Posted by: Jeff Rhodes | July 7, 2011

What’s An Underwriter?

Who is this mythical “underwriter” on whom your insurance agent always blames high premiums, slow service, and disapproved pilots?  Why does this underwriter get to make so many important decisions about the conduct of your aviation operation? Does the underwriter really know anything about airplanes, or is he/she just a “bean counter” who is clueless about the real world? 

In the very early days of maritime cargo insurance, sea captains would post details about their cargo and their prospective voyages in the town square.  Local investors would evaluate the risk and then agree, in exchange for a premium payment, to “insure” the successful delivery of the cargo to its destination by writing their names under the description.  These investment practices evolved into the insurance industry as we now know it and the role of the early risk evaluators became known, logically, as “underwriting.” Modern-day aviation insurance underwriters play a similar role to the early maritime insurers.  The duty of an underwriter is to evaluate and select risks, and then negotiate a premium to cover a peril, or perils. 

But – Do they know my business?

Many senior aviation underwriters have many years in the industry.  Many are aviation enthusiasts and are quite knowledgeable about aviation operations.  The aviation underwriter ranks are filled with professional pilots, flight instructors, and holders of aviation business degrees from aviation universities.  But on the other hand, some underwriters are certainly more insurance industry that aviation oriented.  Some underwriters lack real world or recent experience in aviation operations of any kind.  A number of aviation insurers employ quite a few young aviation underwriters that lack any significant business experience at all. 

They key to success in an aviation insurance placement is having a broker that is skilled in managing underwriter relationships.  Unlike many segments of property and liability insurance, aviation insurance is still very much a personal underwriting process.  Real people looking at individual situations and, for the most part, applying common sense to the negotiations.  Each individual insurance company is different, as are each of the individual personalities within each company.  A good broker selects the right individual person to evaluate each risk, based on the nature of the account. 

Make sure your broker’s underwriter relationships are working in your favor.  If you’ve had problems, or seem to hit an unfair share of dead ends, maybe the broker has been trying to fit a square peg in an oblong hole.

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