In my last mini-article, I briefly discussed that the aviation insurance market goes through cycles. As the market flexes, we see the rates fluctuate from high to low and back again. It is also expected as these cycles manifest themselves, that the “hangar talk” increases. You as an insured will seek the input from other pilots and aircraft owners to see what they are paying for their insurance in an attempt to justify your latest premium quotation.
The fallacy in this practice is multi-fold. First of all, no two underwriting risks are the same. One pilot may have more total time and more general experience than the next. One may have less total time but more make and model experience. One may be older or younger and this alone may influence the underwriting terms. The end result could be summarized by saying that all underwriting risks were not created equal.
One of the biggest explanations for insurance quotation discrepancies is simple timing. If the market is unstable and is cycling, you can compare two similar insurance accounts that renew at different times during the year and they will have drastically different premiums. If the market is hardening and premiums are going up, the aircraft that just renewed will be paying more than an aircraft that renewed six months before. The converse is true if the market cycle is softening and going down.
The moral to this story is to consider the market timing when comparing your insurance placement with that of a trusted friend.