In a crowded field, how do aviation insurance carriers set themselves apart from their competitors? There’s good news for operators of business aircraft. (August 2015 issue of AvBuyer Magazine)
Of course every business is different, but in the highly regulated and mature field of aviation insurance creating something unique is exceedingly difficult. The actual product being sold is simply a future promise to pay, should certain events occur. The physical product is a stack of papers most buyers don’t read.
Except for seasoned insurance professionals, it’s nearly impossible to pick up a policy and determine the quality of the written word inside. Yet there is a vast difference between insurers, their policy forms, their claims service, and their supplementary offerings. In the last few years, several of the top-tier insurance companies have leveraged those differences to pull away from the pack.
Two of the oldest legacy insurers, Global Aerospace and USAIG, launched a cafeteria plan of safety services several years ago that they continue to expand and improve each year. Global has branded its coverage ‘SM4’, and USAIG is calling its coverage ‘Performance Vector’. These offerings are for their insureds operating professionally-flown turbine business aircraft.
Global’s SM4 program focuses on four areas – planning, prevention, response and recovery. To that end, it has partnered with safety experts in each discipline including such well-known names as Convergent Performance for human factors training, Calspan for upset recovery training, Baldwin Aviation for helping flight departments implement an SMS or IS-BAO certification, and Fireside Partners for Emergency Response Planning and Delivery.
USAIG’s Performance Vector is similar, partnering with specialists including Convergent Performance, Aircare International (emergency procedures training in land and water evacuation as well as firefighting using aircraft cabin simulators), Alertness Solutions (fatigue management skills for the flight crew), and Prism (safety management systems solutions).
Other insurers have similar offerings although they don’t promote them to the same extent as USAIG and Global. Starr Aviation provides safety and loss control services free of charge to its insureds through its Safety & Loss Control team, which is comprised of three Board Certified Safety Professionals. AIG Aviation offers safety and loss control services that range from detailed risk assessment surveys and document manual reviews to mentoring of safety program management and employee training. Allianz Aviation partners with AeronomX to provide loss control services including SMS development, IS-BAO consulting, and flight ops manual review.
HOW IT WORKS
The safety companies that partner with insurance underwriters provide their expertise and services on a fee basis to any aircraft owner. Insureds receive discounted rates that have been negotiated with the insurance provider based on volume.
With Global and USAIG, the insured can select one of the safety service modules offered each year from one of the providers and the insurance company will pay for the service. There are limitations, so check with your individual insurer to determine exactly what portion of the cost they will cover for a given safety offering. Of course, the insured can pay over and above for any additional services they would like at the insurance company’s lower negotiated rate.
Interestingly, even though the insurance companies are willing to pick up all or some of the tab for these fee-based safety services, the programs initially have received a lukewarm reception. As a broker, I find these safety services a hard sell (even though it’s not a sell—it’s “free”). I don’t know if it is difficult or confusing for the insured to cull through all the options and understand exactly what is being provided or how much the insurer will pay on the insured’s behalf.
Maybe it’s unclear how much time is required to complete some of these courses. Perhaps we are seeing a form of performance anxiety on the part of operators, fearing a safety expert may judge a flight department inferior – does this information then get back to the insurance company (it does not) with potential negative consequences. Maybe safety is somehow considered “not cool”, so operators are not interested.
Whatever the impediments, taking advantage of these free or highly discounted services is a no-brainer. If you are an aircraft owner who is insured with one of the insurance companies showing safety leadership, you should be jumping all over these features. The safety courses/offerings are given by some of the best minds in their respective fields, and most are available to you at little or no cost.
I’m here to tell you: Safety is the hallmark of professionals. It is interesting that the flight departments that are always trying to get better are the ones that have availed themselves of the insurance companies’ programs. Isn’t that what being a pro is all about?