If you have been involved in aviation for any time now, you will have noticed aviation insurance rates going up significantly. In some cases as little as 20% and in others, some have witnessed a near 100% increase in premium costs. So as if the year 2020 needed any more adversity to throw at us, here come some more! Global pandemics, civil unrest, and even murder hornets have taken their toll on us all this year, but the culprit behind these recent rate increases isn’t related to the year 2020 at all. Rather it is an insurance reckoning that has been some years in the making.
At BWI Aviation Insurance, we pride ourselves on finding the best coverage for the best rates. Yet, we too are at the mercy of many of these market forces. There is competition in the aviation insurance market, but not enough that you can go anywhere and find coverage at your desired rate. However, what we can do is arm you with the information necessary to understand the current market and make the best decision for yourself and your aircraft. So let’s jump right in.
Aviation Insurance is in a Natural Cyclical Swing
If you are a new pilot, you may not have any context for how aviation insurance rates have changed in 2020. However, veteran pilots will tell you that the past decade has been a golden age for insurance premiums. In the insurance game, this is what we could call a soft market. Prices were far below where they should have been and the market would have normally corrected itself with a hard market every six or seven years.
The result is that insurers do not have enough reserves to pay for large losses. Unfortunately, large losses have been the name of the game in recent years. Combined, this means that insurance providers are looking to find the right price point that ensures sustainability in the event of future losses.
Compounding the problem is the low number of aviation insurance providers in the market. There is simply not a lot of room for one provider to undercut the rest and survive. If you pull up to a gas station and some guy whispers from the shadows, “hey, want some cheap aviation insurance?” Please do not be fooled. Increasing premiums are where the true market is at and it will likely continue throughout 2021.
What You Can Do to Find Lower Premiums
While you may not be able to change the market for aviation insurance, you can navigate the market to help find the appropriate coverage for the lowest rate. Perhaps the best way to do this is to work collaboratively with your insurance broker. Here at BWI, we pride ourselves in helping our pilots understand what actions they can take to improve their rates. This means sourcing all of their flight experience, aircraft information, and training opportunities that may help. Check out our blog post: The 5 Best Ways To Save Money On Aircraft Insurance
What about self-insurance?
With insurance premiums rising from 20-100% for multiple years in a row, a lot of our insureds are considering self insuring their aircraft. While this may sound like a viable option to cut costs, we never recommend self insuring unless the aircraft is in pieces in your hangar or has absolutely no chance of flying for the next year. The liability risks are too great and the cost of an annual liability only insurance policy can be as low $.61 a day. For more information, see our article about Settling the Great Aviation Insurance versus Self Insurance Debate
The Incontrovertible Truth
Winston Churchill once famously said, “The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is.” My friends, we wish we had better news for you, but the incontrovertible truth is that higher rates are here to stay for the short-term. The good news is that we can help you navigate this turbulent season in history. We can’t help you with the murder hornets, but we can help you with your aviation insurance. Give us a call today.
BWI | The Nation’s Leader In Aviation Insurance
Family Owned | Nationwide | Since 1977
What makes us different? Our office is open 12 hours a day, our team is hand-picked, well-trained and every single customer has their own dedicated Aviation Insurance Professional.
Get a no-obligation, free insurance quote at www.bwifly.com or call 800.296.8595