aviation Administration

he risk that birds and other wildlife pose to aircraft is well documented, perhaps most visibly in the “Miracle on the Hudson” accident in January 2009 in which a flock of Canada geese brought down an Airbus A320 during takeoff from LGA. While even the worst bird strikes do not always end in human fatalities, the cost of bird and other wildlife strikes around the world is staggering. A single ingestion of small birds can result in six-figure damages. The Federal Aviation Administration (FAA) estimates that bird strikes cost the U.S. aviation industry around $500 million in 2013; conservative estimates of losses to the civil fleet worldwide are approximately $1.3 billion (USD), annually. However, focused U.S. wildlife mitigation programs have reduced damaging strike events at certificated airports over the past ten years. These successes have garnered the interest of industry partners. In 2013, the International Air Transport Association (IATA) and the Latin American and Caribbean Air Transport Association (ALTA) approached the FAA and U.S. Department of Agriculture, which supports wildlife mitigation around airports in the U.S., to participate in a pilot program to assist airports in Latin America and the Caribbean to enhance their wildlife mitigation efforts. Dubbed the Wildlife Incident Neutralization-Cooperative Action Plan (WIN-CAP), the four organizations visited

Michael j. Begier

USDA wildlife services

Tocumen Airport in Panama and Guayaquil International in Ecuador between June 2012 and July 2013 to assist in the development of wildlife hazard assessments and implementation of wildlife hazard mitigation programs. The participants secured the cooperation of the International Civil Aviation Organization and brought the project under the aegis of ICAO’s Regional Aviation Safety Group-Pan

America (RASG-PA). The experiences gained from the WIN-CAP pilot projects highlighted the need for a more permanent presence in the region in order to assist the existing regional wildlife mitigation capacity and a larger number of airports in a shorter period of time. The WIN-CAP partners are exploring the possibility of establishing a more permanent presence in the region and are reaching out to all organizations that have an interest in reducing wildlife hazards to aviation, including ICAO, aviation authorities, airports, airlines, and scientific institutes. The insurance industry is a natural partner in this effort, and the WIN-CAP partners would welcome the participation of the insurance sector in our efforts. For further information, or to express interest in supporting this effort, please contact Santiago Saltos at ssaltos@alta.aero, Gabriel Acosta at acostag@iata.org, or Christopher Barks at Christopher.barks@faa.gov.

industry news 15

Alan Smith

Chairman, AIA Education Foundation

he AIA Education Foundation was established in 2008 for the purpose of funding academic scholarships and other educational programs, such as the Continuing Insurance Education (CIE) Courses, which benefit the AIA and its members directly. The AIA Education Foundation is a 501 c (3) Not-For-Profit Corporation, and all donations are entirely tax deductible. The AIA Education Foundation continues to award four (4) $2500 scholarships and one 1000 GBP per year. These scholarships are given to students who must be currently enrolled in an accredited undergraduate or graduate degree program and who have completed, or in the process of completing, an Internship Program within the aviation insurance industry with a company that is an AIA Member. Also, through funding provided by the AIA Education Foundation, you can obtain state required CIE credit hours by visiting www.aiaweb.webce.com to access our two online courses dedicated to aviation insurance. A third course will be added shortly to the menu. Your suggestion of ideas for the development of future course subjects will greatly assist the Education Committee in their efforts to continually expand this benefit for AIA Members. Please provide your input suggestions to Amanda Bannwarth, Executive Director, AIA, mandie@aiaweb.org. On behalf of all Members, the AIA Board of Directors sincerely thank you for your individual and corporate donations in the past, and we look to those who can assist us with additional funding this year in our efforts to sustain and support our current AIA Education Foundation initiatives. We want you to be involved with your Association and, to that end, I will be reaching out to current AIA Members to solicit your support. Note, the AIA website is in the process of being updated, and the AIA Education Foundation will have a new section added that will allow you to make your donations online in the near future. I look forward to seeing all of you in Colorado Springs, May 2-5, 2015, at the AIA Annual Conference. In the meantime, feel free to contact me with any questions you may have concerning the AIA Education Foundation at: alan.smith@usi.biz or 786-454-2103.

Help Your Companyâ&#x20AC;&#x2122;s Interns Earn $2,500 AIA Education Foundation Scholarship Reminder: The Aviation Insurance Association Education Foundation provides four (4) $2,500 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. The scholarship was formed in order to help him or her alleviate financial strain while expanding their professional knowledge and education. Please visit our website at: www.aiaweb.org to download the Scholarship Application. Send the completed application to Mandie Bannwarth at AIA Headquarters to start the process. In addition, The AIA Foundation provides ÂŁ1000 for the CII Prize. This Award is available only to UK candidates employed in the aviation insurance industry for passing the CII Exam and successfully completing Unit P91.

ASAP for Charter Operators Frank Jackman

Editor-in-Chief, AeroSafety World

he Air Charter Safety Foundation (ACSF) in the United States anticipates adding another six or seven participants to its aviation safety action program (ASAP) in the first quarter of 2015, according to ACSF President Bryan Burns. The likely addi-tions will be a mix of on-demand charter operators covered under Part 135 of the U.S. Federal Aviation Regulations (FARs), fractional program managers covered under FAR Part 91K and Part 91 operations, Burns told AeroSafety World, adding that the nine current participants also represent a mix of operations. The goal of an ASAP is to prevent accidents and incidents by encouraging voluntary reporting of safety issues and events that come to the attention of employees of certificate holders, according to the U.S. Federal Aviation Administration (FAA). To encourage employees to voluntarily report safety issues that possibly involve violations of the FARs, “enforcement-related incentives” are designed into ASAPs, according to information available on FAA’s website (faa. gov). “Under an ASAP, safety issues are resolved through corrective action rather than through punishment or

discipline. …ASAP safety data, much of which would otherwise be unobtainable, is used to develop corrective actions for identified safety concerns, and to educate the appropriate parties to prevent a reoccurrence of the same type of safety event,” according to FAA Advisory Circular (AC) 120-66B, “Aviation Safety Action Program (ASAP).” Each ASAP is based on a partnership that includes the FAA and a certificate holder, and may include a third party, such as the ACSF, which launched its ASAP in the FAA’s Great Lakes Region in 2012, and a year later expanded it to include the Western-Pacific Region. The Great Lakes Region includes Illinois, Indiana, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Wisconsin. The Western-Pacific Region includes Arizona, California, Hawaii and Nevada. Currently, all but one of the ACSF program participants are located in the Great Lakes Region. ACSF is working to expand its program into other FAA regions as well. The FAA program originally was targeted at air carrier and repair station employees, but ACSF saw an opportunity to take the airline-based concepts and apply them to Part 135 and Part 91 operators, Burns said. ACSF worked with the Minneapolis Flight Standards District Office (FSDO), which has extensive Part 121 (air carrier) ASAP experience, to launch its ASAP in August 2012 with two charter company participants.

ASAP safety data, much of which would otherwise be unobtainable, is used to develop corrective actions for identified safety concerns...

To participate in the ACSF program,

an operator must sign a memorandum of understanding (MOU) with ACSF and FAA, through the appropriate FSDO. The MOU outlines the conditions for participating in the program, including reporting procedures and timelines for filing reports, and details the process for reviewing reports and who will do the reviews. The ACSF ASAP applies to all covered employees of a participating company, and only to events that occur while acting in that capacity, according to ACSF’s program materials.

Charter operators and fractional companies that participate in the ACSF ASAP benefit in a variety of ways, according to Burns. Pragmatically, there is a cost savings. There is no cost for a company to participate in ACSF’s program (although there is some training involved and an operator must be a member of ACSF), whereas the cost of starting up its own program could exceed $60,000 in staff time, according to ACSF documentation. “The cost and infrastructure, for these guys to try to do it by themselves, would be overwhelming,” Burns said.

When a covered employee submits a report to the ASAP, the report is processed and reviewed by an event review committee (ERC) comprising an FAA representative, a company management representative and a representative from the participating employee group. The ERC reviews and analyzes all the reports submitted under the ASAP and determines which reports qualify for inclusion. The ERC also identifies actual and potential safety problems from the issue/event information contained in the report and proposes solutions for those problems, and any other action to be taken in response to a reported event. “The success of ASAP is built on the ability of the ERC to achieve consensus on each event that is reported,” according to AC 120-66B. ASAP reports are submitted and processed using a web-based software tool that is supplied and maintained by FAA, ac-cording to ACSF materials.

Also, the ACSF program offers access to data that small, individual companies would not otherwise be able to obtain. ACSF shares with each of its ASAP participants aggregated, de-identified data on safety events reported by all of the participants. As of mid-July, more than 80 reports had been closed in just under two years of the program’s operation. Sufficient data volume over time is essential to seeing trends and identifying possible precursors to incidents and accidents.

...the ACSF program offers access to data that small, individual companies would not otherwise be able to obtain.

Burns sees the ASAP as a way participants can constantly enhance and improve safety at their operations. “We’re very passionate about moving the safety needle,” he said. Reprinted with permission by FlightSafety Foundation’s AeroSafety World.

Treasurer’s Report Paul Herbers

Cooling & Herbers

he financial condition of the AIA is strong. Our cash position at 31 December 2014 was quite favorable, having increased by 35% over year-end 2013. At 31 December 2014, the AIA had cash and cash equivalents of $375,000, which has been the norm in recent years. Operations for 2014 proceeded according to plan and within budget, even as the quality and number of services provided by AIA to its members have increased significantly. The AIA had a small surplus earned in 2014 – approximately $5,800—which was slightly better than budgeted for the year. As the AIA’s financial performance improves, the board continually looks for opportunities to improve the “value added” for the AIA membership. At the same time, the AIA has seen recent drops in membership dues, which also remains a focus of the board of directors for future development. Happily, this drop has been offset by increased conference registrations. More importantly, our many valued sponsors have increased their contributions, and new sponsors have joined in support of AIA’s efforts. We are pleased to report that our sponsors increased their contributions to AIA by more than 27% above expectations, for which the AIA is very grateful.

AIA NET ASSETS 2011-2014

We anticipate the upcoming conference in Colorado Springs will be another financial success for the AIA. We are gratified witth the excellent relationship the AIA has established with Onyx Meetings & Events, which has proven to be very beneficial to AIA’s financial performance as well as to the service of our members. The continuing direction provided by our Executive Director, Mandie Bannwarth, has provided stability and predictability to our operations.

2011 Miami $352,077.00 2012 Las Vegas $408,693.22 2013 Orlando $277,961.86 2014 Phoenix $376,566.07

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Upgrades and Refurbishment Value Daniel Moore

Watauga Flight Service

rom time to time, I have caught myself watching an episode of Bob Villa’s This Old House. If you have not seen the show, it usually involves an older house with a great deal of character or history that some poor soul has dedicated a rather large bankroll to fixing up and getting back into shape. While I do have a certain admiration for that type of work, I sometimes wonder in the end how their investment works out. In many regards, we have gotten to that place in general aviation. Some of the older aircraft that are out of production simply do not have a replacement in the newer airplane market. In the course of a year, it is not that unusual to see an owner moving up to a more complex aircraft, and quite often, they have left a newer airframe for one that is older. An inevitable outcome of people keeping these older airplanes is the fact that they are going to, at some point, undergo some type of major refurbishment. Here comes the hard part for the insurance market, banks, and appraisers. How do we value these aircraft to protect the investment of the client, while being fair to the underwriter as it relates to the value of these refurbished older aircraft? As a Senior Certified Aircraft Appraiser with the National Aircraft Appraisers

Association or (NAAA), I deal with this very situation both from an insurance and finance standpoint. Sometimes the owners are looking to increase the insurance coverage to account for their additional investment, while in some cases, I am working for a lending institution for refinancing purposes. In either case the mission is the same, and that is to determine what the true “Market Value” of this aircraft would be after the proposed (or completed) refurbishment has taken place. In the past, it may have been as easy as opening the Aircraft Blue Book to come up with an approximate value, or taking a Vref evaluation. Those days seem to be gone as the myriad of upgrades and avionics combinations makes it nearly impossible to account for the latest “box” that has been added to the aircraft. In addition to this, as various types of engine technologies advance and mature, we are likely to see this type of upgrade permeate the older airplane market.

if I have added $150,000 avionics upgrade to my $100,000 piston twin aircraft, can it now be insured for $250,000?

The question must be asked: if I have added $150,000 avionics upgrade to my $100,000 piston twin aircraft, can it now be insured for $250,000? The appraiser now becomes the bearer of some bad news. Avionics installation cost (often 10-20% of the total bill)

industry news does not really increase the value of the aircraft. It’s more about the actual value of the equipment. In the process of evaluating avionics upgrades, the panel mounted avionics have to be viewed on a slightly different scale than a glass panel installation. Glass panel installations are more than just avionics. They have now become primary instrumentation. When it comes to the marketability of an aircraft, those with glass panel installation will garner a greater price (above the value of the actual equipment). When these values are considered, I believe that a premium is placed on the time and effort to bring an outdated panel into the 21st century. Those with glass panel installations certainly deserve to be considered as being a “prime condition aircraft”. When it comes to aircraft value, nothing brings more bang for your buck than engine upgrade. When it comes to avionics upgrades, an owner can probably expect to see an increase in value of $1 for every $2 spent on avionics (this is why you want to upgrade then keep the airplane for a while). Engines upgrades/overhauls are as close to a 1:1 ratio as can be found in upgrades. Take for instance the RAM upgrades done to many Twin Cessnas, or Blackhawk Conversions done to many King Airs, Conquests, and Cheyennes. These upgrades provide a giant boost in the value of the aircraft. When I evaluate an airplane, I take the total cost of the upgrade (for the engines), and pro rate it based on the hours since upgrade. When your client asks for an increase in value after an upgrade or engine overhaul, it’s the one place where it is a pretty safe bet that it really has increased in value commensurate with the amount of money spent on the upgrade or overhaul. So how is a person to come up with some concrete numbers in the mind-boggling sea of available options and upgrades? If these are completely uncharted waters for you or others in your firm, you may consider hiring a certified appraiser from a respected appraisal organization. Using a professional appraiser can be a bit of a buffer between you and your client, which can help relieve some potential tension when the possible bad news is shared. If you feel you have the knowledge (and time) and want to do some of the

research on your own, there are some options online. Previously mentioned Vref Online (not the free version found on AOPA), and Aircraft Blue Book subscriptions are just a click away, and in most cases, are fairly easy to navigate. A not as widely known option is a service offered by the National Aircraft Appraisers association through Trade A Plane. NAAA offers an airplane evaluator section to all Trade A Plane subscribers. Just like any piece of software or new website, all of the above mentioned platforms take time and effort to learn. The more complex

the aircraft, the more difficult the process in evaluating it. A little time and effort can offer some concrete results which will assist in making a value determination. Here is a list that indicates, in my professional opinion, the upgrades and refurbishments that add to the value of an aircraft, and the order that the upgrade will retain value from best to worst.

Engines (Overhaul and Upgrades)

Airframe Modifications (such as Winglets, Strakes and other add-ons that improve the capabilities of the aircraft)

Aircraft Paint/Aircraft Interior

Avionics Upgrades

Daniel Moore is the owner of Watauga Flight Service, a company located in Johnson City, TN, that offers professional certified appraisals, along with insurance approved initial and recurrent training in a total of 18 different aircraft. www.FlightTrainOnline or www.AirAppraise.com. He holds ASEL&AMEL ATP, CFII, and A&P Certificates, has been flying for 27 years, and has over 8,000 hours flight time.

board of directors PRESIDENT FRANKLIN F. BASS

Director - Attorneys Division Christopher S. Morin

Director-Elect, Underwriters Division Ernest DeSpain

CATLIN UNDERWRITING AGENCIES, Ltd. franklin.bass@catlin.com

Murray, Morin & Herman, P.A. cmorin@mmhlaw.com

W. Brown & Associates Insurance Services edespain@wbais.com

vice PRESIDENT david Sales

Director-Elect, Attorneys Division Deborah Elsasser

International Director Marcos Shuster

Cooper Gay & Co, Ltd. david.sales@coopergay.com

Clyde & Co LLP deborah.elsasser@clydeco.us

Aon Risk Services marcos.shuster@aon.com

treasurer Paul Herbers

Director of Claims Division Nic Stratta

Director-At-Large Jim Gardner

Cooling & Herbers, P.C. pherbers@coolinglaw.com

Aviation Light Services Corporation nic.stratta@aviationls.com

The James A Gardner Company Inc. jim.gardner@jagardner.com

SEcretary Gary Churchill

Director of Reinsurance Division Ian Wrigglesworth

Director-At-Large Christopher R. Zanette

Phoenix Aviation Managers, Inc. gchurchill@pamav.com

Guy Carpenter & Company, Inc. ian.wrigglesworth@guycarp.com

ZANETTE Aviation Insurance Service, Inc. chris@jet-insurance.com

Director of Agent/Brokers Division Jonathan Doolittle

Director of Underwriters Division Matt Rowley

Executive Director Mandie Bannwarth

Sutton James, Inc. jdoolittle@suttonjames.com

Berkley Aviation, LLC mrowley@berkleyaviation.com

Aviation Insurance Association mandie@aiaweb.org

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Call Mandie Bannwarth at 913-627-9632 for additional information.

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