I have worked with insurance companies for more than thirty years. Insurance is very simple. They all sleep together in the aviation business and when one of the re-insurance groups has exposure they all have exposure. Yes, you are paying for Boeings “screw ups” of the 737 Max with your Cessna 172 premiums. There are also other cost that are increasing but Boeing helped tip the apple cart.
The magic word is “re-insurers.” These are the groups that sit in the back of the bus and are there to bail the guys in the front of the bus out. If they get exposure then there go the rates and that means get your checkbooks out. Re-insurers charge the guys in the front of the bus for using their money to cover claims or having their money exposed. They are the guys with the “big” check books.
Aviation has been in the low end of premiums for many years. It has now been exposed. Boeing is one of the problems as the re-insurers have to make Boeing whole. If Boeing has exposures and the aircraft Boeing have that have been sold to airlines or leased to airlines then “cha – ching” the cash register is exposed. Large insurance companies cannot go broke due to the exposure to our economy and they are required by law to keep reserves. As an attorney one of the things we tell insurance carriers on serious injuries or property damage to “set your reserve” in the millions as you have exposure on a case we handle. They then review the case and reserve funds to pay our claims.
The volcano is preparing to erupt. What do the insurance companies and re-insurers do? They raise rates to feed the system. They have no choice.
One more thing we need to understand. Insurance AGENTS are not insurance companies. They are individual companies that SELL insurance. They are the MIDDLE MAN. They cannot adjust claims and they will not write you a check for your loss. The insurance companies found that out years ago that the guy that sells you the insurance is not at “arms length” in the claims process. In other words if an agent could adjust claims they would give away the “farm.” Adjusters have nothing to do with agents. Agents cannot help adjusters. They can invite you to their parties and see in your in church but they cannot help you to get their claims paid. They are marketers. They tell you what you want to hear but have no power.
One other things that we have a problem with. We have found that certain “agents” have a tendency to direct pilots to certain training facilities. Remember, no one in the world today in business want to lose money. The “quid pro quo” is alive and well. This is also the you scratch my back and I will scratch yours.
The old adage “we need to know who is training you so we can get you a better rate” is garbage. What an agent is trying to do is to direct you to someone in training who is sending them business no matter how bad the training facility is. Do not fall for this. Aviation training is a speciality business. Not all people can teach. Not all people have experience. As I tell my pilots and others who fly, if the guy in the left front seat does not have gray hair get off the plane.
Finally, insurance companies approve pilot training, agents don’t. If you get an agent trying to direct you to a training facility with some long story about how great that training facility is then run to another agent.