On January 26th, 2020 NBA legend Kobe Bryant was killed in a Sikorsky S-76 helicopter crash near Calabasas, California. The world was shocked to hear the news. At 41 years old, Kobe had big plans and a lot of life left to live.
How could a simple helicopter accident bring down a man who had defied all odds and achieved mythical success? Moreover, how will this tragic loss directly effect your personal aircraft insurance rate?
The short answer is: Instead of rates increasing for 2-3 years, this may extend to 4-5 years as the industry looks to recover its losses.
Hopefully by now, most aircraft owners are aware of the current upward market shift in aviation insurance rates. To recap; aircraft insurance rates from 2008-2017 decreased every year, finally hitting rock bottom at the end of 2017. The aviation insurance market went from 18 insurance companies down to 12 during this time as claims rose and profits dwindled. This combined with the Boeing 737 MAX grounding, increased cost of repairs and less capacity has caused the market to shift, and starting in 2018 rates began increasing across the board.
Shortly before the accident, we posted this blog. Based on our market analysis, we predicted that rates will continue to increase in 2020 and beyond. The Kobe Bryant accident will likely extend these rate increases by at least another 1-2 years.
Why will this accident effect my personal aircraft insurance cost?
There are only 12 Aviation Insurance Companies in the United States, as opposed to more than 500 auto insurance companies. Since the industry is so small and specialized, most of the insurance companies reinsure large risks like Commercial Airlines, Part 135 operations or any risks with over 5 million in liability exposure.
Reinsuring means that one insurance company will agree to write the initial risk and 2-3 other insurance companies will take large percentages of the risk to ensure in the event of a catastrophic loss, not any one company is on the line for the full amount.
This was the case with the Kobe Bryant crash. One of our aviation insurance companies took the lead and multiple other companies participated in the reinsurance. For this particular loss, many tens of millions of dollars will be paid out for this loss and therefore the entire aviation insurance industry will be effected.
Insurance is designed as a pool that we all pay into, and in the event that some of us experience a loss, that money is there from the pool to make us whole again.
BWI specialized in Aviation Insurance and has done so since 1977. We are a full service brokerage, family owned, with offices in Southern California and Anchorage, Alaska, and we are licensed in all 50 states.
Our Aviation Insurance Professionals can help you find the absolute best coverage at the most competitive rates for your aircraft or aviation operation.
Call us at 800-296-8595 to get a quote or discuss insurance options. Our office is staffed 12 hours a day from 6 AM to 6PM Pacific.
You can also visit us online or submit a quote request on our website by clicking this link: Submit A Quote Request.