Aviation Insurance: Four Steps to Flight

As an Aviation Insurance broker with more than 25 years in this specialized industry, I've served as an Aviation resource manager at both boutique and international firms. And although the economy has caused a lot of hardship in the industry, it's still a great specialty. In fact, your current clients might even be pilots or may already have some type of Aviation exposure.

There are a number of underwriting companies that serve the aviation industry, including Chartis, Global Aerospace, United States Aviation Underwriters, Allianz, Starr Aviation, Phoenix Aviation Managers, QBE, W. Brown & Associates, U.S. Specialty Insurance Co., XL Specialty, Swiss Re and Berkley Aviation, among others. During the past several years, our industry has grown substantially, with new underwriting companies entering the market, so capacity is plentiful and competition is fierce.

Before you can work in this market, most Aviation underwriters will require an agency to complete an application to determine whether they want to appoint you. Most Aviation underwriting companies want the agency to have someone with aviation expertise because most clients look for advisors who speak the language.

I've tried to work with non-Aviation producers who learn of an Aviation underwriting company and immediately contact them to try and write this new business directly, so they can earn 100 percent of the commission. Underwriters usually decline due to the agency's inexperience and the increased E&O exposure. Even if the agency has a contract with the insurer and is successful in getting a broker-of-record letter, underwriters know the chances are high the producer will lose the account because they don't speak the language or understand the policy: They lack responsive expertise.

Here are some tips on how to access the Aviation market:

1) Know the market. Aviation is served by thousands of people and companies, which includes:

• Aviation products manufacturers
• Airports and fixed-base operations
• Flight schools
• Private and corporate aircraft (Part 91)
• Airlines (Part 121)
• Cargo airlines
• Aircraft charter operations (Part 135)
• Helicopters
• Agriculture aviation
• Air ambulance/hospital aviation
• Satellite/space business
• Blimps

2) Understand the risk. Although writing a client's Aviation business is another source of revenue and new pride for the producer, it's important that you understand that Aviation is catastrophic by nature, which will expose you to potential E&O claims. Each of the above operations has its own unique risks, which must be fully understood by both the agent and the Aviation underwriter to properly cover the insured in the event of a catastrophic loss.

3) Join an organization. Agencies can join a number of organizations that represent the aviation industry, including the National Business Aircraft Association, Helicopters Association International and Aircraft Owners and Pilots Association. As a member, these organizations will provide you with directories listing all members. These organizations have several conventions throughout the year, attended by thousands of people in our industry from around the world. The Aviation Insurance industry is well represented by brokers and underwriters with booths at these conferences.

4) Work with an expert. Agencies looking to get into Aviation Insurance can hire an experienced Aviation broker or Aviation underwriter that maintains a good reputation in the industry. My firm has worked with other agencies to assist them in writing new Aviation business, including an international airport and several corporate jet aircraft. Alternatively, the agency could consider co-broking this business with an Aviation Insurance firm that can serve the client's interests while keeping your costs down by not having to hire an aviation person.