The Evolution of the Aviation Insurance Underwriter

If you have ever purchased any type of insurance, then your potential for loss has been reviewed by an "underwriter".  The definition of underwriting is the measurement of risk exposure and determining whether a risk should be accepted and at what price (or premium).  An insurance carrier does not select risks randomly and all risks do not pay the same premium.  By using the data provided by actuaries, it is the underwriter's job to make sure that each insured pays a premium that is sufficient to pay expected losses plus the operating expenses of the insurance company.  

When we think of underwriters, we tend to think of the people who perform these tasks, but the reality is that in recent decades, more and more underwriting is done by computers.  While there are well trained, experienced persons who are available to review certain risks, chances are that the "underwriter" evaluating your risk is most likely a black box sitting in a server room somewhere.

Back in the day

In the early days of aviation underwriting, agents would either telephone underwriters and give them the application information (which was recorded by hand) or they would mail an application and if they wanted the risk, the underwriter would either call with a quote or send one by mail.  The underwriter would then open a rate book (or go from memory) and give the agent the rates and terms that were to be used on the policy.  Negotiating was common and there was definitely a "human touch" involved in the process.  The personal experience(s) of the underwriter played a larger role in decision making.  Sometimes that would be beneficial if the underwriter liked a particular type of airplane etc., but it could have a negative effect if that individual remembered a bad experience with a certain make and model.

Rise of the machines

About the time that telexes (and then fax machines) became popular, technology began to replace the human aspect of underwriting.  Information could be transmitted electronically to and from the agents and allowed quotes to be done much faster.  This was a positive development as it allowed agents to provide better service to their clients. When programming capabilities had evolved, insurance companies then developed software to evaluate applications and provide quotes on almost all types of aircraft.  Underwriters no longer looked in rate books and became needed only to make exceptions or to review complex risks.  Now that the world wide web has become so reliable and fast, agents enter the information via the internet directly into the insurance company's software that can make most of the decisions that were previously made by a human being.  Underwriting is less subjective than it was in the past.

Make the machine work for you

The point of this article is not to debate the pros and cons of human vs. computer.  But, rather to remind consumers to keep in mind that since computers underwrite purely on the data they receive, we need to give them the best data possible.  With that in mind, we offer a few suggestions:

1)     Provide the most up to date pilot information.  Rates are determined partly on how many hours you have.  Total time, time in type (multi engine / retractable gear) and make and model are all important as well as licenses and ratings.

2)     Stay current.  Pilot hours in the last 12 months and 90 days are also a factor.

3)     Keep training.  Recurrent training with approved facilities will qualify for a discount with most companies.  Your agent should be able to give you a list.

Automation can be a good thing and it allows us to service more clients, but at Falcon we also vow to keep the personal touch for all of our customers.  When you call Falcon, the phone will be answered by a person and not a computer.  And whenever you have a question, you can reach our agents and talk to a real person who is familiar with your account – not a call center halfway around the world.  And, since we are one of the largest aviation insurance specialists in the world, we still have the relationships with the human underwriters to help you get what you need from your insurance policy.