As the pilot population ages, the AOPA Insurance Agency has begun to hear more reports of scenarios like this, according to Vice President of Insurance Sales Bill Bowman. Thanks to fierce competition, aviation insurance prices have been steadily decreasing for years, and now companies are finally feeling the pinch. They’re raising prices selectively, he added, and the category of older pilots is one area in which they’ve become more restrictive. AOPA Insurance recently held in-depth discussions with multiple underwriters to find out more about the relationship between pilot age and accident claims costs.
Like car insurance companies, aviation underwriters track attributes of the risks they insure and consult that data when setting rates. But car insurance companies insure such large numbers of cars and drivers that they are able to parse out the risk of a 17-year-old male in Des Moines, Iowa, compared to a 42-year-old married woman in Portland, Oregon. For aviation insurers, there are far fewer airplanes than cars to insure, so their rates reflect a combination of statistical analysis and judgment. A carrier’s willingness to take on risk—say, a low-time tailwheel pilot or a noninstrument-rated pilot with a piston twin—depends on that carrier’s philosophy and recent claims history. And a smaller market means more volatility: One big-ticket insurance claim can wipe out years of premiums in a given risk category for an aviation insurance company.
“In aviation insurance, you’re dealing with a smaller sample size, and when you get into older pilots an even smaller group,” Bowman said. “They’re basing their pricing and underwriting decisions on their best interpretation of the accumulated data that they have.”
Age is one of several factors carriers consider when they analyze claims payouts, so it’s hard to specify a cutoff of when pilots will start to see higher rates or more restrictive terms. But Bowman said age starts to become a factor at about age 70, particularly when insuring faster, high value, or complex aircraft.
The carriers AOPA Insurance spoke to reported that all things being equal, the average claim payout is higher for pilots over age 70. Does that mean older pilots are getting in more accidents and incidents than their younger counterparts? Not necessarily. The higher average claims cost for older pilots is driven by a higher severity, not a higher frequency, of claims, Bowman said. Insurers are paying more for each claim.
And from a statistical perspective, the smaller population of over-70 pilots means a single high-severity claim can erase years of premiums from that demographic group. Insurance companies set their premiums to cover the expected claims payouts for a group, so even claims-free, active pilots can expect higher rates or lower limits of liability as they age.
But age alone is rarely a reason for denial of coverage. Insurers view risk factors as a package, so a 75-year-old active pilot with an instrument rating may have no trouble renewing his policy on a Cessna 152—but a VFR-only pilot of the same age with the same total time, but fewer hours the previous year, may have tighter underwriting requirements to insure his new Mooney. Those could include a requirement for an annual medical certificate, an annual flight review, or flying with a second qualified pilot.
What you can do
So, what can older pilots do? The temptation may be to take your business elsewhere and shop around for a lower price. But Bowman said that may expose pilots to more difficulty.
“Don’t start switching from one company to another to save $100 here and there,” he said. Carriers are more likely to insure older pilots who are existing clients than first-time customers. A claims-free track record with the company helps your case, and they’re more likely to look at you in terms of your lifetime value as a customer. So, a company might deny a new customer over age 80, but allow an existing customer to continue with certain restrictions.
“At the end of the day, an insurance company simply wants to know that you’re fit to fly, on top of your game, and in good health.” —Bill BowmanIf insurance-imposed restrictions sound draconian, Bowman pointed out that most pilots adjust their flying voluntarily as they age. And policies aren’t static; they change depending on a carrier’s recent experience and other factors.
Pilots aren’t just numbers on an actuarial table; aviation insurance companies consider your risk individually. So put your best foot forward. The more you can do to lower your own risk—and prove it—the more comfortable the insurance company will be with insuring you. In some cases, that’s a win-win: Insurers’ desire for proof of recent experience is as good an excuse as any to fly more. In other cases, it may involve some honest self-assessment and potentially accepting certain limitations on your flying.
The AOPA Insurance Agency compiled these tips and suggestions from insurance carriers to help pilots to mitigate cost and obtain and retain insurance:
Ultimately, insurance companies are looking for indicators that a pilot is a safe bet. “It’s Safety 101,” said Bowman. “Much more frequent flight reviews. Fly regularly. At the end of the day, an insurance company simply wants to know that you’re fit to fly, on top of your game, and in good health. What a pilot can do to best help their chances is to make sure they’re doing that…above and beyond what the regs require.