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VOL. 45 NO. 3 - FALL 2020

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ASCENDING TO GREATER HEIGHTS Since 1980, LAU has consistently delivered products and services that our producers can rely on. We have our sights set on a bright future and we are charting a course to rise above the rest.

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IN THIS ISSUE Editor John Murray

Murray, Morin and Herman

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President’s message

SAFETY REPORT ARE PERSONALIZED INSURANCE PREMIUMS POSSIBLE?

CONFERENCE 2020 THE KEYNOTES

CORE PRINCIPLES AND CONCEPTS VIRTUAL CLASS

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2021 CONFERENCE NEW ORLEANS

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CLAIMS DIRECTOR’S REPORT COVID-19 AND THE IMPACT ON AVIATION INSURANCE CLAIMS

The ideas and opinions expressed by authors of articles published in The Binder are wholly their own and do not necessarily represent those of the Aviation Insurance Association. The articles are not provided as legal advice.

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Published by the Aviation Insurance Association 7200 W. 75th St. Overland Park, KS 66204


PRESIDENT’S MESSAGE JIM GARDNER - AIA PRESIDENT, The James A Gardner Company Inc.

AIA WANTS YOU The AIA Wants YOU! The backbone of a solid association is the depth and breadth of its membership. The AIA was founded and has thrived on a small core group of members focused on the annual conference for networking and business facilitation. Times have changed. While the conference will always be the most important event of the year for the aviation insurance industry, we can no longer afford to rely on it as the major portion of our revenue.

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To grow and reduce our reliance on the annual convention we need to dramatically expand our membership base, which in turn increases our revenue from membership dues. This needs to become the rock on which the financial foundation of the association is built upon. To our strong group of core members, we need your continued support and help to build on that. If you are a Premier member, thank you. If you are an executive member, we ask you to consider a Premier membership. If you are an Affiliate or Associate member, we ask for your continued support, even if you are not planning on being at the conference. We will find a way to bring value to your membership. If you’re not a member and are reading this Binder, and feel it is worth reading, or you attended one of our educational webinars and found it worthwhile, we ask you to join us. Our membership dues are some of the lowest in the Aviation Industry. Pay it forward and contribute to our ability to bring better education opportunities and more member services to you. We ask you to budget for the conference as if it were normal times. We need your support, not only in membership dues for a larger part of your company employees, but sponsorships as well. Whatever happens, we will bring you value for your support. In addition to member growth, we need to find other sources of revenue, whether from advertising in The Binder, sponsorships for our virtual education opportunities, or some other innovation not yet seen.

The AIA has made good strides adapting to our changing world In May, we held our 2020 conference on a virtual platform, providing our membership with 8 hours of Continuing Insurance Educations and Continuing Legal Education providing full licensing credit. I’m not sure of the exact number, but we were able to provide continuing education to at least twice the number of aviation insurance professionals than we did at the annual

conference. In addition, we hosted 4 Keynote Speakers to address our membership. In June we held a series of webinars “Focusing on the Underwriting Companies” in a virtual adaptation of the popular “Queueing Up at AIA” held each year at the annual conference. Sadly, we lost the in-person networking that is the backbone of our annual conference. However, we discovered that the virtual format gave each underwriting company an opportunity to “tell their story” in full to our Agent and Broker Members. It was such a big success that we’ve decided to continue the virtual “Queueing Up” format in the future, allowing our Agents & Brokers and Underwriter joint division members to adopt an education format, possibly for additional CE Credit during the conference. We have also hosted webinars for the FAA to outline illegal charter issues and held a 1 hour CIE webinar just this past month on “Why Is It Excluded.” Thanks to the volunteer panel members outstanding presentation, we were able to raise additional and much needed revenue for the association. We are planning on more of these.

The AIA has been front and center as a spokesperson for the Aviation Insurance Industry We have hosted or participated in numerous webinars and seminars for the HAI, NBAA, NATA and GAMA telling the aviation world why the aviation insurance marketplace has changed, how it has changed, and how their members can adapt to it. Our new Safety Committee is engaging with the industry to address safety issues with a focus on how it affects insurance. We continue to look for and accept opportunities to represent the aviation insurance world.

We’ve had some setbacks • We had to cancel our Toronto Conference, which inhibits our membership growth in Canada. • We have postponed any new Core Principals & Concepts classes for CAIP designation due to the pandemic

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and lack of facilities to hold the class in person as well as the technology and experience to do it completely virtual. This is a problem we are working hard to solve.

The AIA has a solid financial balance sheet But our foundation is built on the sand of dependency on our annual conference. The math for a smaller conference, does not lead to a profitable conference at an affordable conference fee, given smaller revenue and added expense of better audio visual to improve our educational offerings. The silver lining to the pandemic is that it has forced us to change at a faster pace than we were planning. We need to continue to adapt, improve, change, and GROW!

The 2021 Conference – In Person and Virtual We are going forward with the 2021 conference in New Orleans. Our annual conference remains and will remain the pinnacle of our association. Virtual meetings and technology have their place, but you cannot replace in-person networking and meetings to facilitate relationships and business. Our conference is the best time and place for our European partners to meet with our US companies to facilitate business and solidify relationships. Or, for agents and brokers to meet with underwriters and expand relationships with attorneys, claims, and the international community. The pandemic has certainly thrown a wild card into our ability to plan events and budget. At this point there are so many unknowns. With any luck, the airline, travel, and hospitality industries will have continued to adapt to provide a reasonable and safe environment for everyone. And, as science catches up with what this virus is, and isn’t, we could have vaccines, improved testing, and treatments that make it less contagious and deadly as well as bring a sense of comfort to the traveling public. We are just going to have to monitor and adjust to the realities as they present themselves.

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Bringing more education to more Aviation Insurance Professionals We are learning how to use technology combined with our traditional education opportunities. • At the conference, we plan not only to hold social distanced and safer in person CIE and CLE sessions similar to what we have in the past, we plan to offer classes via live video stream to all aviation insurance professionals who want to get their 8 hours of CIE and CLE credit. • The general session will also be held both in person and live streamed to reach more members and viewers • We will continue to bring education opportunities throughout the year. • We will find a way to have at least 1 live/virtual and 1 virtual Core Principals & Concepts classes in 2021. • We are exploring an Advanced Aviation Insurance curriculum which goes beyond the Core Principals course for advanced education. • We are learning how to repackage the videotaped conference presentations so that members can go on our website and get a wide variety of education opportunities for credit, not just this year, but past years’ presentations.

More than ever, the AIA Wants YOU! Building a better association through a broader membership base, better member services and education opportunities, non-conference revenue streams, and adapting our annual conference to take advantage of technology are our areas of focus for 2021 and beyond. It all starts with you. Every single member is important. I ask you to make the commitment to be a part of making our association better.


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AIA SAFETY REPORT

ARE PERSONALIZED INSURANCE PREMIUMS POSSIBLE?

STEVE BRUNEAU - VICE PRESIDENT AVIATION SERVCES, POLARIS AERO MADELINE SULLIVAN - MANAGER OF SAFETY TRAINING

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here’s a big debate in the sports industry during the time of Covid-19: is it safer to play or not to play? Without much thought, it’s easy to assume “no play” is the obvious answer. No huddles, no contact, no problem. While this may be true, it isn’t realistic. Aviation would be safer, too, if planes never left the ground. Yet, business must continue. Athletes must play and airplanes must fly. A world without risk is not possible; a world with too much risk is unacceptable. To minimize risk, we must go beyond standard concepts of safety. We need to realize that actionable information is the key to minimizing risk. The challenge with quantifying safety in our industry is

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that it’s nearly impossible to track a lack of outcomes. Instead, the industry relies on abstract and incomplete information to guide decision making, and subsequently insurance premiums. So, what is the best way to determine insurance premiums? How can we determine an operator’s level of safety? Before we can answer these questions, we must understand the inadequacies of how the “safeness” of an operator is widely measured. The absence of incidents or accidents is generally used to indicate a company’s level of safety. While this can be true, it is a woefully inadequate way of gauging the safeness of an operator. As an analogy, consider a drunk driver who does not cause an accident. Does that mean


he was safe? No, the danger was still there, despite the lack of a bad outcome. The lack of outcomes are not a reliable method for determining safeness. The consistent use of hazard scoring systems is another indicator of a company’s safeness. These systems assign arbitrary values to various hazards. For example, night may be assigned a score of 5 and a wet runway may be assigned a value of 3. These values are then added together to get an overall score of 8. Here the problem lies in assuming qualitative values can be used quantitatively. After all, we cannot claim that two 3-star restaurants are better than a 5-star restaurant simply because the sum of the two 3-star restaurants (6) is greater than 5. Scoring systems fail to address the risk in a meaningful way and lull users into a false sense of security. Third-party auditors are also used to determine an operator’s level of safety. These auditing organizations provide a 2-tier or 3-tier rating system that categoriz-

es an operator’s safeness based on the level of conformance to an accepted standard. These third-party audits are certainly an improvement over the aforementioned methods; however, the data accumulated during the audit does not paint the complete picture. The main pitfall with audits is that they only capture the organization’s safeness during a very small snapshot of time. Finally, participation in data sharing programs–for example, Aviation Safety Information Analysis and Sharing (ASIAS) program, Aviation Safety Reporting System (ASRS)–is another indicator of an organization’s interest in safety. It’s important to recognize that most of these programs were not created to help individual companies; they were created to gather data for the FAA. While these data sharing systems have many benefits, they also have drawbacks: the data collected in these programs is inconsistent, incomplete, and difficult for operators to access.

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So, how do we overcome these shortcomings to comprehensively quantify safety for the purpose of offering personalized insurance premiums? It’s easy to say we need better data analysis and information sharing. Though fundamentally important, these are not novel concepts. The multifaceted solution lies in the type of data we’re tracking and way that information is shared. Let’s dig deeper. We’ve already established that collecting safety data is a must here, but it’s equally important to discuss the different types of data. Take, for example, the operator who looks at the safety data and sees that they’ve had four unstable approaches in the last two weeks. If they were to act only on this data (i.e., the number of unstable approaches), they would likely conclude that pilots require remedial training. They would remind the pilots of the published stabilized approach criteria. If, on the other hand, the operator conducts a proper root cause analysis, they may have discovered that all the unstable approach events were completely unrelated–they all had different causes. Since they had different causes, they will require different remedial actions to fix. Therefore, the original proposed risk control (more training) will not fix the problem! Consider a different example where the safety data shows a few sporadic events (e.g., unstable approach, near mid-air collision, incomplete pre-flight checks) over the past couple of weeks, but nothing seems to be trending. If the operator were to do a root cause analysis on each event, they may actually discover a common causal factor–fatigue. Only after identifying the root causes can we put in place corrective actions to avoid negative outcomes. To understand the cost of safety, we need to look at more than just the cost of incidents and accidents. We need to systematically capture the impact that safety-related deviations and malfunctions have on a business. How

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many flight delays did they cause? How many flight cancellations? How much revenue was lost? How much did it hurt the organization’s reputation? By capturing these hidden costs, we can get a more complete picture regarding the true cost of safety. If we can track the costs of a lack of outcomes–which we can, given today’s technology–then we’re really not that far away from being able to achieve objective safety analysis. As flight operations and insurance underwriters embrace information sharing, we can create industry-level safety analyses that will highlight which companies are lagging and which are leading. Not only will this process allow underwriters to accurately assess the “safeness” of an operator compared to their peers, it will allow flight operations to justify future safety investments, thrusting the benchmark for safety into unchartered territory. So, are personalized insurance premiums possible? Let’s answer that question with a question: Will sports continue during Covid-19?


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AIA CONFERENCE 2020:

THE KEYNOTES KIM ROSENLOF - AeroInk Incorporated

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he online format of the 2020 AIA Conference held throughout the month of May presented so much information, it was difficult to adequately cover the educational sessions and the four keynote speakers in one article. Hence, this article provides an overview just of the four keynote speakers; for a review of the educational sessions, see the Summer 2020 issue of The Binder.

Keynote 1: James Viola, Helicopter Association International (HAI) Stepping into the role of HAI president on January 16, 2020, former military helicopter pilot and FAA director Jim Viola could not have known that he would take charge of the international helicopter organization during one of the toughest economic and political environments in the history of the industry. Ten days after taking office, Viola addressed public fear and anger toward helicopters generated by the high-profile Kobe Bryant crash occurring in Los Angeles the day before HAI’s Heli-Expo conference opened in Anaheim. Then, about ten weeks into his term, Viola saw the helicopter industry decimated by Covid-19 border closings and shelter-in-place orders worldwide.

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“All of the tour operators are completely shut down right now,” Viola said, speaking to the AIA via video on May 11. “Training for pilots and mechanics is being disrupted since it’s all face-to-face and hands-on. Manufacturing is down, although we don’t know by how much yet. And the cut in oil and gas prices certainly affects that part of the industry. There’s a lot of pain right now in the rotorcraft industry.” Viola began his presentation with statistics from the U.S. Helicopter Safety Team (USHST) that he helped create in 2013. Per the USHST, from 2009 to 2019 U.S. civil helicopters flew nearly 34 million flight hours and experienced 233 fatal accidents, for an overall accident rate of .68 per 100,000 flight hours. Flight instruction comprised 17 percent of hours but only 7 percent of fatal accidents, while personal/private flying comprised only 3 percent of hours but 26 percent of fatal accidents.


“We’re really looking at ways to get safety enhancements and messages out to the personal/private pilots,” said Viola. “The goal of the USHST is to lower the fatal accident rate to 0.55 per 100,000 flight hours by 2024, and we’re working 22 data-driven safety enhancements aimed at reducing fatal accidents.” Four industries—personal/private, helicopter air ambulance, commercial operations, and aerial applications— made up 61 of 104 fatal accidents from 2009 to 2013. Of those 61 fatal accidents, 52 percent were tied to three occurrence categories: loss of control inflight (LOCI), unintended flight into instrument meteorological conditions (UIMC), and low altitude operations. Hence, the USHST are focusing their safety enhancements on those that most affect combinations of those industries and operators. For example, LOCI initiatives include: • Detection and management of risk level changes during flight • Progressive approach to training autorotations • Training for recognition and recovery of spatial disorientation Other USHST initiatives include a variety of risk assessment initiatives; new technologies such as flight data monitoring, stability augmentation systems, enhanced helicopter vision systems, and digital co-pilots; pilot competency initiatives tied to certification, training, and safety culture; and enhanced training initiatives—including simulation/education to develop safe decision making. The team is working with various pilot and industry organizations to distribute materials and get the word out about safety initiatives and enhancements. But worldwide use of the key recommendations, such as incorporating a safety management system (SMS), is still under

70 percent, suggesting room for improvement. Use of flight data monitoring by helicopter operators hovers between 20 and 30 percent worldwide. Viola also discussed HAI’s own safety initiatives including the Land to Live program, which urges helicopter pilots to perform precautionary landings when faced with potential emergency situations; and the HAI Accreditation program, which provides accreditation to operators who meet certain IS-BAO (International Standards for Business Aircraft Operations) standards and employs International Helicopter Safety Foundation (IHSF) recommendations. During the Q&A session after Viola’s presentation, AIA President Jim Gardner asked Viola whether HAI could help develop software for training devices to provide more situational experience for young helicopter pilots. “It’s not that their stick and rudder skills are lacking. Some of these young pilots can fly a helicopter inverted through a pinhole,” Gardner joked. “But their experience and judgement need some help.” Viola replied that the HAI’s Training Working Group is working on more scenario-based training featuring aeronautical decision making skills that could be done in the simulator. He said the main issue with simulator training is the lack of credit given for the training by aviation authorities around the world. “[Helicopter pilots] aren’t doing enough simulator training for providers to lower the price because they aren’t getting the credit for it from aviation authorities,” said Viola. “What we’re trying to do as a safety organization is to say, the heck with the credit, let’s be safer and do the additional training whether or not you get the credit. If we can do more training in the aviation training devices, the more devices will be out there and the cheaper it will be. It’s a hard sell, though.”


Keynote 2: Bruce Landsburg, National Transportation Safety Board NTSB Vice Chairman Bruce Landsburg spoke to the AIA on May 13, 2020, providing a brief overview of NTSB responsibilities and topics affecting safety. Previously serving as president of the Aircraft Owners and Pilots Association (AOPA) Foundation and Air Safety Institute, Landsburg holds an Air Transport Pilot (ATP) certificate with numerous instructor ratings and has logged more than 7,000 hours of flight time. One item of special interest to the NTSB at the moment is the patchwork legalization of marijuana across the United States and its effect on transportation workers. Landsburg showed a slide depicting the states where marijuana is still illegal (3), legal for medical purposes with limited THC content (14), legal for medical purposes only (22), and legal for any use (11). While the “enthusiasm for pot is considerable,” according to Landsburg, he reminded the audience that according to Code of Federal Regulations 14 section 91.17, marijuana cannot be used or transported when flying an aircraft, and even CBD oil may contain trace amounts of THC that can show up on drug tests. “Federal law preempts any use by pilots, regardless of what state it was bought in and whether it’s legal to use on the ground in that state,” Landsburg said. “It’s absolutely not legal to use in the air. We had a recent case where a pilot was transporting a small amount, had an incident, and the FAA revoked his pilot certificate.” Landsburg then went on to talk about the NTSBs highest unsolved area, which is crashes involving failures of reciprocating (piston-powered) engines. Approximately four crashes involving piston-powered aircraft occur each week in the U.S., with 50 percent of those crashes

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resulting in fatalities. These aircraft usually don’t have a “black box” cockpit voice recorder or flight data monitoring equipment, and there may not be much left of the aircraft if a post-accident fire occurs. For these reasons, about 35 to 40 percent of these cases remain unsolved by the NTSB. Landsburg recommends that pilots and owners of piston-powered aircraft do everything they can to collect data on their engine health. “Data speaks, if we’ll listen,” Landsburg said. “There’s a lot of equipment that can be used by GA pilots. For example, an engine data monitor (EDM) that shows exhaust gas temperature and cylinder head temperature provides two areas of information that help predict when the engine is going to have a problem.” EDM data can often be downloaded to a USB stick and sent to a lab for analysis, similar to an oil analysis. Both EDM and oil can provide trends that can indicate engine health and predict failures. “An oil analysis is analogous to a blood test and should be done every time the oil is changed,” Landsburg said. “If the engine is in the process of failing, it will start to produce varying degrees of metal, and the submicroscopic analysis (of the oil) can help predict when components are getting out of tolerance and could fail.” Landsburg talked briefly about the NTSB’s role in the Boeing 737 Max crashes, emphasizing that neither crashes are under the NTSB’s authority since both occurred on foreign soil and were flown by foreign air carriers. Instead, the NTSB is an accredited representative to the investigation under ICAO Annex 13, and can provide input and recommendations only. Landsburg summarized the NTSB’s September 2019 finding that pilots could be overwhelmed by the technology, saturated by complex troubleshooting, and that there needs to be re-thinking of human factors in cockpit designs.


“Human factors is an arcane subject, and we like to think that we’ve come a long way,” Landsburg said. “I think this proves that we haven’t quite got to the level we’d like to be.” Landsburg noted that the trim de-activation system on the MAX was different than other 737s, and the pilots, with not much transition training from previous 737 models to the MAX, did not behave as either Boeing or the FAA expected when confronted with the initial noseup trim problem. “Instead of resolving the problem in 10 to 15 seconds as expected, the pilots in both crashes fought with the aircraft for several minutes and never did resolve it,” said Landsburg. “Plus there were multiple alerts, making the pilots quite confused as to what was really going on.” Landsburg used the 737 MAX human factors scenario as an introduction to a section on pilot psychology, noting that while everyone believes they have an invisible shield that will protect them when driving a car or boarding an aircraft, pilots (and members of many other professions) often have an illusory superiority complex. “We all believe we have an invisible shield, so when we decide to get into an airplane or get into our car, we think nothing bad is going to happen,” Landsburg said. “But our abilities are not uniform. We may be really good at one thing, mediocre at something else, and maybe flying airplanes isn’t really our strong point… In the insurance world, you have to deal with people who are financially gifted but aeronautically challenged. And this can get really expensive.”

Keynote 3: Steve Blakey, StaRR Insurance Holdings Speaking to AIA on May 19, Steve Blakey, president and CEO of Starr Insurance Holdings, started his presentation with an estimation of Covid-19-related insurance losses of $107 billion, mainly due to business interruption claims. “Purportedly, losses to small business in the U.S. alone are $250 billion to $325 billion per month,” Blakey said. “The U.S. insurance market capital is $800 billion, and the global reinsurance market has about $600 billion. Clearly, had business interruption been purchased for pandemic coverage across all industries, there wouldn’t be enough capital to play claims. The insurance industry would be destroyed.” Blakey predicted that governments around the world will begin working on pandemic-based co-insurance agreements similar to the terrorism risk insurance program. “A passenger surcharge per ticket could be levied to build a pool to respond to airline business interruption cover,” said Blakey. “The revenue can be collected, administered and insured by industry alongside a substantial government coinsurance or reinsurance. The government is simply unable to keep lumping billions and trillions of dollars to cover the costs.” Blakey compared the pandemic situation to that faced by the aviation insurance industry after 9/11. “In the airline industry, the war covers were all cancelled, so airlines were essentially grounded,” Blakey recalled. “The market had to develop the cover to get everyone flying again. The insurance industry put together $1 billion in capacity, the U.S. government signed onto a program, [then AIG CEO Maurice] Greenberg put up a $250 million net line… the aviation insurance really responded and got the airlines flying again.”

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While the covers for Covid are being worked out, Blakey says the rating environment—which already was hard— will get worse due to continuing volatility. He noted a number of aviation weather occurrences in early second quarter 2020, with airports and parked aircraft damaged by tornadoes and other spring storms. Losses have also occurred in the space market, “which is not small by nature.” In his commercial aviation outlook, Blakey noted the airline segment would be “affected more than most” with global lockdowns affecting premiums for the next year or two. Preliminary data suggests airline traffic was down to five percent of its pre-pandemic levels in April 2020 [based on passenger bookings; flight data show global decrease of 45 to 65 percent compared to previous year depending on week surveyed], and experts are suggesting that it may be 2022 before they are back up to January 2020 levels. “The pandemic has caused us all to relinquish many of the freedoms that we enjoyed and once took for granted,” said Blakey. “In the interest of personal and public safety, all of us will have to accept a certain amount of reduced access. We simply won’t be able to move around the world as we did.” While the commercial outlook looks bleak, Blakey’s general aviation outlook had a silver lining, suggesting that pandemic events might renew interest in business and personal aviation. “People may want to fly in smaller groups and use their own transportation for short haul,” Blakey said. “One would expect corporate America to protect its executives by expanding the usage of private aircraft.” Blakey also noted that while flight hours are down across general aviation, many entities continued to fly through the Covid shutdown, such as air ambulances, news gathering aircraft, police aviation units, and even some flight schools. To help keep pilots flying, Starr Companies announced in April that it would extend certain training and medi-

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cal certification deadlines for insured pilots, essentially mirroring those extensions granted by the FAA through June 30, 2020. In late June, Starr also launched a new usage-based aviation insurance product for pilots who rent aircraft. Called Starr Gate, the new product allows pilots to essentially purchase insurance on an as-needed basis from a mobile app or broker prior to each flight. In addition to the ad-hoc coverage, Starr Gate also provides access to CloudAhoy, a cloud-based pilot analytics tool that allows both the pilot and the insurance company to compare the pilot’s flying with other pilots; the pilot for learning and improvement purposes; the insurance company for risk assessment and premium rating. “We think Starr Gate is one of those evolutionary steps that demonstrates how technology can be leveraged in our industry to improve safety and bring cost savings to the product supply chain,” Blakey said. “We believe the online convenience coupled with the focus on safety using the CloudAhoy scoring mechanism will get the attention of many renter pilots and help ensure the aviation industry will thrive.”

Keynote 4: Mark Baker, Aircraft Owners and Pilots Association Prior to accepting his current position as only the fifth president in AOPA’s 80-year history in 2013, Mark Baker served a number of “C-level” positions in corporate America: chief operating officer at Scotts Miracle-Gro Company, president and CEO of outdoor outfitter Gander Mountain Company, and chief merchandizing officer and executive vice president for The Home Depot. But throughout his corporate career, he has also flown myriad airplanes, from a Super Cub that he has owned for 25 years to type ratings in Cessna corporate jets and DC-3s.


“This crisis has impacted general aviation in a unique way, grounding a lot of pilots, airplanes and flight schools,” Baker said, addressing the AIA on May 20. “We’re always concerned about pilots going stale and rusty and we want to make sure that we approach re-entering general aviation in a big way.” Baker discussed AOPA resources available to help pilots get back in the air after a time on the ground, including the AOPA Rusty Pilots online course, training and safety videos available at AOPA.org, and various webinars, some of which apply towards the FAA Wings program. “We’re constantly encouraging people to go sit in their aircraft, walk around it, make sure the birds and the bugs haven’t taken over the aircraft as can happen when aircraft just sit,” Baker said. “We’re coming off of a slower winter of general aviation flying, and then the pandemic hit in March so add another 60 or potentially 90 days of not flying to your currency and freshness. For us, the number one thing you can do to be safer is to fly more, because when you fly less, you have the opposite effect.” Since fewer pilots were flying in the early months of the pandemic, thousands took advantage of AOPA’s resources (including the author of this article, who completed the AOPA Rusty Pilot course in June 2020 and has flown about 40 hours since). Baker says the organization’s website traffic was up more than 250 percent from April through mid-May, and phone calls were up by the thousands. “We’re bullish about the future of general aviation on the other side of this pandemic,” Baker said. “There’s a strong likelihood of people buying general aviation aircraft and using them to get to places where they can’t get to because essential and commercial air service will be reduced.” One of the reasons Baker is optimistic about a miniboom in the GA industry is that aircraft purchases were already on the rise in May, even though there weren’t many aircraft on the market.

“During the last economic downturn, one in four turbine [powered aircraft] were listed for sale,” Baker said. “In this downturn, only 8 percent of active turbines were for sale… We’ve seen a huge lift in the number of airplanes financed in the last couple months, and more 45-yearolds arriving at flight schools to learn how to fly because they can’t get to their shops, their families, or their customers any other way.” Baker, himself an aircraft owner for several decades, also discussed challenges that AOPA members are facing with rising insurance premiums. He gave two cases of members who are flying regularly with clean records in the air and on the ground, under age 70, who saw premiums increase 38 to 40 percent last year. While he says he understands the challenges faced by the aviation insurance industry, and that increases in premiums now may not even bring premiums up to the same rates they were 15 years ago, he suggests that insurance companies find better ways to share the risk with their customer and communicate options for reducing premiums. “We know there are a lot of forgetful incidents like leaving the towbar on and it hits the propeller causing $50,000 worth of damage,” Baker said. “I think a lot of pilots would be respectful of higher deductibles for these types of incidents that don’t cause fatalities but still result in a claim.” Baker suggested that automatic premium increases due to age don’t factor in the actual risk and can push knowledgeable, capable pilots out of flying prematurely. He would advocate yearly cognitive testing or flight reviews with different instructors to better gage actual risk. “I fly with an 86-year-old instructor pilot who is as sharp as he was 40 years ago,” Baker said. “Not all 70 or 80-year-olds are the same, and we have to figure out a different way to determine their capability. It doesn’t make sense that at 69.5 years old they were okay but suddenly at 70 they are a higher risk.”

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MODULE 6: Aviation CGL Insurance 8:00 – 9:00 AM

1:00

MODULE 2: Industry History & Overview This session will provide a brief overview of the beginnings of the insurance industry along with a timeline of significant events in the development of the aviation line of coverages specifically.

9:00 – 9:30 AM

Break

9:30 – 9:45 AM

MODULE 7: Related Aviation Coverage

9:45 – 10:45 AM

This section will present other aviation policy coverages needed by most commercial aviation operators to include workers compensation, property insurance, business auto, etc., all in the context of the aviation operator.

0:30

MODULE 3: Aviation Risk Management This session will provide the student with an overview of the risk management process, the tools used to identify risk, and the various methods utilized to deal with risk in the aviation industry.

MODULE 4: Aviation Insurance Law & Contracts

1:00

Break

1:30

1:45 – 2:00 PM

MODULE 8: Claims

This module will discuss contract law and how and why contracts are utilized in the aviation industry as a risk transfer method.

10:45 – 11:45 AM

Lunch

11:45 – 1:00 PM

1:00

This section will focus on actual claims scenarios provided by aviation claims managers from around the industry to see how the aviation coverage responds to a particular accident or incident. Helpful best practices are shared so that risk managers and aviation insurance professionals can prevent claim problems. Break

MODULE 5: Hull & Liability Insurance This module will delve specifically into aviation insurance policies and discuss the important differences between those contracts and the more standardized ISO contracts used in other industry segments. It will also point out the differences between policy wordings and how they can affect coverage.

12:15 – 1:45 PM

2:00 – 3:30 PM

1:30

3:30 – 3:45 PM

COURSE RECAP / Q&A 1:00 – 2:30 PM

1:30

Break

2:30 – 2:45 PM

MODULE 5: Continued

2:45 – 4:45 PM

2:00

DAY ONE RECAP / Q&A

4:45 – 5:45 PM

1:00

This time is set aside to review the course material and work with students in applying the principles and concepts presented to an actual business such as the one presented at the beginning of the course. The focus is on risk identification, and both insurance and non-insurance solutions available to deal with the risk.

3:45 – 5:45 PM

2:00

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New Orleans Marriott AND ONLINE

AIA WANTS YOU! 2020 has been a challenge. One moment we were excited to be together in Tucson, the next we were watching the world come to a halt as the pandemic ravaged our colleagues, neighbors, friends, and families. As with all challenges, the aviation insurance industry finds a way to adapt and evolve to become better–to persevere. While not the conference we anticipated, the tremendous reception of our virtual event paved a path for the Aviation Insurance Association to enhance our education opportunities and increase value to our membership. We are committed to offering our 2021 AIA Annual Conference as a hybrid event. While we would prefer to see all of you in person, we understand that may not be possible. If you are unable to come to us in New Orleans–we will bring the conference to YOU, in the comfort of your home and workspace. If you CAN be in New Orleans, we will gather socially distanced and safely, with elbow bumps, air hugs and copious amounts of hand sanitizer.

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The Aviation Insurance Association annual conference is THE place to make the connections that matter. In addition to the knowledge you will gain from the education sessions, the available networking opportunities are what truly makes this conference the place to be for those working in the aviation insurance industry. This is the one time per year when all facets of the industry are together at once. It is your opportunity to renew old acquaintances, and build new relationships and your business. The 2021 AIA Annual Conference is the best venue to trade experiences, create business partnerships, and discuss the current state of the industry from each segment of the association. Network with your peers over cocktails during the opening reception and learn what is to come for the aviation insurance industry during the general education sessions. Registration will be open soon for the 2021 AIA Annual Conference – and AIA WANTS YOU to be there!


What Is Included • Educational sessions to help your business grow • Numerous networking opportunities for you and your peers • Exhibit Hall featuring the latest industry technologies and services • The opportunity to learn from some of the most successful aviation insurance professionals in the industry The full registration fee covers conference general sessions, divisional breakout sessions, conference materials, access to the Exhibit Hall, breakfasts, refreshment breaks, lunches, networking receptions, Monday night party, and education sessions for continuing education credit. The one-day pass includes everything offered on the day you select to attend except add-on and special events, which require separate fees.

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PRELIMINARY SCHEDULE AT A GLANCE FRIDAY, MAY 1 1 – 4 pm

Continuing Legal Education sessions

1 – 2 pm

Lessons Learned from an Aviation Product Liability Trial

2 – 3 pm

A Primer on Offshore Helicopter Operations

3 – 4 pm

Charting a Course for Success with Diversity and Inclusion

4 – 5 pm

Young Professional Networking Event

SATURDAY, MAY 2 8am – 2 pm

AIA Golf Tournament

8 – 10 am

Women’s Initiative Networking Event

3 – 4 pm

Membership Committee Meeting

4 – 5 pm

Education Committee Meeting

5:30 – 6 pm

New Member/First-Timer Reception

6 – 7:30 pm

Opening Reception

SUNDAY, MAY 3

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7 – 8 am

Breakfast with Exhibitors

8 am – 5 pm

Continuing Insurance Education Sessions

8 – 9 am

Risk Management & Insurance for COVID Remediation in Aviation

9 – 10 am

How Social Media and other information May Impact Claims/Litigation

10 – 11 am

Helicopter EMS Accidents/Human Factors

11 am – Noon

History and New Techniques of Aircraft Accident/Reconstruction

Noon – 1 pm

Lunch

1 – 2 pm

3-D Printing in Aviation: Perspectives on Insurance and Product Liability

2 – 3 pm

Strangest Claims You’ve Ever Heard

3 – 4 pm

Risks Involved in Loaning/Renting Aircraft

4 – 5 pm

Simulator Based Training


MONDAY, MAY 4 8 – 9 am

Breakfast with Exhibitors

9 am – 12:30 pm

General Session

9 – 9:30 am

President’s Welcome

9:30 – 10:15 am

Jeff Bruno, Global Aerospace

10:15 – 10:30 am

CAIP/CAIP Gold Award

10:30 – 11:00 am

Break

11 – 11:45 am

Ed Bolen, NBAA

11:45 am – 12 pm

Pinnacle Award

12:15 – 1:30 pm

Lunch with Speaker

2 – 4 pm Attorney/Claims Division Session 2 – 4 pm Agent/Broker and Underwriter Division Session 6 – 9 pm

Monday Night Party

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KEYNOTE SPEAKERS JEFF BRUNO President and Chief Underwriting Officer Global Aerospace Jeff Bruno was named President and Chief Underwriting of Global Aerospace, Inc. in April 2015. He has over 35 years of experience in insurance, reinsurance, and aviation insurance. He joined the company in 1988 and has served in multiple underwriting roles throughout his tenure. Jeff graduated with honors from Fairleigh Dickinson University with a degree in economics and holds the Chartered Property Casualty Underwriter (CPCU) and the Certified Aviation Insurance Professional (CAIP) designations. Jeff is a type-rated airline transport pilot with over 5,000 hours of logged PIC experience and maintains single, multi-engine, and instrument flight instructor certificates.

ED BOLEN President and CEO GAMA Ed Bolen became the president and CEO of the National Business Aviation Association (NBAA) in Washington, DC, on Sept. 7, 2004. Prior to joining NBAA, Bolen was president and CEO of the General Aviation Manufacturers Association (GAMA) for eight years. Bolen joined GAMA in 1995 as senior vice president and general counsel. GAMA’s board of directors elected him president and CEO in November 1996. In 2001, Bolen was appointed by President Bush to serve as a member of the Commission on the Future of the U.S. Aerospace Industry. Established by Congress, the commission’s objectives were to study and make recommendations on ways to ensure American leadership in aerospace in the 21st century. Bolen was nominated by President Clinton and confirmed by the U.S. Senate to serve as a member of the Management Advisory Council (MAC) to the Federal Aviation Administration (FAA). He chaired the council from 2000 to 2004. Bolen is a member of the board of directors of the National Aeronautic Association. He also serves on the Aviation Advisory Board of the Mitre Corporation, a federally-funded research and development corporation.

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LODGING & CONFERENCE LOCATION New Orleans Marriott 555 Canal Street New Orleans, LA 70130 New Orleans Marriott welcomes you to Louisiana with style, substance, and unparalleled service. Our 4-star hotel is nestled on NOLA’s famed Canal Street, between the French Quarter and the Warehouse District. We’re a short walk from Jackson Square, the Audubon Aquarium of the Americas and Harrah’s Casino. The hotel is also near the cruise port, the Convention Center and the Mercedes-Benz Superdome. Many of our intuitively designed rooms and suites offer remarkable views of the Mississippi River and downtown New Orleans. Adventure awaits at New Orleans Marriott.

Hotel reservations must be made no later than Monday, March 31, 2021. AIA’s special conference room rate at The New Orleans Marriott is $245 per night for single or double occupancy. Rates do not include applicable state or local taxes. Any hotel reservation made after Monday, March 31 (or after the AIA room block sells out) will be on a space-available basis and may not qualify for the conference rate. All rooms are available on a first-come, first-served basis. Check-in time is 4 p.m., and check-out time is 11 a.m. Individuals will need to first register for the AIA Conference to receive the information to make hotel reservations. Once payment is made, the hotel link will be on the registration confirmation page.

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• Atlanta • Chicago • Dallas/Fort Worth • Denver • Houston • Indianapolis • Las Vegas • Las Angeles • Minneapolis/St Paul

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• Oakland • Phoenix • Portland • Salt Lake City • Provo • San Jose • San Diego • San Francisco • Seattle


Airports

Recommended Attire

The Louis Armstrong New Orleans International Airport is 17 miles from the New Orleans Marriott.

Business casual is appropriate for most of the conference events.

Transportation The New Orleans Marriott does NOT provide a shuttle service to or from the airport. The hotel recommends that guests rent a car or take a taxi or Uber to the hotel.

Parking Valet Only. Guests can drive up to the main entrance at The New Orleans Marriott and be assisted by a valet for $50.72 daily plus tax for overnight guests. No vehicles taller than 5ft 9in.

The average temperature for April in New Orleans is a high of 79 and a low of 61, so please dress accordingly.

Cancellation/Dispute/Refund Policy Full refunds for cancellations will be granted if AIA is notified in writing by Monday, February 1, 2021. Refunds for cancellations made after February 1 through March 1 will be refunded at 50% of the registration fee. No refunds will be issued for regular registration cancellations received after March 1, 2021.

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CLAIMS DIRECTOR’S REPORT

COVID-19

and the impact on aviation insurance claims

TREHANE OLIVER - MANAGING DIRECTOR - McLarens General Aviation This article first published in Insurance Day on 9th November 2020

It’s been a challenging year for aviation and recent media briefings from the International Air Transport Association (IATA) paint a somewhat grim picture for the months ahead. Many indicators are pointing to a suppressed demand for air travel for the foreseeable future and the effects on the sector–which has enjoyed consistent growth for a number of decades– will likely continue for some years to come. From an insurance claims perspective these developments have a number of implications, both in terms of the volume and nature of aviation losses, as well as that way in which claims are handled.

Losses There’s no doubt that off the back of the reduction in air traffic, the number of new aviation claims has dropped off substantially. That said, we are still man-

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aging an ongoing case book across our international network. Many clients, dealing with pre-existing insurance claims, are now faced with the additional financial consequences of a global pandemic and so this has been a focus for insureds looking to complete the claims process on open files. We have a network of offices in 21 countries throughout the world, and there has been notable variation in terms of both how countries have been affected, and the restrictions that have been put in place. For example, general aviation work has remained consistent in the USA, and our China team were the first to go into lockdown and have been the first to come out. They’ve been able to perform their normal duties since around May/June onwards with no real restrictions, and domestic travel has recovered to about where it was pre-pandemic.


Airport operations have changed abruptly, and airport service companies have faced new challenges such as how to manage the large number of parked planes. As such, in some cases, this has led to ground collision claims.

‘isolation visits’ have been utilised where necessary and allowed us to continue with inspections. In some cases, we’ve been able to use our global network very proactively - for instance, managing a site visit in the Czech Republic via our Hamburg office, because of travel restrictions.

There has also been an impact on the timescales around ongoing repairs. Again, this is dependent on location, but many engine overhaul facilities have either been closed or were not working at full capacity. Issues such as a slower supply chain and the impact on parts availability, as well as human factors like travel restrictions preventing OEM representatives from collaborating with service providers in person, as they normally would, have all fed into delays. This has started to improve to some extent, though certain costs, such as shipping, have risen dramatically as a result of the pandemic.

Logistical challenges In addition to the volume and nature of losses these developments also affect the way that aviation claims are handled. International travel is more complex, with potential quarantine restrictions in many places, so there’s been a big adjustment as to how business is conducted. At the same time tech and digital tools have been used to good effect. McLarens has a global, web-enabled claims system, electronic files and video telephony running on our laptops. This allowed the easy transition of immediately switching to remote working, but also ensures complete engagement throughout our international network, with customers and other offices. Some aspects of our job have become more challenging; for example, undertaking site surveys. However, video technology, “non-contact inspections” and

Returning to normal operations? With respect to operations in the future, a lot of older generation aircraft will likely be retired early, and this will have an impact on claims because newer generation aircraft employ higher levels of technology coupled with generally higher repair costs. Coupled to the downturn in aviation in general, we may also see pressure on MROs, who are dependant on the seasonal input of aircraft from many regions. Large facilities need a steady volume of work, and much of this is under threat with so many aircraft grounded. At the same time there will be new types of risk with regards to the revised operation of airlines. Our risk

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and asset management (RAMS) team has been talking to insurers about post-Covid preparation, the return to work, how to deal with new hazards, etc. As airport operations teams turn their attentions towards restoring normal aviation operations and bringing aircraft back into service, they face a number of new challenges. Take staffing, for example, which has been heavily affected as operators look to manage their cost base. Whether it be training in new Covid-related safety procedures, or new operational challenges such as having a large number of aircraft parked in a limited amount of space, there are new risks that have to be managed. Moreover, with pilots’ flight hours having been greatly reduced, skills decay is another potential risk. There are also challenges related to bringing dormant aircraft, equipment and infrastructure back online, particularly as we begin to recognise the implications of long-term storage. One recent airworthiness directive, for example, was issued regarding a check valve in a particular type of engine that can be affected by corrosion developing after a period of storage and

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disuse. Aircraft will have to be carefully restarted and properly tested before they can be returned to service. Our RAMS team has also been undertaking work with lessors, helping to manage the process of aircraft coming off lease prematurely because of being grounded. Though not directly related to insurance claims, it’s indicative of the economic climate, plus the fact that many operators have been reviewing their long-term leases, which may have an impact on insurance renewals.

.......................................................................................

McLarens Aviation is a leading provider of loss adjusting, survey and risk services to the global aviation and insurance industries. It has a team of over 100 in-house aviation specialists, operating in 21 countries across the globe. In the USA, in addition to the McLarens Aviation, McLarens General Aviation maintains a network of specialists with focus on the GA sector.


PRESIDENT JIM GARDNER The James A. Gardner Company, Inc. Jim.Gardner@jagardner.com

VICE PRESIDENT GREG STERLING AIG AEROSPACE greg.sterling@aig.com

SECRETARY CHRISTOPHER MORIN Murray, Morin & Herman cmorin@mmhlaw.com

TREASURER LUKE UITHOVEN Kimmel Aviation Insurance Agency, Inc luke@kimmelinsurance.com

DIRECTOR, AGENT/BROKER DIVISION DAVID HAMPSON Schrager Hampson Aviation Insurance Agency LLC david@planeinsurance.com

DIRECTOR, ATTORNEY DIVISION ROBERT J. WILLIAMS Schnader Harrison Segal & Lewis LLP rwilliams@schnader.com

DIRECTOR-ELECT, ATTORNEY DIVISION MICHAEL MCGRORY SmithAmundsen LLC MMcGrory@salawus.com

DIRECTOR, CLAIMS DIVISION ERIC WEIDNER McLarens General Aviation eric.weidner@mclarens.com

DIRECTOR OF REINSURANCE DIVISION WALTER VOIGTS-VONFORSTER Munich Re WVoigts-vonForster@munichre.com

DIRECTOR, UNDERWRITER DIVISION JEFFREY TIPPINS Starr Aviation jeffrey.tippins@starrcompanies.com

DIRECTOR-ELECT, UNDERWRITER DIVISION WES COLLIER Old Republic Aerospace wcollier@oraero.com

DIRECTOR, INTERNATIONAL DIVISION IAN WRIGGLESWORTH Guy Carpenter ian.wrigglesworth@guycarp.com

DIRECTOR-AT-LARGE NICOLE WOLFE STOUT Strawinski & Stout, P.C. nws@strawlaw.com

DIRECTOR-AT-LARGE CHRISTOPHER ARNOLD Sutton James, Inc. carnold@suttonjames.com

INTERNATIONAL DIRECTOR-AT-LARGE BELINDA BRYCE The Magnes Group bbryce@magnesgroup.com

AIA EXECUTIVE DIRECTOR MANDIE LOROFF Aviation Insurance Association mandie@aiaweb.org

AIA BOARD COUNSEL RAY MARIANI Leader, Berkon, Colao and Silverstein LLP rmariani@leaderberkon.com

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Profile for Aviation Insurance Association

BINDER Vol. 45 No. 3 - Fall 2020  

BINDER Vol. 45 No. 3 - Fall 2020  

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