When a recent study from the Aircraft Owners and Pilots Association found that older pilots are seeing their aircraft insurance policies canceled or suddenly much more expensive because they are over 70, many called it age discrimination.
But according to one insurance expert, discrimination in insurance is different than in other situations.
That’s because pilots fall into different categories and part of determining their insurance premiums is looking at all of the pilots in that category.
For example, “a low-time student pilot is going to get a much higher rate because they’re lumped in with all the low-time student pilots,” says Kim Skipper, Aviation Underwriting Manager for Avemco Insurance Company, the only direct writer of general aviation insurance.
“Maybe there are one or two low-time student pilots who are phenomenal pilots and will never have a claim. But as a group, they tend to have more claims, so you get classified that way.”
“In auto insurance, you see it frequently with young males just learning to drive,” she adds. “Their insurance is through the roof because, collectively as a group, that’s what the data shows.”
And years of data collected by Avemco shows that older pilots have more claims than some other categories.
As the data is proprietary, she couldn’t reveal what kind of incidents or accidents older pilots are having, but as a group, she noted they have more claims.
“As a result, the data shows that older pilots do deserve a slightly higher rate overall.”
So why is that not age discrimination?
“Where it gets unfair is if I pick a characteristic that doesn’t play a part,” she says.
For instance, she can’t say, “oh, you have a red plane and red planes cost more.” Or a pilot is 6 foot tall or 4 foot tall or some other arbitrary characteristic, as they have no implication on a claim.
On the flip side, it also would be unfair for an insurance underwriter to say, “oh, I like this guy, so even though he’s older, I’m not going to charge him the older rate,” she adds.
“That’s when you can get into a lot of trouble.”
Skipper has heard similar complaints from pilots she’s insured over the years.
“Some will say, ‘I’m 80 and I run six miles a day,’ and while I do understand that, I also know that all 80 year old pilots may not be able to do that. When explaining that to customers, you see the little light bulb go off as they think of one of their pilot friends who maybe isn’t quite at the speed they are.”
But if older pilots are truly more apt to have an accident, it would be very apparent in records from the National Transportation Safety Board (NTSB), right?
Not at all, she says.
“More than 50% of the claims that we pay don’t make into the NTSB reports,” she explains. “A large number of them are not what’s deemed to be reportable. A small, dinged wing probably isn’t getting reported to the NTSB, but yet I see those claims.”
“More than 50% of the claims that we pay don’t make into the NTSB reports.”
So much of setting a premium is based on the company’s own data, which uses the past to predict the future. And it’s in the future where Skipper finds out if she hit the right numbers.
“From the policies I write this year I do not know what kind of claims they’re going to have until maybe three years from now,” she explains. “Insurance is a difficult product to price from that standpoint, which I think a lot of people don’t understand. If you’re selling a stapler to someone, you know how much the stapler cost you and what your overhead is to sell it for the right price. I don’t necessarily know what I’m going to pay in claims until a couple years after the fact.”
And there’s a lot that goes into paying a claim, such as the obvious things like the cost to repair or replace an airplane. Then there’s the things pilots might not think of, such as the cost to transport a plane from where it was damaged to the shop to get it fixed or legal costs.
If there are injuries or damage to someone else’s property, there’s usually legal costs associated with them and depending on the severity of the claim, they could be rather large.
What Can You Do To Get the Best Premium?
There are a few things you can do to retain coverage and keep your premiums manageable.
Perhaps the most important thing? Stay current, she says.
“Obviously if you haven’t flown in several years, and now you’re looking to get back into it, it’s going to be a lot harder as an older pilot than it would be as a younger pilot,” she says. “That’s because there are concerns that if you haven’t flown for five years that your skills may have diminished, not only because you haven’t flown, but as we all know, as we’ve gotten older, the things that we did when we were in our 20s we’re not quite as quick about when we get into our 50s and 60s and 70s.”
Another tip? Get additional training and continuing education. For instance, get involved in the FAA’s Pilot Proficiency Program called WINGS. Avemco sponsors the wings pins that are awarded to pilots who complete a phase. It also gives discounts on premiums to pilots who are active in WINGs. Other insurance companies may also give discounts for WINGs participation.
Another tip: Stay with the same insurance company — don’t hop from company to company every year.
“Even when you’re with one agent, they might move you to Company B, and then next year, they’re going to put you with Company C or Company D,” she says. “In your mind, you’re still with that same agent, but in reality, they’ve moved you every couple of years. And that may make it harder for that company to continue to offer you coverage.”
She does admit that her company looks at a pilot who has been with Avemco a long time differently than someone who is new to the company.
“That’s because as the only direct writer, we are having conversations with our pilots throughout the year, we know that they are continuing to train above what the minimums are.”
Today’s Insurance Market
Insurance, like any other marketplace, has its cycles.
Right now, it’s in a cycle where premiums are going up and it’s getting harder to get coverage.
And while some companies are increasing premiums across the board, that’s not happening at Avemco, according to Skipper.
“We haven’t raised our rates in several years,” she said. “Now, as pilots hit certain classifications, their rate may change, but as a whole across the board where everyone is getting an increase like I’ve heard in the industry over the last year or two, that’s not something we’ve done.”
And while she can’t speak as to why other companies are raising rates or tightening limits, she paints a scenario where she would do the same.
“I can tell you, I would raise rates and tighten limits if all of a sudden the dollars being used to pay claims is much higher than what I had anticipated,” she notes. “At that point, you need to raise your rates because you’re not collecting enough money to cover the losses”
And pilots would do well to remember that rates in aviation insurance aren’t just determined in general aviation.
“The insurance industry as a whole looks at aviation altogether, so that’s includes the commuters and the big airlines. And if the losses have gone up, then it becomes a little bit more difficult for coverage to be available. It’s part of the overall cycle.”
She notes she’s ridden out the cycle several times over the years.
“When companies leave general aviation insurance, rates seem to rise and everything gets very restrictive as far as availability. And on the other hand, if insurance companies start making what appears to be an interesting profit in the general aviation market, other companies will start writing it. One way to get new accounts is to offer better terms or have a better rate. That then starts the down slide where rates have dropped with many types of coverage available. But when all those losses start happening, you see it start to restrict again and go back the other way.”
Other factors also play into the general aviation marketplace, such as the weather.
As weather events continue to get more extreme, insurance companies are paying out more and more claims due to hurricanes, tornadoes, windstorms, and more.
“It is common this time of the year in the Northeast when old hangars just get to a point that they no longer can hold the weight of the snow and hangar roofs collapse,” she says.
“Elsewhere a windstorm may blow through and while you’ve tied your airplane down, and your neighbor may have done a really good job of tying his airplane down as well, the winds may be bad enough that break the tie-downs and now his airplane and your airplane are tangled up together.”
She notes that Avemco pays out a lot of claims that are weather-related, as well as other non-pilot involved claims, such as another plane taxing into a tied-down plane.
“We do pay a lot of what I would call non-movement related claims, such as fire, theft, vandalism, and those caused by weather,” she says.
When the insurance company figured out that they are leaving money on the table by not insuring the older group maybe they will wake up. The older is more cautious, more experienced, and less likely to have to go and buckle under pressure. Hope they see the light soon.
Using the comment of “FUTURE RISK”, then at the end of policy period, we should get a rebate for no claims. BUT NO, the next year rates go up even more. So even though after 50 years behind the propeller, NO INCIDENT, ACCIDENTS OR CLAIMS, I receive no benefit from an unblemished safety record.
The other comment i have is why is General Aviation even attached to the Commercial aviation bunch. Oh, sorry, I forgot, we are just another source of money for the greedy,
Well I guess we can find out if there are more older pilots having more claims then younger pilots.. How about GAN or AOPA? Think you could manage a survey that ask how many pilots are over 70, read GAN or belong to AOPA, have had a claim in the last calendar year. and maybe a few other questions. If the problem is that insurance companies wont release the info lets do our own and shove it up their tailpipes. Think about it. But remember DOSS. Do Something Stupid. Anything but do Something.
Ahh yes, take a driver training course and we’ll reduce your rates . . .
Took one a couple of years ago, the presenter didn’t have the first clue as to how anything worked (ABS, air bag deployment, lidar, etc.) and after wasting most of a day (and driving 30 miles each way to get there), the reduction in my premium was – wait for it – a whopping $25.
The offered me this course again, not only did I tell them to stuff it, but I called my insurance agent and he switched me to a better and less expensive policy. In over 50 years of driving, no accidents, no incidents, nothing, no claims.
Had homeowner’s insurance, policy went from $900 to $1,200 to $1,800, again no claims. Switched to a new company, back to $800, better coverage. Roulette.
Insurance companies are guessing at predicting the future and they are guessing with our money.
Ever visit Hartford CT? Check out the fabulous skyscrapers owned by insurance companies, all built with OUR money. In Boston, the tallest building in town is owned by Prudential. Scam-o-rama.
Sort of like government taxes working the problem backwards. Decide how much they want and then decide the easiest places to get it, like gov sin taxes are easy targets,
Thought AOPA said no uptick in accidents relating to basic med, which I would think is an older population.
Higher rates on younger and inexperienced pilots discourages new pilots and new business. Analysis would show where the predominate problem lies but they’re not telling.
Perhaps it would make sense to prorate hull claims. Like a roof, prorate prop and engine…or avionics as are washers, driers and computers. Or carry less coverage. Some say self insure on hull, which is essentially if you can’t afford to lose it, don’t fly it…which is what I use.
A lot of the comments seem to miss the point here – your insurance rates are not a product of your PAST RISK (experience), they are a reflection of what the data says will be your FUTURE RISK (for the term of your policy). Unlike selling staplers (the example in the article), where a manufacturer can change pricing with some flexibility as they see changing costs, an insurance company only gets a chance to do that once a year for most policy holders. Your rate has to cover the estimated future risk plus the costs of past claims.
An agent once estimated the coverage for an experienced pilot, not well-qualified in a particular type of aircraft, as 10% of hull value. That means the insurance company would have to have about 10 years of claim-free coverage to break even on a claim that wrote off the airplane, and that assumes that the aircraft owner hadn’t increased their hull coverage.
This is not the case for all aircraft, and I’m not saying insurance companies AREN’T taking advantage of some customer segments, but one claim can erase every premium you’ve ever paid.
I’m over 70. My experience with Kim Skipper and avemco was horrible; They denied me insurance Without giving a reason in a voicemail. I tried to return a call to see in there were some mitigation I could do like wings or further training. They couldn’t be bothered to return my call.
I personally feel that age discrimination is a lot of BS, this whole insurance discrimination is nothing but a lot of GREED !! any way you slice it !! Same as auto insurance, especially now that the auto industry has pinned us up against a wall by forcing everyone that drives a car has to have insurance, but ??? the auto industry hasn’t yet put the screws to us like the aviation has, and place age discrimination on older drivers. The main reason aviation insurance continues to screw the people with the most experience is because they can ! So all we have to do is fight fire with fire and it will go away,, pilots that own there aircraft free and clear, do not pay for hull ins. simply liability, we really don’t need hull ins. because we are good pilots and don’t have claims, right ?? so that’s all that’s needed . Aviation ins. company’s can have their cake and eat it too. In other words we don’t need no stinking badges !!! My auto ins. company told me that in order to lower my premium was to go to driving school of their choosing and if I do well they might see it to lower my ins. premiums. I told the lady that I didn’t need any kind of school on driving, I have driven over 50 years without a ticket or accident, they don’t teach you that in driving school, the same goes with my flying, no incidents, accidents or any thing even close to costing the ins. a penny.. I’m very cautious, smart and determined to be the best that I can be… We the flying public are the only ones that can bring these crooks to their knees, I say lets start now !!!
“As the data is proprietary, she couldn’t reveal what kind of incidents or accidents older pilots are having, but as a group, she noted they have more claims.”
I call BS. The way they do their actuarial tables might be proprietary.
But if you want to solve some of these problems, let’s look at auto insurance. It used to be, at one time, that if you took a defensive driver course every x years, you would get a deduction in your premiums (with certain carriers) because they found that people who did this had fewer at fault crashes.
If the insurance companies looked at recurrent training in the same way, we might see things change. For instance someone who just turned 65, has been flying 20+ hours a year, and does a BFR and then every other year does an IPC (even though legally they don’t need it), or adds a rating, or takes some ADM training, would probably be someone who has fewer crashes.
Proving one still has the skills and is proficient, should have the insurance companies rewarding those pilots.
“because they found that people who did this [took a driving course] had fewer at fault crashes.”
-> I’m inclined to suspect that those people would have had fewer at fault crashes without the course. That is, the mentality that sees any benefit in a safety course is less likely to get in an at-fault crash”
Not a one of these comments will have an effect on insurance rates by any of the companies. AVEMCO price was almost double for same coverage for my 108-2 Stinson.
Arbitrary & Capricious comes to mind for age related pricing of coverages for older pilots.
As an 80 year old pilot, I say the insurance company should insure the pilot based on the his or her experience & or incidents or accidents/claims paid out in his/her behalf. But to charge more just be dirt & I are close to the same age IS DISCRIMINATION no matter how they spew their crap. Having flown since 1970, in the Army & civilian life, no accidents, no incidents AND no claims, my rate increased $130.00 per aircraft, for 2 PA-22’s. I am having the same discusion with my auto insurer. 20 years younger, my rates would be different.
The comment made in the article aboout knowing the cost of actual damages to an incident/accident is not true, they have everything figured in and they still are making money.
Would not surprise me if aviation insurers do not use the person FICA score to adjust rates upward.
Maybe when it is my time to go, I should fly over the current insurer’s office & do a kramakazi into their domain.
You know what pisses me off is when someone does something that is absolutely the stupidest thing and causes damage to the insured plane and other property around it.
Example, hand propping an airplane that was never intended to be started by hand.
If the plane was designed to be started by hand, there would be a procedure in the POH and you would be trained to perform the process.
I am not saying the insurance company should get off the hook in most claims, but we pay for the stupid decisions of others.
There are old pilots, and there are bold pilots, BUT [yah, yah, yah, I know…, you have already heard that one], but for those young, inexperienced and unseasoned pilots who load up their rented 172 with three of their American sized friends assuring them you will not run of gas because you have just now filled the tanks to the point where our new PIC is wearing 100LL for deodorant one hour after the DPE has signed off on his Airman’s certificate, and…. Well, let’s put it this way, old pilots are not bold, and being experienced they don’t do dumb things [any more]. Resultantly, their insurance rates should be lower than all others until they [the others] have proved themselves good risks from the standpoint of insurance. You have to be old [and still alive] to do that. I have a question for the woman quoted in the article to which this missive responds; when is the last time you have had to pay out claims to the widows of friends of this former pilot who managed to nose in his piston powered side show 200′ before the end of the runway, or anything close to it? When?
The Nall Report analyzes and summarizes Aviation Accidents. What Ms. Wood states is “claims are not necessarily reportable to the NTSB.”
If you are older, have been flying all your life, never had a claim. Been paying into insurance all this time, and get hangar rash putting your plane back in the hangar, you are probably thinking, I’ll just file a claim. I’m wondering out loud if this is the typical claim for an older pilot, where in years past they would fix it themselves, now they take advantage of the insurance. Financially most Octogenarians are retired, on fixed incomes, and insurance is there for a reason. If you have been paying insurance with the same company your entire flying career, and not had a claim, that should have value. If the data were published, I suspect the average claim would be of the “fender bender” type. Not the fatal or injured passengers.
Very simple: the insurance companies charge more and decline coverage to experienced pilots for the same reason that a dog licks itself…because it can.
Note that discrimination per se is not illegal. UNREASONABLE discrimination generally is. If a certain demographic has higher accident rates, its insurance will be higher. I’m not saying that there might not be something nefarious going on, but if the numbers justify a rate increase, then a rate increase is not unreasonable.
There’s another problem looming besides high insurance premiums for pilots and their aircraft. Which, by the way will continue to rise. https://americanmilitarynews.com/2021/09/army-flight-surgeon-says-pilots-risk-sudden-cardiac-death-from-covid-vaccine-side-effect/
Kim Skipper at Avemco is quoted in the article by Janice Wood, editor at General Aviation News. Janice is just reporting what Avemco is saying about higher premiums for older pilots (giving her no data to back it up.)
Don’t shoot the messenger, GAN editor Janice Wood!
If y’all think this is a godawful mess now, wait until we have autonomous aircraft.
Claim denied because you didn’t have the latest software update. Claim denied because the owner is over 70 (even though the owner is simply a passenger). Claim denied because aircraft manufacturer didn’t comply with sub-specification in CFR 1643-443 sub b4 paragraph 8a-7. Claim denied because of obscure but known incompatibility between version 28-3 of aircraft software and iPhone23 when placed in dark mode.
It gets worse, too. Coverage declined because we have no underwriting experience with autonomous aircraft. (Of course if they never write a policy, there’s no way to evaluate the loss risk.) Coverage declined because we (arbitrarily) define this as a drone (even though people will ride in it) and we don’t cover drones.
Now that could be a problem . . . no bank will finance without insurance, so all these things are going to have to be bought for cash and then flown uninsured. Having your buyers limited to cash customers only kinda-sorta narrows your customer base and you aren’t going to sell many aircraft. Not selling many aircraft is a great way to go out of business entirely. Flying uninsured leaves YOU personally liable for anything that happens. Oh yeah, did I mention that your life insurance is going to exclude autonomous aircraft? (They already often exclude GA in general, some even exclude flights on commercial carriers!)
No insurance = no financing = darn few customers = another bankrupt aviation business. Because of this, autonomous aircraft (autonomous air taxis, etc) may never, if you’ll pardon the expression, get off the ground.
We’re developing the hardware, but without insurance (and financing) the game is over before it begins.
Buy a relatively smaller, simpler airplane. Keep liability coverage only. Drop the hull insurance and save premium money by self-insuring, staying proficient, flying in good weather, tying down your airplane securely or flying it away in front of approaching storms, if you have time. Spend the money you save on recurrent training with an instructor and better engine maintenance. I’ve saved thousands over the decades and I’m not that old!
Ues……they have chosen to lump older pilots together in a risk pool, when there must be other ways to group pilots that better reflect the risk. And, of course, now “climate change” is responsible for higher premiums. Is COVID next?
Generating rates based on data the insurance companies refuse to share will always make them look suspicious and greedy. They could easily dispel that belief by simply showing the data. The fact that they won’t makes me believe older pilots get charged more because the insurance underwriters are able to wring more $$ out of them. Disagree with that? Then share the data.
Change out “old pilots” for “black pilots” and you get “black pilots have higher (or lower) claims than other pilots so their rates are different.” Now everyone will agree this would be discrimination, but it somehow isn’t if it is old pilots?
It seems like an opportunity for EAS, AOPA, ASI, and the other Alphabet organizations to work with the insurance companies to determine what training subjects and techniques could be developed and offered to address the issues creating claims by older pilots. Older pilots who complete such training could be offered lower rates. Without such a process, I don’t see how we work our way clear of this situation.
Race doesn’t have one single thing to do with your ability to fly. Being an rude 70 year old man sure does…. Get out of here with that nonsense.
The average ages of pilots as a whole are getting older. I don’t think the high premiums are age discrimination but on risk. Premiums are risk and profitability based. Aviation Insurance Companies are in business to make a profit not build goodwill in the industry. If claim payout exceeds premiums, salaries and other fixed costs as well as a return on investment either the premiums go up or they go out of business. Greed and competition (or lack of) no doubt play a part but the customers play a part in allowing that. If the aviation insurance industry starts making large profits others will join in offering lower premiums and the cycle of lower premiums will return. I just hope the required higher profits, greed, whatever doesn’t run their customers out of flying.
Gibberish. Here’s what the data shows, but we can’t show you the data. Older pilots do seem to have a “slightly” higher rate of claims. We lump you all together in case. This article was pretty much a waste of space.
I fly for the owner of a worldwide Corporate, airline and GA broker and we’ve discussed this many times. They raise the rates because they are experiencing massive claims not just in aviation, but in all categories in the past few years and they are picking the low hanging fruit.
Turbine and jet single pilots over 70 with stellar records, current recurrent training and simulator sessions will be a thing of the past in the not to distant future. Even two pilot crews are getting hit with restrictions and it’s not going away. As with everything else in this country, those in power are enforcing only the rules they agree with at this point in time.
The really sad thing is , we the end user have zero recourse.
I really think Ms. Wood is talking out of both sides of her mouth and until the aircraft industry comes up with a solution to help pilots of all ages they will see general aviation to go down hill.
I would like to know the number of plane owners by age. Older pilots can afford a plane more than younger ones. This would make it more age discrimination.
The insurance industry can paint this picture any way they want – but it is still age discrimination. Look up the definition……