Message-Id: <5.1.0.14.2.20020320145221.045fc110@olsusa.com>
Date: Wed, 20 Mar 2002 14:53:02 -0500
To: lancair.list@olsusa.com
From: Marvin Kaye <marvkaye@olsusa.com>
Subject: Re: Insurance
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Reply-To: lancair.list@olsusa.com

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Posted for Brent Regan <Brent@regandesigns.com>

John writes:

<<What can we do? We can work together to present to the insurance industry 
statistics that justify their underwriting our aircraft. Since the category 
"high performance homebuilt" has unfavorable statistics, we need to create 
a subset of that category that we can plausably claim is safer than the 
average.>>

Insurance. Insurance allows a large group of entities to share risk on the 
concept that the result of the loss of wealth, like the loss of blood, is 
non linear.  Lose a little, no big deal, lose a lot....dead. The larger the 
group, the lower the average cost per unit. It would seem that, rather than 
trying to pare the insured group definition to exclude pilots we know are 
going to be high risk, the reasonable thing to do would be to work to 
expand the member set to as large as possible (why not all GA pilots are 
charged the same per dollar of coverage).

Insurance companies pray on every pilots belief that they are a lower risk 
then the next guy and it is in the "safe" pilots best interest to allow the 
insurance company to charge the other guy a higher premium or exclude them 
altogether. This allows the insurance company to charge a higher aggregate 
premium. We should be reminding insurance companies that their job is to 
spread risk, not focus it.

It would be very interesting to take the industry total paid claims to GA 
and divide it by the total number of active pilots. I suspect that if this 
number was corrected for policy limits to get a cost per dollar of coverage 
we would see that this average is lower than the base rate for the "safest 
group".

It can also be argued that there is no reason for the insurance company to 
offer incentives to make pilots safer. Insurance company income is based on 
a percentage of the "take". If there is no loss then there are no premiums 
and no profit. Lots of loss, large premiums and lots of profit.

I have always been amused that there is a "Good Hands" insurance company 
and that a pick pocket is said to have "good hands" if they can get your 
money without detection.

Regards
Brent Regan
John writes

<<What can we do? We can work together to present to the insurance industry 
statistics that justify their underwriting our aircraft. Since the category 
"high performance homebuilt" has unfavorable statistics, we need to create 
a subset of that category that we can plausably claim is safer than the 
average.>>

Insurance. Insurance allows a large group of entities to share risk on the 
concept that the result of the loss of wealth, like the loss of blood, is 
non linear.  Lose a little, no big deal, lose a lot....dead. The larger the 
group, the lower the average cost per unit. It would seem that, rather than 
trying to pare the insured group definition to exclude pilots we know are 
going to be high risk, the reasonable thing to do would be to work to 
expand the member set to as large as possible (why not all GA pilots are 
charged the same per dollar of coverage).

Insurance companies pray on every pilots belief that they are a lower risk 
then the next guy and it is in the "safe" pilots best interest to allow the 
insurance company to charge the other guy a higher premium or exclude them 
altogether. This allows the insurance company to charge a higher aggregate 
premium. We should be reminding insurance companies that their job is to 
spread risk, not focus it.

It would be very interesting to take the industry total paid claims to GA 
and divide it by the total number of active pilots. I suspect that if this 
number was corrected for policy limits to get a cost per dollar of coverage 
we would see that this average is lower than the base rate for the "safest 
group".

It can also be argued that there is no reason for the insurance company to 
offer incentives to make pilots safer. Insurance company income is based on 
a percentage of the "take". If there is no loss then there are no premiums 
and no profit. Lots of loss, large premiums and lots of profit.

I have always been amused that there is a "Good Hands" insurance company 
and that a pick pocket is said to have "good hands" if they can get your 
money without detection.

Regards
Brent Regan

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