How safe are we, really?

One of our most avidly read features is Accident Reports.

To put these together for every issue, reporter Meg Godlewski combs the National Transportation Safety Board’s database, choosing a wide variety of accidents to spotlight. We don’t do this to highlight bad news. In fact, we look at these reports as cautionary tales, presenting them so that pilots can learn from the mistakes of others.

But, according to one insurance expert, there’s a lot more going on in aviation than what we see in the NTSB reports.

Between 2003 and 2005, aviation insurance company Avemco processed 3,000 claims. Only 17.3% of them were reported to the NTSB, says Mike Kerwin, executive vice president. However, 40.3% of the claim dollars paid out did involve accidents reported to the NTSB, he says. “Losses that are reported are the big losses,” he says.

The discrepancy is in the reporting system. NTSB reports are filed on accidents or incidents that result in injury or death and/or substantial damage to an airplane.

But pilots are “extraordinarily creative” in how they damage planes, Kerwin says, noting that a majority of those ways don’t necessarily involve an NTSB investigator.

He does concede that last year’s numbers were skewed by Mother Nature, with hurricanes accounting for a majority of ground damage in the last few years. For example, damage from wind accounted for 17% of Avemco’s losses in 2004, up from 8% in 2003, with the average claim totaling $26,898. Hail accounted for 4%, with the average claim totaling $20,425.

Theft and vandalism result in claims, but no NTSB reports. Average payout for theft: $13,205, $7,283 for vandalism.

The big payouts, of course, result when a plane is moving. For instance, incidents that occur on takeoff, which account for 7% of Avemco’s claims, had an average payout of $45,688 (for hull insurance, not liability). Inflight incidents push the average claim to $80,624, while approach and landing, which account for 37% of claims, usually cost the insurance company $47,514 each.

In listening to Kerwin talk, you realize a few things: This guy loves numbers and he’s got some definite opinions on how pilots can be safer.

“In weather-related incidents, there’s no way to get those down,” he concedes. “But any time you put a person and a machine together, bad things can happen.”

Working to counteract those “bad things” is an initiative by Avemco, in tandem with John and Martha King, to increase the quality of decision making and judgment in pilots. They identified four basic issues that increase the company’s exposure to loss — and a pilot’s chances of messing up big time.

The first: Analyze yourself. Is today the right day to fly this route?

Second: Is this the right airplane for my mission? Is it properly maintained? Am I current in this aircraft?

Third: Analyze the environment. Does it meet my personal minimum weather conditions? Is my aircraft the right vehicle for these conditions? Are my skills appropriate for these conditions?

Fourth: Analyze external pressures. Everybody’s familiar with “get-home-itis,” Kerwin says. “You fly four buddies 400 miles to the NASCAR race,” he says. “You have to get everybody back on Sunday so they can get to work on Monday. You’re flying because you’ve got to be there.”

If every pilot took the time to go through these four steps, Kerwin believes we could decrease losses by 30-40%.

But while Avemco offers pilots a discount on their insurance rates for completing a risk management course, only 20% of their clients have taken them up on the offer.

An insurance adjustor’s worst client? One who flies less than 50 hours a year, Kerwin says. “If you fly less than that, you are a danger to yourself and the public,” he states emphatically.

That’s one reason insurance companies don’t like flying clubs, he says. Too often, clubs have members who fly only 10 hours a year. Add a younger pilot and the risk goes up even more.

“I’d much rather fly with an 84-year-old pilot, because he’s made so many mistakes and survived, than a 21-year-old pilot,” Kerwin says. “The 21-year-old pilot might have great skills and dexterity, but his judgment stinks.”

He advises young pilots not to personalize their rejection by the insurance industry. “21 year olds as a group have horrific decision making,” he says.

But wait, because in a few years things will get better. “Insurance companies hammer young pilots until the age of 28,” he says.

What about ancient pelicans? “When a pilot reaches 150, I personally tear up his insurance policy,” he jokes.

But he quickly agrees that older pilots have historically been charged more for insurance.

Kerwin goes back to his beloved statistics: For pilots between the ages of 70 and 97, the loss ratio over the last seven years has been within two points of the young guys. And yet, he admits, insurance companies charge pilots between the ages of 85 and 90 35% more than 50 year olds. “The problem is that the older guys are in high value airplanes,” he explains.

He adds that the group is so small, it’s hard to spread risk — which is what insurance companies do. That’s why when a pilot turns 71, he should expect to see his insurance premium jump at least 10%.

Assessing risk is what Kerwin’s paid to do. And like every number-cruncher, he has set formulas he uses to determine whether he’ll insure you and how much it’s going to cost. Variables include your licenses and ratings, number of hours, currency, the aircraft you fly and more. Once again, he urges pilots not to take all this too personally.

“It’s not a beauty contest,” he says. “Pilots with a specific number of hours in specific aircraft all get the same rate.”

Read more about safety and risk in our special focus on page 38.

Janice Wood is editor of General Aviation News.

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