Insurance rate shocker

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designrs
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Re: Insurance rate shocker

Postby designrs » Tue Jan 14, 2020 2:46 pm

... you haven’t had any claims.
... you have a newer plane
... you are the certified mechanic (multiple certifications)
... AND nationally recognized (for decades) as an authority on education, Rotax, not to mention all of your FAA affiliations and knowledge of regulations that you actively educate others on.

If any flight school is low risk, it’s yours!
- Richard
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Author of: INDELIBLE SPIRIT - Overcoming Adversity and Living An Extraordinary Life, by Pilot Rich
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drseti
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Re: Insurance rate shocker

Postby drseti » Tue Jan 14, 2020 4:47 pm

designrs wrote:If any flight school is low risk, it’s yours!


Thanks for that, Richard. Unfortunately, insurance companies tend to quote on the basis not of individual risk, but rather aggregate risk.
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designrs
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Re: Insurance rate shocker

Postby designrs » Tue Jan 14, 2020 10:55 pm

drseti wrote:
designrs wrote:If any flight school is low risk, it’s yours!


Thanks for that, Richard. Unfortunately, insurance companies tend to quote on the basis not of individual risk, but rather aggregate risk.


Tell them to buzz off then!

You have been a good customer and remain a low risk. You are NOT responsible for the risk of other policies under their self-serving “basis,” aggregate or otherwise. It’s about picking your pockets to pad theirs.

Now, I’m the furthest thing from being cheep.
However, if there is ONE THING that I despise most, it’s Forced-Fed Consumerism.

Better yet, ask for a DISCOUNT for being a such good customer!
- Richard
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Author of: INDELIBLE SPIRIT - Overcoming Adversity and Living An Extraordinary Life, by Pilot Rich
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Warmi
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Re: Insurance rate shocker

Postby Warmi » Wed Jan 15, 2020 12:54 am

designrs wrote:
drseti wrote:
designrs wrote:If any flight school is low risk, it’s yours!


Thanks for that, Richard. Unfortunately, insurance companies tend to quote on the basis not of individual risk, but rather aggregate risk.


Tell them to buzz off then!

You have been a good customer and remain a low risk. You are NOT responsible for the risk of other policies under their self-serving “basis,” aggregate or otherwise. It’s about picking your pockets to pad theirs.

Now, I’m the furthest thing from being cheep.
However, if there is ONE THING that I despise most, it’s Forced-Fed Consumerism.

Better yet, ask for a DISCOUNT for being a such good customer!


Insurance companies generally stay solvent becomes of carefully applied and calculated statistical risk models - the only thing that can influence these pricing models are market forces ( i.e competition ) but even there - there is only so much you can give before it becomes financially dangerous - that's not really force fed consumerism but common sense - it is rather very low profit margin business.
Flying Sting S4 ( N184WA ) out of Illinois

Atrosa
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Re: Insurance rate shocker

Postby Atrosa » Wed Jan 15, 2020 7:11 am

Very true. I'm in that industry. Our margins are incredibly thin. If you get pricing wrong it will sometimes take years to recover if ever. Insurance is becoming increasingly commodity like. Because companies are on the knifes egde there will be companies chasing market share which is dangerous because when you lose money you tend to lose alot. It is akin to selling dimes for nickels. You will get a bunch of customers until you are out of money. Unlike what most of the public thinks It is a very transparent industry. You can see their loss ratios on the NAICs website. I suggest everone who suffers from insomnia take a look at one.

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designrs
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Re: Insurance rate shocker

Postby designrs » Wed Jan 15, 2020 10:47 am

Atrosa wrote:Very true. I'm in that industry. Our margins are incredibly thin. If you get pricing wrong it will sometimes take years to recover if ever. Insurance is becoming increasingly commodity like. Because companies are on the knifes egde there will be companies chasing market share which is dangerous because when you lose money you tend to lose alot. It is akin to selling dimes for nickels. You will get a bunch of customers until you are out of money. Unlike what most of the public thinks It is a very transparent industry. You can see their loss ratios on the NAICs website. I suggest everone who suffers from insomnia take a look at one.


Interesting replies abut the insurance industry. I still feel that the big companies, and the underwriters, are making big money... and those are the ones who must pay if there is a claim. Or does a small selling agent suffer a loss or penalty in a claim as well?

Curious too about the comments above, are you speaking specifically of aviation insurance, or other forms of insurance?

Thanks for the perspective.
- Richard
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Previous Owner: 2011 SportCruiser
Author of: INDELIBLE SPIRIT - Overcoming Adversity and Living An Extraordinary Life, by Pilot Rich
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Atrosa
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Re: Insurance rate shocker

Postby Atrosa » Fri Jan 17, 2020 3:01 pm

I've attached a link to the NAIC's industry report. In the report it details what kind of margins the Property&Casualty industry experienced. The key measures are loss ratios. If you look at the historical run rate it is about 72.5%. What that means is that for every dollar sent to an insurer 70 cents is sent back to the customers. Now running insurance companies in this extremely highly regulated environments take armies of Lawyers, Actuaries and Accountants. As you may know this group of individuals don't come cheap, someone has to be able to afford flying :)

The expense ratio is mainly made up of HR costs but technology and regulatory fees are not by any means insignificant. The expense ratio is about 27%.

So how do we stay is business you ask. Investment income. As part of the financial professionals we hire we also hire the worlds best investors. because we may experience large payouts, those payouts tend to happen over time not once you pay your premium. This allows our hot shot investment team to invest the money and make us investment gains.

Two events really will send shock waves though the industry, higher that expected claims and market volatility. If you noticed in the data 2010-2012 were very bad years for the industry. Hurricane Irene caused significant losses across the industry.

I'm not a specialty risk guy, and that is where GA insurance operates under but I think there has been an uptick in crashes over the past few years. Because this space is relatively small it will not be able to absorb times of volatility as well as a enormous market like property and casualty. As you have bigger sample sizes you can get more accurate predictions and price accordingly, think back your high school statistics class and sample sizes. Remember a free market abhors a vacuum and if there is unchecked profiteering others will quickly want a piece of the pie and before you know it prices will come down. We had a specialty risk division at my company but others did it better and we were forced to close the division. That pesky free market is a double edged sword.

Let me know if this helps shed some light on a complex, less than transparent industry. (BTW I author notes to the financial statement and by the time legal and the regulators are done with it I barely understand what I wrote)

https://www.naic.org/documents/topic_in ... report.pdf

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Warmi
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Re: Insurance rate shocker

Postby Warmi » Fri Jan 17, 2020 3:10 pm

Who so a combination of some kind of market crash ( or a downturn ) and large disasters ( natural disasters , 9/11 type of events ) are really like double whammies for the industry ...
Flying Sting S4 ( N184WA ) out of Illinois

Atrosa
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Re: Insurance rate shocker

Postby Atrosa » Fri Jan 17, 2020 4:13 pm

Warmi you are right on with market drops. Also claims increase during times of market downturns. Also most of our investmemt prowess is put on a leash because of regulatory limits on investment types and concentrations.

Atrosa
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Re: Insurance rate shocker

Postby Atrosa » Fri Jan 17, 2020 6:23 pm

Oh yeah Designer i forgot to answer your question. An agent is not impacted by the losses. His geographical area may see a rate increase if the is something that makes that area have a higher frequency of claims.

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designrs
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Re: Insurance rate shocker

Postby designrs » Fri Jan 17, 2020 8:44 pm

Atrosa wrote:Oh yeah Designer i forgot to answer your question. An agent is not impacted by the losses. His geographical area may see a rate increase if the is something that makes that area have a higher frequency of claims.


Very interesting ad extremely thorough.
Thank you for shedding some light on these issues.
- Richard
Sport Pilot
Ground Instructor
Previous Owner: 2011 SportCruiser
Author of: INDELIBLE SPIRIT - Overcoming Adversity and Living An Extraordinary Life, by Pilot Rich
Book Preview: https://indeliblespirit.com/sneak-previ ... le-spirit/

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Scooper
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Re: Insurance rate shocker

Postby Scooper » Fri Jan 24, 2020 5:14 pm

Part of this morning's AOPA ePilot email discussed rising insurance premiums and the reasons it's happening.

https://www.aopa.org/news-and-media/all-news/2020/january/23/why-insurance-rates-are-increasing-10-to-100-percent
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Re: Insurance rate shocker

Postby Sling 2 Pilot » Sat Jan 25, 2020 8:26 am

I’m keeping my fingers crossed this year, hoping I won’t see a huge increase. All of my premium cost is related to Hull. My liability is under $300 and I pay around $2500. That’s down several hundred from both the original premium when I got the Sling and the first renewal I was quoted a year later. I had Hallmark from AOPA originally and went back to AVEMCO, who were a couple of hundred less. Ive used Avemco before for my last plane and for renters insurance. When I purchased the Sling they weren’t insuring them at the time, guess I got lucky, glad I asked again.

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Re: Insurance rate shocker

Postby Wm.Ince » Sat Jan 25, 2020 5:01 pm

Sling 2 Pilot wrote:. . . All of my premium cost is related to Hull. My liability is under $300 and I pay around $2500.

If you don't mind sharing, how much are you insuring the hull for?
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