The Aeronautical Repair Station Association (ARSA) and Polaris Enterprise Group have unveiled a new insurance option for the aviation maintenance industry. Aviation Alliance Insurance Risk Retention Group, Inc. (AAIRRG), which ARSA and Polaris have been working jointly to establish, has received its insurance license (known as a certificate of authority) from the state of Montana. AAIRRG will provide products liability insurance exclusively to repair stations that are ARSA members.
As a small subset of the aviation insurance market, repair stations have often been lumped with more high-risk elements of the aviation industry when seeking insurance, according to association officials. This has led to higher premiums representing an average of all aviation risk rather than that necessary solely for repair stations based on a historic analysis of accident and safety data. Because AAIRRG provides insurance only to repair stations, it will be able to offer coverage at well below market rates.
“AAIRRG offers the chance for a repair station to take greater control of its insurance costs,” said AAIRRG President Bill Perdue. “For the first time, repair stations will have insurance designed specifically for them which takes into account our industry’s outstanding safety record. We’re no longer going to be lumped in with the rest of the aviation industry.”
AAIRRG differs from an ordinary insurance company in that it functions as a risk retention group (RRG). An RRG consists of independent companies that assemble to create and fund a licensed captive insurance company, which operates under the Federal Liability Risk Retention Act of 1981 and is able to write common commercial liability insurance for its members. Each insured member is an owner of the RRG and receives shares in the RRG and is eligible for financial distributions from potential underwriting profits.