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VOL. 44 NO. 4- WINTER 2019


a CRISIS OF BAD FAITH Properly Insuring Aircraft in Owner Trusts



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IN THIS ISSUE Editor John Murray

Murray, Morin and Herman



President’s message




















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.


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


Focusing on



y focusing on our membership and services the As-

sociation has shown some real success in a very short time. The initiatives we have undertaken coincide with our goals of increasing the visibility of the AIA brand and improving the membership value proposition with the ultimate goals of increasing membership and strengthening our financial foundation for the future.


The Aviation Insurance Association can become an Effective Voice for the Aviation Insurance Industry

GAMA Presentation In October, Peter Bunce of the General Aviation Manufacturers’ Association (GAMA) invited the AIA to address their Board of Directors. GAMA membership had been expressing concerns that they were seeing large increases in insurance premiums and wanted to hear from an unbiased source concerning the state of the aviation insurance world. With the help of AIA Vice President, Greg Sterling, AIA members Jordan Lanford and Gregg Strange, we put together a presentation for GAMA, “Trends in Aviation

Insurance”, and delivered a very candid and factual panel discussion. While the message we delivered was probably not what they wanted to hear, they came away with a clear understand of why their insurance rates were going up and likely to continue the foreseeable future. I think they understood that it is in everyone’s best interest to have a healthy and profitable aviation insurance industry and that the rates they were enjoying the last several years simply were not sustainable. Mr. Bunce told me after the presentation that “this was exactly what we (GAMA) needed.” I feel certain that our message was echoed at the NBAA BACE the following week. The fact that it came from an unbiased source made the message that much more effective. We will continue to look for opportunities for the AIA to speak to the Aviation Industry at large on issues of Safety and Insurance. And, by being more visible, we are actually reaching more Aviation Insurance Professionals around the world.

Core Principles and Concepts is reaching more Aviation Insurance Professionals worldwide. In September, the Association conducted a Core Principals and Concepts class in Atlanta. It was a packed class room with 25 attendees. The very first Core Principals and Concepts class was taught in London November 5-6, just preceding the London Reception. This was a very important milestone for the Association as it extends our reach to aviation insurance professionals worldwide. We had three attendees from Hong Kong. Congratulations to past AIA President David Sales as the very first European recipient of the coveted CAIP designation. It is fitting as David was very instrumental in getting the European credentials approved and building support for expanding the class to London.


Core Principals and Concepts coming to you via Webinar! It is now set in stone. Courtesy of our new University Partnership with Ole Miss, we will be conducting our first Webinar February 22-23, 2020. If all goes well we will be able to reach even more aviation insurance professionals with educational opportunities, potentially including risk managers.

London Reception continues to grow as an important event for our international community. The London Reception which concluded on November 7, 2019 went extremely well. We had about 125 attendees which made the networking opportunity a real plus. It also gave us a perfect segue into sharing how the AIA benefits our international community as well as touting the May 2020 Annual Conference in Tucson. The entertainment was an exceptional panel discussion put together by Walter Voights-von Forster, our Reinsurance Director. Moderated by yours truly, it was a lively discussion on the Effect of the Pilot Shortage on Aviation Insurance Worldwide. We could have gone on for hours but I was reminded the “refreshments” were getting warm and the hors d’ oeuvres were getting stale.

The AIA University Ambassador Program – Not everyone wants to be an airline pilot! As part of our Membership Committee, the University Ambassador Program is taking our message to colleges and Universities about careers in Aviation Insurance. We are looking for volunteers to carry our message to their Alma Maters having aviation or insurance departments. This involves creating a contact and relationship


with Department Chairs and Professors as well as attending their career days or addressing the classrooms on behalf of the AIA and the Aviation Insurance Industry. Did you know that a qualified college or university intern candidate may be eligible to earn college credit and receive AIA scholarship money to help offset the required tuition?

The AIA Safety Committee is thriving and has taken a life of its own. In just 7 short months of existence, under the leadership of Mark Breitenbach and efforts of committee members, the AIA Safety Committee has been well received in the aviation community. They have provided a panel presentation to the Georgia Business Aviation Association on the Pilot Shortage issue and received an invitation to speak to the Pacific Northwest Business Aviation Association as well. In addition we have begun a liaison program with other industry associations and regulatory agencies to include the NBAA, NATA, GAMA, IATA, and the CAA in London. We are carrying the message of how safety and insurance are interdependent, and the aviation world is listening.

The AIA is building an Aircraft Training Provider Data Base This will be a member’s only service. Thanks to W. Brown & Associates, we have a starting point. Over the course of the next several months we will be adding training providers who wish to participate. Hopefully we will have the best selection of training providers of all types of aircraft for our members to find a viable solution for their clients. It will be clear that being on the list does not mean they are approved by any insurance company; just that they provide the specific training services to the flying public.

Marketing and Membership During our build up to the London reception and the first London Core Principles and Concepts class, it became abundantly clear that the AIA membership communication is not where we want it to be. We need to find ways to reach out beyond our core membership as well as build the AIA brand to the Aviation community at large. For that reason, we have acquired the services of a Marketing and Membership consultant to help improve our message and reach a wider audience, through more diverse media in a more consistent and effective way. In addition, we hope to reach new sponsors for our conference, more sponsorship opportunities, as well as increase advertising revenue in the Binder. We also want to explore other potential non-conference revenue opportunities.

Thank You to AIA Members, Volunteers and Contributors. As always, I would like to make a special thanks to all of our members, volunteers and contributors without whose help we could not succeed. Every little bit helps. No contribution is too small, even if it the simple sharing or liking an AIA post on LinkedIn or Facebook. One of your contacts or followers could be our next new member, sponsor or contributor. And, in the spirit of the holidays … Best Wishes and Happy Holidays to one and all.


Add your Photo

Help put a face to a name by adding your photo to the AIA membership directory located in the members’ only section of the AIA web site. Uploading is easy through your profile page – however, if you need assistance or would prefer that AIA Headquarters upload your photo for you, we are happy to do so! If you would like AIA to assist you, please e-mail your picture directly to AIA Executive Director, Mandie Loroff at



Properly Insuring Aircraft

in Owner Trusts Jeffrey Towers - General Counsel, TVPX


onsidering that the US is the hottest market for aircraft transactions, has the greatest concentration of aircraft operators and is a worldwide commercial center, it should come as no surprise that more aircraft are registered here than anywhere else in the world. However, the popularity of the US registry extends beyond its borders and includes thousands of aircraft that are operated by non-US parties or based outside of the country. Among the main reasons for the worldwide acceptance of the US registry are the industry’s confidence in the FAA’s maintenance and safety standards and the established precedents of US law regarding title priorities and security interests. Many of the business and commercial aircraft that are registered in the US are held through ownership structures known as “owner trusts”. Owner trusts are specifically designated under US law as one of the ways that an aircraft owner may register an aircraft on the N registry. An understanding of the purposes of, parties to and documentation used with owner trusts is helpful for determining the appropriate insurance coverage.


The US regulates who may register aircraft based on the citizenship of the owner. The citizenship tests are intended to assure that parties who register aircraft are US citizens who are not under the direct or indirect control of non-US citizens. However, the tests in practice have some unexpected consequences. For example, a US public corporation that has a non-US president or that has more than 25% of its voting interests held by non-citizens would fail the test. Fortunately, the FAA permits a US citizen to serve as an owner trustee for another party, including a non-US citizen. Owner trusts are often used by US citizens to address potential registration problems like those described above or to discourage unwanted attention from business competitors. Owner trusts are established for the benefit of non-US citizens to satisfy the FAA’s citizenship requirements. Such trusts are often referred to as “non-citizen trusts” or “NCTs”. Owner trusts are created through a trust agreement between the US citizen trustee and a beneficiary, who is

often referred to as the “trustor�. The trust agreement is a standard form used by all owner trustees that has been reviewed and approved by the FAA. The trust agreement contains obligations of the trustor to in-

The trustee has some protections against personal liability under the trust documents and US law. The limitations on liability are appropriate because the trustee’s involvement is merely for registration purposes and it

demnify the trustee. Trust arrangements also typically include a lease or operating agreement between the trustee and the party that will operate the aircraft or a party that will sublease the aircraft to the operator. The lessee may be the trustor or a third party. The operating lease describes the obligations of the lessee to indemnify the trustee and identifies the insurance coverage that the lessee is required to provide. It is important that the insurance broker and carrier are aware of all the indemnification obligations and insurance requirements in the trust documents, especially those in the operating lease, and to also determine if lenders or other parties need to be covered.

has no operational control over the aircraft. Additionally, there is a federal statute which is designed to shield aircraft lessors, including trustees, from liability when the lessor is not in actual possession or operational control of the aircraft.

The trustee does not have a financial investment in the aircraft like the beneficiary does, but it may have obligations to lenders or other parties that warrant attention to the terms of the hull insurance. However, the trustee will likely be particularly focused on the liability provisions. Typically, the trustee will not be a named insured in the insurance policy. Rather, the operator and the management company, if any, should be named insureds. The trustee/lessor should be an additional insured with breach of warranty protections that apply to liability coverage, as is common in aircraft leases. The breach of warranty provision protects the trustee against breaches by the named insured(s) of their obligations under the policy. In deals with subleases the trustee will also want to confirm that its trustor and lessee are covered by the insurance to support their indemnification obligations.

Why then would a trustee worry about insurance at all? Firstly, it is the registered owner of the aircraft. If an accident occurs, regardless of the cause, the trustee is likely to be named as a defendant in a lawsuit. The mere cost of defending a complex lawsuit, let alone the risk of a money judgment, is more than enough to make a trustee care about whether they are adequately covered by liability insurance. Also, the trust documents are, for the most part, only binding on the parties that signed the documents. If an accident occurs and a third party is injured, they would probably assert that they are not subject to any limitation of liability against the trustee under the trust documents. Finally, the US law limiting the personal liability of a trustee and the statute protecting lessors is possibly not controlling if a lawsuit is brought under the laws of another jurisdiction. As the registered owner and lessor of an aircraft, the trustor faces risks that necessitate appropriate insurance coverage. For those who are unfamiliar with owner trusts, a review of the indemnification and insurance provisions in the trust documents, especially those in the operating lease, will usually clarify any issues.



A Crisis of (Bad) Faith: The Insurer’s Options When Multiple Liability Claims Exceed Policy Limits

Arthur J. Park - Mozley, Finlayson & Loggins LLP


onsider this not-too-improbable hypothetical: after a plane crash, the pilot and all four passengers pass away. The initial investigation points to pilot error as the probable cause of the accident. You insure the pilot with policy limits of $5 million per occurrence. There is no per person limit or per seat limit in the policy. The heirs of three passengers have hired lawyers. The fourth family seems disinterested. One of the families rushes to file suit. Another family submits a time-limited demand for $3 million. What are some potential pitfalls and what should the adjuster be watching for? Although a state-by-state analysis is beyond the scope of this article, I hope to provide the reader with some food for thought when multiple liability claims exceed policy limits and a bad faith claim might be brought in the future. Please keep in mind that each state is differ-


For example, some states do not have the procedure for an interpleader action (discussed below), and some states require the insurer to take certain steps, making some of the “solutions” suggested in this article obsolete. Also, states differ on the treatment of first-party claims by the insured and third-party claims by the injured person. 2

Farinas v. Fla. Farm Bureau Gen. Ins. Co., 850 So. 2d 555 (Fla. Ct. App. 2003). Unfortunately, at least one court has held that the claimants cannot agree


ent, and it is very important to retain separate “coverage counsel” or “bad faith counsel” to advise the insurer on local law if there is any doubt as to bad faith issues. 1 The best option is to get the claimants to agree on how to divide the policy limits. The Florida Court of Appeals has stated that an insurer must seek a global settlement of all claims before settling with any individual claimant.2 The insurer should fully investigate all claims, settle as many claims as possible within the policy limits, choose the settlements that minimize the insured’s risk of an excess judgment, and keep the insured informed during the claims process.3 “The obvious problem for an insurer in a case with multiple claimants is how to divide a limited pool of money among them.”4 If the insurer pays the policy limits but

among themselves to apportion the policy proceeds in a different or unique way other than the pro rata method. Balz v. Heritage Mut. Ins. Co., 720 N.W.2d 704, 715 (Wis. Ct. App. 2006). 3

General Sec. Nat’l Ins. Co. v. Marsh, 303 F. Supp. 2d 1321, 1325 (M.D. Fla. 2004).

fails to resolve all claims (piecemeal settlements), the insured could face personal liability which often leads to bad faith litigation. Id. In addition, the insurer may still have a duty to defend the remaining claims – even though the policy’s proceeds have been paid out. 5 When multiple claims are filed against the insured that have the potential for exceeding the insurer’s policy limits, the insurer must act in good faith and with due regard for the insured’s best interest in considering whether to settle one or more of the claims … An insurer which hastily enters a questionable settlement simply to avoid further defense obligations under the policy clearly is not acting in good faith and may be held liable for damages caused to its insured. 6


Douglas R. Richmond, Too Many Claimants or Insureds and Too Little Money: Insurers’ Good Faith Dilemmas, 44 TORT TRIAL & INS. PRAC. L.J. 871, 877 (2009). 5

In jurisdictions that allow the insurer to stop defending once the policy limits are exhausted, it may behoove the insurer to leave a small portion of the policy “untouched” to ensure that the duty to defend remains in place for any remaining claims/lawsuits. 6

Pareti v Sentry Indem. Co., 536 So. 2d 417, 423 (La. 1988).


Smith v. Audubon Ins. Co., 679 So. 2d 372, 377 (La. 1996); see also Maguire

The insurer’s duty to act in good faith also applies when disbursing the policy proceeds. Good faith is determined on a case-by-case basis, but the court will likely consider “the probability of the insured’s liability, the extent of the damages incurred by the claimant, the amount of the policy limits, the adequacy of the insurer’s investigation and the openness of communications between the insurer and the insured.” 7 Numerous cases have recognized that “the liability insurer may compromise such claims as it sees fit in the exercise of its reasoned settlement discretion so long as it exercises good faith toward its insured and deals fairly with it.” 8 In short, “a carrier, faced with multiple claims, must, with due regard for the interests of its insured, attend to his best protection against all of these,” and the

v. Ohio Casualty Ins. Co., 602 A.2d 893 (Pa. Super. Ct. 1992); Viking Ins. Co. v. Hill, 787 P.2d 1385, 1390 (Wash. Ct. App. 1990). 8

Litig. & Prev. Ins. Bad Faith § 3:45 (3rd ed.) (citing Voccio v Reliance Ins. Cos., 703 F.2d 1, 3 (1st Cir. 1983); Liberty Mut. Ins. Co. v Davis, 412 F.2d 475, 478, 480 (5th Cir. 1969); Farinas v. Florida Farm Bureau Gen. Ins. Co., 850 So. 2d 555, 561 (Fla. 4th DCA 2003); Williams v. Infinity Ins. Co., 745 So. 2d 573, 57476 (Fla. 5th DCA 1999); Redcross v. Aetna Cas. & Sur. Co., 260 A.D.2d 908, 688 N.Y.S.2d 817 (N.Y. App. Div., 3d Dep’t 1999); De Walt v. Ohio Cas. Ins. Co., 513 F. Supp. 2d 287, 300-01 (E.D. Pa. 2007)).

insurer must handle each claim reasonably in light of the liability and damages submitted.9 But how do you as the adjuster actually do that? How can the adjuster work to achieve the optimal result for the insured in such a tough situation? The insurer has three main ways to resolve multiple claims exceeding the applicable policy limits: (1) interpleader, (2) the pro rata approach, or (3) the first to settle approach. 10

I. OPTION ONE: INTERPLEADER “A liability insurer may invoke interpleader to resolve multiple claims in excess of policy limits.” 11 By depositing the entire policy limit into court, the insurer admits liability and seeks judicial guidance on how to disburse the funds among conflicting claims. “The availability of interpleader relief to a liability insurance company does not depend on tort claimants having reduced their claims against the insured to judgment.” 12 In general, the simple act of filing an interpleader action, standing alone, cannot be construed as bad faith. “While a successful interpleader action will inexorably result in reduced defense costs, this does not render resort to the procedure an act of bad faith.” 13 Since the interpleader is merely a procedural device and never a defense to payment, it is neither illustrative of good faith nor bad faith; filing an interpleader action does not move the needle in either direction.14 If the insurer lacks reasonable grounds for withholding payment, however, interpleading the funds into court might constitute an act of bad faith. 15 Under 28 U.S.C. § 1335, an interpleader action can be filed in federal court when the amount in controversy is $500 or more, and there is minimal diversity of citizenship between the claimants. Complete diversity


Kinder v. W. Pioneer Ins. Co., 231 Cal. App. 2d 894, 902 (1965).


A fourth approach, known as the first to judgment rule, was cited in some older opinions but “is now outdated and disfavored.” Richmond, 44 Tort Trial & Ins. Prac. L.J. at 880. Under the modern view, the insurer’s duty of good faith “begins before the insured is named as a defendant in a lawsuit and even if suit is never filed. The insurer is required to promptly investigate insurance claims and offer equitable settlements when liability is reasonably clear.” Sellers v. Kurdilla, 377 P.3d 1, 14 (Alaska 2016). 11

44B Am. Jur. 2d Interpleader § 44.




Lehto v. Allstate Ins. Co., 31 Cal. App. 4th 60, 71 (1994).


United Servs. Auto. Ass’n v. Werley, 526 P.2d 28, 36 (Alaska 1974).


Kelly v. Farmers Ins. Exch., 194, Cal. App. 3rd 1, 9 (1987).



of citizenship is not required for a statutory interpleader action in federal court.16 The interpleader “protects the stakeholder from the vexation of multiple suits and the possibility of multiple liability that could result from adverse determinations in different courts.”17 Venue is proper where any of the claimants reside.18 The insurer must deposit the policy proceeds at issue into the registry of the court or provide a bond for that amount.19 Surprisingly, the federal court hearing an interpleader case can even stay or enjoin the underlying state court lawsuits from moving forward, in certain situations.20 In Treinies v. Sunshine Mining Co., 308 U.S. 66, 74 (1939), the U.S. Supreme Court explained that the statute “authorizes the enjoining of parties to the interpleader from further prosecuting any suit in any state or United States court on account of the property involved. Such authority is essential to the protection of the interpleader jurisdiction and is a valid exercise of the judicial power.” In Treinies, the federal district court in Idaho had properly enjoined related proceedings in a Washington state court. Under most policies, the filing of an interpleader does not end the insurer’s duty to defend the insured in the underlying lawsuits.21 “Similarly, an insurer, by resorting to interpleader in a federal court and depositing the


General Atomic Co. v Duke Power Co., 553 F.2d 53 (10th Cir. 1977). Under

Fed. R. Civ. P. 22, a slightly different type of interpleader action is also available based on complete diversity and an amount in controversy that exceeds $75,000. Morongo Band of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376 (9th Cir. 1988). 17

Wright & Miller, 7 Fed. Prac. & Proc. Civ. § 1702.

proceeds of the policy with the court, should not be relieved of its contractual obligation under state law to defend the insured.” 22 If the dispute does not meet the requirements of a federal interpleader action, most jurisdictions also allow for an interpleader proceeding in state court. 23 When considering an interpleader action, please be very aware of time-limited demands. In Georgia, a claimant can send a Demand for Payment of Policy Limits pursuant to the holding in Southern General Insurance Company v. Holt, 262 Ga. 267 (1992). Such a letter will ask for the payment of the entire policy limits (or any amount within the policy limit), but the offer will usually expire after thirty days. A refusal to pay the time-limited demand can subject the insurer to excess liability for bad faith in refusing to settle this claim within the policy limits. In short, the insurer may no longer have policy limits on the thirty-first day. Although the Holt doctrine was intended for cases of clear liability and damages that obviously exceed policy limits, it has been extended to virtually every case in which the jury eventually awards damages that exceed the policy limit… after all, hindsight is usually 20/20. 24 Many states have similar provisions, and the filing of an interpleader is likely not an “acceptance” of the time-limited demand.

indemnity are separate obligations). 22

Wright & Miller 7 Fed. Prac. & Proc. Civ. § 1713 (citing Emcasco Ins. Co. v.

Davis, 753 F. Supp. 1458, 1462 (W.D. Ark. 1990); Simmons v. Jeffords, 260 F. Supp. 641 (E.D. Pa. 1966); National Cas. Co. v. Ins. Co. of N. America, 230 F. Supp. 617 (N.D. Ohio 1964); Pan Am. Fire & Cas. Co. v. Revere, 188 F. Supp. 474, 486 (E.D. La. 1960)).





the plaintiff denies liability in whole or in part to any or all of the claimants.” F.R.C.P. 22(a)(1)(B). “Since it no longer is necessary that the stakeholder be disinterested, making a deposit or posting a bond does not waive the stakeholder’s contention of nonliability to any of the claimants or for the full amount demanded and paid into the court.” Wright & Miller, 7 Fed. Prac. & Proc. Civ. § 1716. Therefore, it may be possible for the insurer to seek a return of some of the policy proceeds.

the insurer could reasonably deny a demand for policy limits and the jury could eventually render a verdict that exceeds limits. “When a plaintiff makes a policy limits demand, the covenant of good faith and fair dealing places a duty on an insurer to tender maximum policy limits to settle a plaintiff’s demand when there is a substantial likelihood of an excess verdict against the insured… But the covenant of good faith does not broadly require an insurer to give its insured pre-trial assurances that it will cover an excess judgment against the insured if the insurer fails to accept a plaintiff’s policy limits demand. The insureds’ proposed theory would translate into a general duty to issue a pre-trial waiver of policy limits, and there is no such broad duty.” Jackson v. Am. Equity Ins. Co., 90 P.3d 136, 142 (Alaska 2004) (citations and quotations omitted).

28 U.S.C. § 1397.

28 U.S.C. § 1335(a)(2). “Joinder for interpleader is proper even though …


28 U.S.C. § 2361; General Ry. Signal Co. v. Corcoran, 921 F.2d 700 (7th Cir. 1991). 21

See Anderson v. US Fid. & Guar. Co., 117 Ga. App. 520 (1986) (defense and


See, e.g., Alaska R. Civ. P. 22; Cal. Civ. Proc. Code § 386; O.C.G.A. § 23-3-90. Of course, it should not be this way. There are certainly situations in which

The importance of time-limited demands cannot be overstated. For example, Nationwide did not accept a ten-day time-limited demand for its policy limits of $100,000 following a motor vehicle accident in Georgia. Nationwide’s insured/driver was intoxicated and ran a red light; the claimant’s driver had passed away. Nationwide tried to accept the offer, but insisted on a general release instead of a limited release. The first jury returned a verdict of $5.85 million for the wrongful death claim. After a second lawsuit was filed asserting the bad faith claim, Nationwide was ordered to pay the entire amount (plus millions more for interest and the claimant’s attorney fees). 25

II. OPTION TWO: THE PRO RATA APPROACH “Applying the pro rata rule, the insurance policy proceeds are distributed on a pro rata basis in accordance with the amount of damages suffered by each claimant.” 26 The pro rata approach is very effective when a court or jury assesses the damages or when the damages are easily determined, such as property damage claims; it is more difficult to apply in a pre-suit setting. In short, the pro rata method “distributes the policy proceeds on a pro rata basis, in accordance with the amount of damage suffered by each claimant.” 27 The disadvan-


Nationwide Insurance Hit With $8M Bad Faith Judgment, Daily Report, June 17, 2016, 26

Richmond, 44 Tort Trial & Ins. Prac. L.J. at 880-81 (citing Christlieb v. Luten, 633 S.W.2d 139, 140 (Mo. Ct. App. 1982); Allstate Ins. Co. v. Ostenson, 713 P.2d 733, 735 (Wash. 1986); Wondrowitz v. Swenson, 392 N.W.2d 449, 452 (Wis. Ct. App. 1986)). 27

Jay Barry Harris & Hema P. Mehta, Avoiding the Flames: Navigating the Dangers of Multiple Claimant-Burning Limit Policy Scenarios, 57 DRI FOR THE DEFENSE 55 (May 2015) (citing Century Indemnity Co. v. Kofsky, 161 A. 101 (Conn. 1932); Underwriters for Lloyds of London v. Jones, 261 S.W.2d 686 (Ky. 1953); Burchfield v. Bevans, 242 F.2d 239 (10th Cir. 1957) (applying Oklahoma law); State Farm Mut. Auto. Ins. Co. v. Hamilton, 326 F. Supp. 931 (D. S.C. 1971)). 28

Richmond, 44 Tort Trial & Ins. Prac. L.J. at 881.


Id. (citing Elliott Co. v. Liberty Mut. Ins. Co., 434 F. Supp. 2d 483, 499 (N.D.

tage is that the insurer may have to wait until all claimants have submitted a full claim – or until the statute of limitations has expired.

III. OPTION THREE: THE FIRST TO SETTLE APPROACH The first to settle approach has been described as the majority approach. “The first to settle rule enters play where the insurer has settled with some but not all claimants, and the settlements that have been achieved have either completely or nearly exhausted the policy limits.” 28 Instead of compelling insurers to settled with the first claimant, “the first to settle rule recognizes that insurers should be able to selectively settle with any or several of multiple claimants, even though these settlements deplete or exhaust the policy limits, without incurring bad faith liability in connection with any of the remaining claims.”29 In addition, the insurer has no duty to solicit or seek out claims that have not been formally submitted for consideration.30 The insured should not be forced to wait for the submission and evaluation of all potential claims before paying anyone; such a plan would discourage the public policy of settling claims and avoiding litigation. It must be remembered that the insurer is not required to settle with the first claimant in a multi-claimant case

Ohio 2006) (interpreting Connecticut, Delaware, New York, Ohio and Pennsylvania law); TIG Ins. Co. v. Smart Sch., 401 F. Supp. 2d 1334, 1359-51 (S.D. Fla. 2005); Miller v. Ga. Interlocal Risk Mgmt. Agency, 501 S.E.2d 589, 590-91 (Ga. Ct. App. 1998); Levier v. Koppenheffer, 879 P.2d 40, 45 (Kan. Ct. App. 1994); Oliver v. Imperial Fire & Cas. Ins. Co., 983 So. 2d 172, 175 (La. Ct. App. 2008); Cont’l Cas. Ins. Co. v. Peckham, 895 F.2d 830, 835 (1st Cir. 1990) (applying Massachusetts law); Babcock v. Liedigk, 497 N.W.2d 590, 593-94 (Mich. Ct. App. 1993); Goughan v. Rutgers Cas. Co., 570 A.2d 501, 503 (N.J. Super. Ct. Law Div. 1989); Allstate Ins. Co. v. Russell, 788 N.Y.S.2d 401, 402 (N.Y. App. Div. 2004); Voccio v. Reliance Ins. Cos., 703 F.2d 1, 2-4 (1st Cir. 1983) (applying Rhode Island law); Tex. Farmers Ins. Co. v. Soriano, 881 S.W.2d 312, 315 (Tex. 1994)). See also State Farm Mut. Auto. Ins. Co. v. Murphy, 348 N.E.2d 491, 493-94 (Ill. Ct. App. 1976); Hartford Cas. Ins. Co. v. Dodd, 416 F. Supp. 1216 (D. Md. 1976); Alford v. Textile Ins. Co., 103 S.E. 2d 8, 13 (N.C. 1958). 30

Id. (citing Smith v. Premier Alliance Ins. Co., 48 Cal. Rptr. 2d 461, 466 (Ct. App. 1995); Allstate Ins. Co. v. Russell, 788 N.Y.S.2d 401, 402 (2004)).


and exclude the other claimants; the insurer may insist on a global settlement without violating its duty of good faith.31 In Combetta v. Ordoyne 32, the Louisiana Court of Appeals discussed the first to settle approach in some detail: State Farm provided an automobile policy with UM/UIM coverage of $10,000 per person and $20,000 per accident. After a motor vehicle accident, three individuals submitted claims. In May of 2002, State Farm paid $10,000 to Wilson In June of 2002, State Farm paid $4,000 to Foster. In July of 2002, State Farm paid $6,000 to Combetta. The problem was that Combetta was by far the most severely injured, submitting medical bills of over $53,000. Combetta filed a bad faith action, alleging that he had to wait to submit his claim until he underwent surgery and State Farm should have used the pro-rata approach. The trial court entered summary judgment for State Farm, and the Court of Appeals affirmed. It was reasonable for State Farm to pay the claims on a first-come-first served basis. When State Farm paid the first two claims, it was aware of the potential claim but was not appraised of the extent of Combetta’s injury or medical bills. State Farm also had a duty to timely pay the proper, substantiated claims submitted by Wilson and Foster. The court also noted that State Farm was not required to file an interpleader action because (a) “there may be insufficient information to confirm that all potential claims exceed policy limits,” and (b) doing so “would require that all claimants take legal action to receive that amount which is due to them.”33

In certain jurisdictions, the insurer is given broad discretion with respect to how and when to distribute the policy proceeds.34 In Scott v. Gallacher35, the insurer was allowed to use its “business judgment” in determining how to pay the various claims. “Nothing in the statutory scheme requires an insurer to effectuate a global settlement simultaneously with all potential claimants,” so the insurer was “entitled to make a good faith business judgment to settle the claims in the order that they were presented.”36

CONCLUDING REMARKS To reiterate, each state has its own rules and quirks to consider, and it is imperative that the insurer hire a coverage lawyer on the issues of bad faith and settlement offers. In some states, the controlling law on bad faith can trap an unwary adjuster. Generally speaking, the insurer should clearly state its policy limits to all of the involved claimants and seek a global resolution, including a full release of all insureds. A mediation or settlement conference may be appropriate in certain situations. The insurer should further communicate to the claimants that, after a reasonable time, it will proceed with an interpleader action or by paying claims as it sees fit using either the pro rata approach or the first to settle approach.37 If the claims must be considered one at a time, seek to settle as many claims as possible 38 within the policy limit and take the necessary steps to limit the personal exposure of the insured; keep the insured “in the


Williams v. Infinity Ins. Co., 745 So. 2d 573 (Fla. Ct. App. 1999).


934 So. 2d 836, 841-44 (La. Ct. App. 2006).


Id. at 844.


Sharp, 105 Ky. L.J. at 595-96.


No. 10-P-209, 2011 WL 93084 (Mass. App. Ct., Jan. 11, 2011), Id. at *2.


each state has its own rules and quirks to consider, and it is imperative that the insurer hire a coverage lawyer on the issues of bad faith and settlement offers.


loop” for these tough decisions, deferring to the insured when necessary. Here are a few more tips to consider: - Don’t forget to actually offer the policy limits! Even if the claimants are unlikely to accept, offer the limits anyway. 39 Even if the claimants have not submitted a formal, written demand, offer the limits anyway. After a fatal plane crash, the pilot’s insurer failed to offer its policy limits of $100,000 to the estate of the passenger, resulting in a bad faith judgment of $11.5 million. 40 - Do NOT “create” or “manufacture” more than one occurrence in an effort to increase the available policy limits. “The purpose of requiring all losses arising out of every occurrence to be adjusted as one loss is to prevent an insured from submitting multiple claims to avoid policy limits and to prevent insurers from applying more than one deductible.” 41 - Make sure to consider the med pay benefits. In the Combetta case discussed above, the last man standing only received $6,000 in UM/UIM coverage, but he did receive the med pay coverage of $5,000 per person as well.


Richmond, 44 Tort Trial & Ins. Prac. L.J. at 894 (citing Gen. Sec. Nat’l Ins. Co. v. Marsh, 303 F. Supp. 2d 1321, 1326 (S.D. Fla. 2004)). Where a single occurrence gives rise to multiple claims against an insured, then a liability insurer which issued only a single policy should owe that insured a duty to attempt to settle as many of those claims as can be settled before ex38

hausting the aggregate policy limits. Robert E. Keeton, Preferential Settlement of Liability-Insurance Claims, 70 Harv. L. Rev. 27, 28-35 (1956). 39

“The failure either to settle within policy limits or to make an offer of settlement creates an issue of bad faith of the insurer.” Thomas v. Atlanta Cas. Co.,


- If you have coverage for passenger voluntary settlements (PVS) under the policy, offer that as well. The answer to every question that you don’t ask is “no.” - SEND an excess letter to each insured and note that the insured may want to retain personal counsel on top of the insurance defense counsel. - The applicable law can vary quite a bit from state-tostate, so pay careful attention to which state’s substantive law will apply. It might be the place of the accident, the place where suit is filed, or the place where the policy was issued. - Be mindful of potential conflicts and consider hiring a separate coverage lawyer to assist you with disbursements, especially if a time-limited demand is pending.

Arthur J. Park is a partner with Mozley, Finlayson & Loggins LLP in Atlanta. He is licensed in Georgia, Virginia, and West Virginia. His practice focuses on civil litigation, aviation, subrogation, and insurance coverage.

253 Ga. App. 199, 204-05 (2001). 40

Gruber v. Marshall, No. 2014-CV-00302 (Riley Co. Kans. Nov. 14, 2018.)


Am. President Lines, Ltd. v. Marine Mech. Inc., No. 3:10-CV-00029 JWS, 2013 WL 3177834, at *7 (D. Alaska June 24, 2013) (citing Basle Turbo Conversions LLC v. HCC Ins. Co., 601 F. Supp. 2d 1082 (E.D. Wis. 2009)).


2019 AIA London Reception and Education Session T


he 2019 London Reception was once again another successful event filled with excellent speakers and networking. This year, AIA offered our Aviation Insurance Core Principles & Concepts Course prior to the London reception and eleven individuals completed the course. AIA Past-President, David Sales, passed the final exam and as he met all other requirements, he is the first international AIA member to earn his Certified Aviation Insurance Professional (CAIP) Designation.

insurance; Pete Drumford, Eastern Airways; Kathryn Jones, Civil Aviation Authority and Peter Hogston, L3HARRIS who lead a dynamic panel discussion and focused on the impact of the Pilot Shortage on Aviation Insurance Worldwide. During the presentation, the panel shared that the airline industry is hiring pilots at a record pace, which means that more than 600,000 new pilots are needed between now and 2035 and the industry is challenged to recruit the next generation.

The London reception began Thursday, November 7th and the session featured Jim Gardner, AIA President; Walter Voigts von Forster, AIA Director of Re-

Following the presentations, the attendees were offered the opportunity to network at the ensuing Cocktail Reception in Lloyd’s.



RUBY SPONSORS AIG Kimmel Aviation Insurance Agency, Inc. The James A Gardner Company Inc. Starr Aviation

EMERALD SPONSORS Aircraft Builders Council Ed Broking LLP Global Aerospace

SILVER SPONSORS, LLC Cooling & Herbers, P.C. Engineering Systems Inc. Lynch Daskal Emery Murray, Morin & Herman, P.A. Old Republic Aerospace Schnader Aviation Group Strawinski & Stout, P.C.

BRONZE SPONSORS J2 Aircraft Dynamics LaMontagne & Amador LLP


Schrager Hampson Aviation Insurance Agency, LLC



Pilot Shortage



he global initiative to train and hire the next generation of qualified pilots is occurring at record speed. According to Boeing, between 2018 and 2037, the world demand for commercial pilots will reach 650,000. The two largest regions are projected in North America at 206,000 and Asia-Pacific at 261,000. A short-fall of pilots is causing a rift within the industry. We can point to a combination of social and economic factors that have created barriers to entry. From a civilian standpoint, the economic benefits were lop-sided. The return on investment of a fouryear college degree didn’t equate to a $20,000 a year starting salary at the regional airlines 15-20 years ago. The US military historically provided qualified pilots to the airlines. In light of military budget cuts and reduced fleet size, recruitment fell. Many ac-

tive duty pilots have been offered “retention bonuses” as much as $35,000 a year. Currently, the top five (5) employers to US pilots are the; US Air Force, US Army, Delta Airlines, United Airlines and American Airlines. The industry also experienced pivotal changes to regulation, each having a cumulative effect on the pilot shortage. These included the following; • August 1, 2013 – Congressional Action (Public Law 111-216). Stemming from 2009 Colgan Air Flight 3407 crash. Minimum standards for Regional Airline First Officers increased six fold from a Commercial Pilot Certificate and 250 hours of flight time, to an Airline Transport Pilot Certificate and 1500 hours of flight time. • January 1, 2009 – Congress increased the mandatory retirement age from 60 to 65.






to US pilots

These changes to regulation either delayed or deterred new airline pilots for several more years. Invariably, this created a larger bubble to burst we’re facing today. What is being done to reduce the airline pilot shortage? The regional airlines realized that starting pay needed to improve to attract new talent. This now includes living wages, signing bonuses, and improved benefits. In addition, many flight schools and aviation colleges are partnering with airlines with tuition reimbursement to help offset the costs of training. Several local and national organizations such as Tuskegee Next and the NBAA focus on providing opportunity and scholarships to those who seek career opportunities in aviation. Up to this point, the focus has been on the airlines. But what is happening with corporate aviation? Overall, we are seeing a short-fall in qualified candidates across the spectrum. The pool is being drained, as airlines can generally offer greater earnings potential, benefits, and opportunity to upgrade compared with Pt. 91 or Pt. 135 operators. Many corporate flight departments are compelled to re-evaluate minimum hiring standards based upon availability of qualified applicants. A greater emphasis is being placed on training and mentorship initiatives from leadership. There has also been increased demand to partner with non-employee contract pilots to fill vacancies. This especially, at the Co-Pilot level. This can present its own challenges with Cockpit Resource Management (CRM) that needs to be evaluated by the operator. In light of these changing times, the aviation insurance industry is recognizing the need to closely partner with operators to maintain a high standard. Albeit, the terms “creative and flexible� can make some insurance folks nervous, a little bit may go a long way.




The future of aviation insurance:


reasons why we should develop a different product

Walter Voigts-VonForster. - MUNICH RE


t this year’s conference in Asheville I had the pleasure of being part of a panel discussion on the future of aviation insurance. Questions for future staff recruitment, work environment, ways for client interaction and trends that may change aviation insurance came up. I would like to revisit the topic and put out an incomplete list of why I think our product could evolve . This list conveniently ignores all the practicalities of implementation, investment cost or inertia inherent to the current state of things. It ignores that some aspects might be attractive only to one party in the client, broker, insurer triangle and will be resisted by the others. But you can’t let a few practical difficulties get in the way.

Cost saving Currently somewhere around 60 cents in every Dollar of premium are spent on claims (assuming a market where insurers make a modest margin). One common easy win of using tech is to cut on recurrent tasks through automation. All of the following suggestions embrace tech to enhance the current offerings, but also to just simply cut expense.

Pay-per-use The concept of paying only for what you

are actually using has been deployed in many personal insurance lines. So rather than arguing about lay-ups and ground-risk clauses, aviation insurers could pick up on that trend and use data from ADS-B tracking such as FlightRadar24 to see how much actual flying an insured has performed with his fleet of aircraft and rate him accordingly. Perhaps charge a deposit based on known flying activity of the previous year and then adjust the premium based on actual utilization over the coming year. For a commercial operator linking insurance premium to revenue generated through use of his aircraft could make sense. This gives the insured a break in tough economic times, and gives the underwriter an opportunity to automatically receive more premium when flying hours pick up. Obviously this would need to be fully automated. Private pilots may prefer to buy insurance only for days out flying rather than an annual policy. Perhaps only paying per flight, per flying day or per miles flown may suit a pilot’s needs better by linking his insurance costs to actual usage of his aircraft. At least for certain groups of insureds one could envisage a good alignment of their interests with that of insurers by exploring such concepts.


Relevant risk factors in underwriting A cross-check of proposal forms used by insurers/brokers shows a common set of parameters used in most underwriting decisions. Are the age of an aircraft, its gear configuration and the pilot’s total time really the most crucial risk factors? I’m not disputing that these are relevant, but ultimately they are limited in their ability to forecast a loss. Since most losses are a combination of factors, it’s clearly impossible to forecast future losses with a high degree of accuracy. However if an underwriter knew that the insured pilot regularly chooses to fly in marginal weather or to fly in IFR conditions lacking the rating to do so, or to do regular runs to Colombia, then he might wish to decline to write that risk; a decision that may avert a negative impact on his annual result. The tech aware underwriter could furthermore use that data on flying patterns that he is collecting as part of the pay per use product and further link it to weather conditions at the time, to terrain crossed and to airports used and territories visited. Would it be a step too far to throw in an automated search of social media publications of the pilot? Surely machine learning should be able to deduce which combination of these exemplary parameters are key to help underwriters to give the best deal to a pilot taking safe decisions, and to highlight the rogue pilot that he’d rather not have in his portfolio.

Differentiate clients Presumably most pilots consider themselves better than average. They fly only in perfect conditions. They regularly go to a flight school to stay current. Why should they pay for the perceived bad apples? An insured seeking to be differentiated on his safety record may be willing to share information to get a benefit, e.g. flight data collected on his tablet in the cockpit. Unlike the devices required for telematics insurance in cars aviators wouldn’t need to build hardware


to gather data. They would need to get access to existing data and develop capabilities to draw conclusions from it to give their clients the recognition in insurance premium they (perceive to) deserve.

Flexibility and ease Need that flight certificate right now? Or a higher liability limit required for flying to an airshow for one weekend, but less for the rest of the year? Add or remove a pilot to the policy? By today’s standards, this should be a matter of a couple of taps on a phone, right? Credited or debited straight to an online payment system where required, with no touch of a broker or underwriter. Right now the way we are doing these things still seems far too much of a hassle for all involved.

Digital interaction In an ageing pilot population this may not be a pressing issue. But a new generation of private pilots or commercial operators may wish to interact differently with insurers. As little as necessary! But 24/7 accessibility and with instant response. Avoid personal contact, questions answered by a chat-bot. Claims adjusted without delay by a machine that can interpret photos and videos taken of the damage, supplemented by an OCR recognized snapshot of the license and the flight log info taken from the pay-per-use product. This list may give some impulses how and why our insurance product could change and how they relate to clients’ (changing) preferences. Whether it should or will is up to insurers and brokers to make an alternative offer to clients, and up for clients to decide if they like it. The tools for disruption may have previously been missing but are now becoming available and successful in other lines, so “we’ve done this before and it didn’t work” doesn’t count as an excuse for not trying it.




Q: Alan, please tell us how long you’ve been an AIA member and how many annual conferences have you attended? A: I joined and attended my first annual conference in 1999 (San Antonio) and have attended every annual conference since. I think that makes 21 so far.

Alan Farkas

SmithAmundsen Aerospace

Q: That’s a pretty impressive conference streak! Are you planning to attend our next annual conference in Tucson, May 1-4, 2020? A: For sure. Like most of the members, I belong to several industry groups and there’s no shortage of events to choose from, but AIA’s conference and EAA/Oshkosh are the only aviation events that I never miss.


Q: What would you say to a member that is trying to decide whether or not to attend our annual conference? A: If you are committed to a career in any segment of the aviation insurance industry the AIA annual conference is an absolute must. You are guaranteed to hear top notch presentations from people that live and breathe the issues being discussed. You will make connections in different segments of the industry. You will gain perspectives from others that are making their way in the same field as you. And, the social functions allow us all to get to know each other on a deeper more authentic level. Overall, it’s about the most fun you can have in a legitimate industry conference.

Q: What are you looking forward to in Tucson?

A: Well, like I said, the presentations, seeing old friends, making new friends, and all of that. On top of that, I’ll either embarrass myself on the golf course or hope to get lucky shooting clays. Once the conference wraps up, I’ll take a few days to tour some of the beautiful surrounding areas with a few other members on rented motorcycles. We have room for others so if you know anyone that rides, please have them contact me at afarkas@salawus. com.

Q: That sounds great Alan. I look forward to seeing you in May. A: Thanks, Mandie, and thanks for all the work that you and your team do to make the conferences so wonderful.



STAY IN YOUR LANE, BRO. Mike Chevrette. - Great American Insurance Group


recently hired a professional painter to paint a couple of rooms in our house. Yes, I’m that lazy! He did a great job. He stayed within the lines, and then cleaned up when he finished the job. While he was there, he overheard me complaining that one of our toilets was backed up…again. I was complaining that plumbers charge exorbitant rates just for knocking on your door, much less doing any work. He told me not to fret, that he knows all about plumbing, and offered to fix the problem for me, for free! It only took me about a half of a second to accept his generous offer. And just like that, he put his paint brushes away, and took out his toolbox. Two hours later, as I watched in horror as two years’ worth of sewage flooded my basement, I heard the painter grumble “Dang it, I should have left this to the professionals”. About a week later, I had a dentist appointment. While in the chair, I mentioned to Henry, my dentist, that I was experiencing severe pain in my abdomen. He asked me some questions. He poked and prodded me a bit. Then, he informed me that I needed to have my appendix removed. I was horrified! I told Henry that, as soon as he was done with my check-up, I was heading straight to the hospital. I knew it would be expensive, even with insurance. But I had no choice, this was a life or death situation! He told me not to bother going to the hospital, because he knew enough about human anatomy to remove


my appendix, right there in his office, for free! Again, it took me less than a nanosecond to accept his gracious offer. A couple hours later, when I began to recover from my Novocain induced haze, I glanced in utter horror at Henry while he was scooping up what was left of my intestinal tract off the floor with a broom and dustpan. As he was doing this, I overheard him grumble “By golly, I should have left this to the professionals”. Note to the reader, much to your dismay, none of this actually happened to me. But please, humor me, and hang in there. I’m about to make a really super-awesome point. My point is that these examples, far-reaching as they may seem, directly correlate to aviation underwriting. When reading my rants and ravings, I ask the reader to please keep in mind that I’m doing so whilst self-loathingly looking at myself in the mirror. In other words, I have mastered the art of “do as I say, not as I do”. As aviation underwriters, more so than other insurance underwriters, I think we feel more of a connection to our insureds. Most of us have some type of background in the aviation industry. Personally, I am a part of what I’m certain is the majority in this business who are here because we couldn’t get jobs in our chosen professions (you know who you are). As such, we want to help our

“I should have left this to the professionals”.

insureds. We like them, and we want them to like us. Part of our hunger for acceptance is a tendency to fool ourselves into believing that we know how to underwrite “regular” insurance coverages, in addition to aviation coverages. “Regular” insurance, for the purpose of this writing, includes any type of insurance that doesn’t involve an airport or aircraft. I’d like to discuss two separate coverage extensions that I believe we, as aviation underwriters, are guilty of providing, even though they do not fall within our areas of perceived expertise. There are many more, but I think that I can make my point with two. These coverages are excess auto liability, and excess employers’ liability. We have a tendency to include these coverages in some of our policies for free. Why do we do this? Well, they’re what we like to refer to as “sleep” coverages, meaning that nothing bad will ever happen.

Excess Auto Liability As the name implies, this is coverage for cars. Most of our insureds have cars. Some have more than one. I’m reasonably certain that they all buy car insurance in one form or another. It is my understanding that auto liability limits, for the most part, are significantly lower than those that we offer in aviation. As such, if our insureds need or desire higher liability limits, there is a market out there for excess auto liability insurance. A lot of insurance companies provide this coverage. I’m pretty sure that these companies are staffed with underwriters that know how to underwrite excess auto coverage. Yet, for some reason unbeknownst to me, many of us in the aviation underwriting community feel compelled to add this coverage to our policies…for free. No problem, right? As I said earlier, this falls into the category of sleep insurance, because nothing bad will happen, right? The sad reality is that the world of excess auto liability can be rather nasty. Losses tend to start out looking pretty bad. Then, they tend to grow, over time, and get even worse. They adversely develop as time goes on. The numbers don’t improve. They only get worse. According to the Reinsurance Association of America, at the end of 2008, there were reserved excess auto claims


in the U.S. totaling approximately $21.2 million. Five years later, reserves on that same year had grown over 300% to $91.8 million! Sleep insurance? Really? I don’t have any information pertaining to market premiums in 2008. However, with 300% adverse development, it’s probably safe to say that the industry results pretty much sucked (that’s a technical insurance term, by the way). It gets worse…adverse development actually began further accelerating in 2013 and subsequent years. Again, I’m looking in the mirror here. Self-loathing, remember? It’s interesting to me that, as aviation industry professionals, we pride ourselves on the fact that flying is statistically safer than driving an automobile. In 2018, there were over 500 aircraft fatalities globally. Compare that to 37,500 automobile fatalities in 2018 in just the United States. Yes, air travel is indeed safer! Yet, we charge money for the airplane coverage, but give the auto coverage for free. Ironic, is it not?

Excess Employers Liability OK, full disclosure…I don’t even know what employers’ liability is. I just looked it up on-line. It is defined as “an insurance policy that protects employers from liabilities arising from disease, fatality, or injury to employees something-something-something”. After barely reading the first sentence of the definition, my ADHD was red-lining, so I went back to making adjustments to my fantasy football roster. Hence, I don’t know what this coverage is, I don’t know what it does, and I don’t know why anyone needs it, but I include it on many of my policies…for free. Yes, I’m the Village Idiot! My point in all of this is that we, as aviation underwriters, should probably stick to what we know. We know lots about airplanes, pilots, airports, and manufacturers. But, do we know enough about some of these other coverages to feel confident that we’re acting in our shareholders’ best interest? We would consider it insane if an auto underwriter suddenly decided to include aircraft liability in their policies, so why should the reverse be any different? My advice to myself, and anyone willing to follow: Stay in you lane, bro!




2020 aia conference



REGISTER SOON! Choosing the aviation insurance industry as a career path is not for the faint of heart. It requires a love of aviation and an inner fire which pushes you to succeed despite fierce competition and a constantly evolving market. In this industry, you must have “The Right Stuff,” the qualities needed to do or be something that most people would find difficult. The Aviation Insurance Association was founded by industry pioneers, not unlike the Wright Brothers, Glenn Curtiss, Charles Lindbergh, Eddie Rickenbacker and the like. These leaders paved the way for future aviation insurance professionals to be bold and succeed despite the odds, (and the occasional soft market). AIA members excel, and the AIA Annual Conference was created to give aviation insurance professionals the tools need to become Aces. The 2020 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, get in-depth knowledge at the continuing education sessions, and learn what is to come for the aviation insurance industry from leaders in aviation from around the world. If you have “The Right Stuff,” …or want it, join us in Tucson for the 2020 AIA Annual Conference!


What Is Included • Educational sessions to help your business grow • Numerous networking opportunities for you and your peers • Tabletop exhibits 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 The Education Sessions (CIE) on Sunday. However, if credit is needed to remain in good standing with your state, a $50 fee will apply. The Continuing Legal Education sessions

on Friday are also included in the full registration fee. However, if credit is needed to remain in good standing with your state, a $100 fee will apply. The one-day pass includes everything offered on the day you select to attend except add-on and special events, which require separate fees.



Continuing Legal Education sessions

1–2 p.m.

Lessons Learned from an Aviation Product Liability Trial.

2 - 3 p.m.

A Primer on Offshore Helicopter Operations

3– 4 p.m.

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

4–5 p.m.

Career Paths & Success Stories in Aviation Insurance

SATURDAY, MAY 2 8:00 a.m.–2 p.m.

AIA Golf Tournament and Lunch for Golfers

7:30 a.m.

Sporting Clays Departure

8:30 - 2:30 p.m.

AIA Sporting Clay Tournament

8 – 10 a.m.

Women in Aviation Event

4–5 pm.

Education Committee Meeting

4-5 p.m.

Membership Committee Meeting

5:30–6 p.m.

New Member/First-Timer Reception

6–7:30 p.m.

Opening Reception



7–8 a.m.

Breakfast with Exhibitors

8 a.m. – 5 p.m.

Continuing Insurance Education Sessions

8–9 a.m.

Insurer Ramification of disruption of emerging tech

9–10 a.m.

Strangest Claims You’ve Ever Heard

10–11 a.m.

Part 91 Dry Lease

11 a.m.–Noon

Illegal Charter

Noon–1 p.m.


1–2 p.m.

Inadvertent Fire Foam Damages

2–3 p.m.

Sales and Marketing – The Dos and Don’ts

3–4 p.m.

Cyber Security issues in Aviation Insurance

4–5 p.m.

Hot Topics in Aviation Insurance from an International Perspective

MONDAY, MAY 4 8–9 a.m.

Breakfast with exhibitors

9 a.m.– 12:30 p.m.

General Session

9–9:15 a.m. President’s Welcome 9:15–10:00 a.m.

Matthew S. Zuccaro, HAI

10 –10:15 a.m.

CAIP/CAIP Gold Award

10:15–10:30 a.m.


10:30–11:10 a.m.

Bruce Landsberg, NTSB

11:10 a.m. –12 p.m.

Steve Blakey, Starr Aviation

12 –12:15 p.m.

Pinnacle Award

12:15 – 1:45 p.m.

Luncheon Speaker

2–4 p.m.


Queuing Up at AIA Attorney/Claims 6–9 p.m.

Closing Party at PIMA Air Museum


KEYNOTE SPEAKERS Matthew S. Zuccaro President and Chief Executive Officer Helicopter Association International Matt Zuccaro began serving as HAI president on November 1, 2005. Prior to joining HAI, he was President of Zuccaro Industries, LLC, which provided international aviation consultation services, specializing in helicopter related issues. During his 40-year career, Mr. Zuccaro held several executive and operations management positions, with commercial, corporate, air tour, scheduled airline, and public service helicopter operations in the New York City area. During his tenure with the Port Authority of New York and New Jersey, he served in operations management at Kennedy International Airport and the Port Authority’s public and private heliports. Mr. Zuccaro holds Airline Transport and Instrument Flight Instructor Pilot certificates for both airplanes and helicopters. He is a recipient of HAI’s 10,000 Hour Pilot Safety award and “Salute to Excellence” Community Service Award, as well as numerous other industry awards for his efforts and commitment to the helicopter industry.

Bruce Landsberg Vice Chairman National Transportation Safety Board (NTSB) Bruce Landsberg was sworn in as Vice Chairman of the National Transportation Safety Board on August 7, 2018, to become its 43rd Member. Before coming to the NTSB, Vice Chairman Landsberg was with the Aircraft Owners and Pilots Association from 1992 to 2014 where he served as executive director of the Air Safety Foundation until 2010, and then as president of the AOPA Foundation and Air Safety Institute until he retired in 2014. Under his leadership the organization received international recognition and numerous awards for promoting light aircraft safety. During his AOPA tenure he conducted countless safety seminars and wrote a monthly column on aviation safety for its magazine, AOPA Pilot. Vice Chairman Landsberg owns a Beechcraft Bonanza that he flies for business and pleasure. He has more than 7,000 hours of flight experience and holds an Air Transport Pilot certificate with instructor ratings for airplane single and multi-engine land, instruments, and advanced/ instrument ground instructor certificates. He also sailed a variety of boats for more than three decades.


Steve Blakey President and Chief Executive Officer Starr Insurance Holdings Steve Blakey is president and chief executive officer for Starr Insurance Holdings, Inc., one of the fastest-growing commercial property insurers in the world. He also serves on several boards for Starr’s various insurance entities. Steve has over 35 years of distinguished leadership experience in the commercial insurance industry. He was responsible for establishing Starr’s London operation in 2006, expanding the company’s capacity through its CVS 1919 Syndicate, Lloyds Managing Agency and newly-established company subsidiary. He is widely-recognized for his expertise in the property, casualty, aviation, reinsurance and captive management disciplines. Prior to his current roles, Steve held positions increasing in responsibility for Starr Aviation including chief financial officer and chief operating officer before becoming president. Under his leadership, Starr’s Aviation division expanded throughout the United States, the United Kingdom, and Latin America and quickly became a leading global underwriter of aviation insurance.



Registration Fees:

Through Jan. 31

After Jan. 31

• AIA Member $675.00 $725.00 • Nonmember $1,075.00 $1,125.00 • One-Day Pass $575.00 $575.00 • Speaker Rate $500.00 $500.00 • AIA Member Tabletop $850.00 $950.00 • Nonmember Tabletop $1225.00 $1335.00 • AIA Member Pop-up Booth



• Nonmember Pop-up Booth $2000.00 $2,100.00 • Booth Personnel/Member $600.00 $650.00 • Booth Personnel/Nonmember $900.00 $950.00

Add-on and Special-Event Fees • Guest Meal Package


• Guest Opening Reception


• Guest Monday Night Party


• Continuing Insurance Education Credits


• Continuing Legal Education Credits


• Golf $275.00 • Golf Club Rental $75.00 • Sporting Clays Tournament



Lodging and Conference Location JW Marriott Tucson Starr Pass Resort & Spa 3800 W. Starr Pass Boulevard Tucson, AZ 85745 Where style and comfort intersect, JW Marriott Tucson Starr Pass Resort & Spa offers uncomplicated relaxation amid the city’s most compelling attractions. Featuring luxury amenities and excellent service, our downtown resort is a full-service sanctuary where your comfort is always a certainty. Test your swing on the Arnold Palmer-designed desert golf courses, pamper yourself at our spa or take a dip in our multi-level pool and lazy river. Hike and bike on spectacular trails or explore the Arizona-Sonora Desert Museum, Kino Sports complex and Old Tucson Studios. In the evening, indulge in delicious cuisine in one our resort’s buzzworthy restaurants before retreating to well-appointed rooms and suites with stylish decor, plush bedding and separate sitting areas. If visiting for business or social events, succeed like nev-

er before in our sophisticated venues with room for up to 3,300 guests. Whatever your reason for visiting, we want to make your stay memorable at JW Marriott Tucson Starr Pass Resort & Spa. Hotel reservations must be made no later than Wednesday, April 8, 2020. AIA’s special conference room rate at The JW Marriott Starr Pass is $225 per night for single or double occupancy. Rates do not include applicable state or local taxes. Any hotel reservation made after Wednesday, April 8 (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 thank you for registering page.

Airports The Tucson International airport (TUS) is 12.3 miles NW from the Tucson Starr Pass. Tucson is served by six airlines with daily nonstop service to/from major airports and connections around the world. Choose TUS for convenience and a less stressful travel experience. Here are some major US hubs you can catch non-stop flights and easy connections from: • Atlanta • Chicago • Dallas/Fort Worth • Denver • Houston • Indianapolis • Las Vegas • Las Angeles • Minneapolis/St Paul

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

Parking at the JW Marriott Starr Pass Valet (standard parking rates): Guests can drive up to the main entrance at JW Marriott Starr Pass and be assisted by a valet for $25 daily. Garage Parking (standard parking rates): Garage parking is available to our day and overnight guests. The on-site parking fee is $15 daily.

Recommended Attire Business casual is appropriate for most of the conference events. The Saturday Opening Reception will be held outside, and the Closing Party on Monday night is at the Pima Air Museum and you are encouraged to dress up in your best Top Gun/The Right Stuff attire. The average temperature for May in Tucson is a high of 96 and a low of 67, so please dress accordingly.

Cancellation/Dispute/Refund Policy Phoenix Sky Harbor International Airport 115 miles and 1 hour and 45 scenic minutes away. Approximately 45 million passengers pass through America’s Friendliest Airport each year.

Transportation The JW Marriott Starr Pass 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.

Full refunds for cancellations will be granted to everyone who registers DURING THE EARLY BIRD RATE, up to the day of the conference, as long as AIA is notified in writing. Full refunds for those who register after the early bird rate will be granted, as long as the AIA is notified in writing by Friday, January 31. No refunds will be issued for regular registration cancellations received after Friday, January 31.

Aviation Insurance Association Expands Education Course to Webinar Format

Online or In-person Class – Feb 22-23, 2020 REGISTRATION OPEN IN DECEMBER In an effort to make the Aviation Insurance Core Principles and Concepts course available to aviation professionals everywhere, AIA has partnered with the University of Mississippi to offer the course in a Webinar format so attendees may take the course in the comfort of their own home or office while saving on travel expenses.

• For the seasoned professional the course will challenge you and broadens your depth and breadth of knowledge.

The webinar version of the course will be offered for the first time, Feb 22-23, 2020. Students will also be able to attend the in-person session in Oxford, Mississippi if they prefer that over the webinar version.

• For the young professional and entry level aviation professional, it will give you an in-depth introduction to a broad spectrum of insurance products.

Make an investment in your future and enhance your career with the Aviation Insurance Core Principles & Concepts Course


• Interactive class environment allows you to share and network with other aviation insurance professionals.

• Course written and taught by some of the most experienced aviation insurance professionals in the world

PRESIDENT JIM GARDNER The James A. Gardner Company, Inc.



TREASURER LUKE UITHOVEN Kimmel Aviation Insurance Agency, Inc





McLarens General Aviation

Sutton James, Inc.



Munich Re

Schrager Hampson Aviation Insurance Agency LLC






AIA BOARD COUNSEL RAY MARIANI Leader, Berkon, Colao and Silverstein LLP




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The Binder VOL. 44 NO. 4- WINTER 2019  

The Binder VOL. 44 NO. 4- WINTER 2019  

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