Write about Underwriting and Pricing General Aviation Risks. The Function of Underwriting. The Need of underwriting. Aviation Exposures and Catasthrophe loss.
Chapter 10: Resumen
Underwriting function: is the process of selecting and pricing risks which are presented to the insurer.
Underwriting Purpose: is to maximize profits by accepting a favorable distribution of risks.
A safe distribution of risks requires their diversification among many types of aircraft, purposes of use, pilots, coverage’s, and geographical areas.
Over Concentration of exposures is poor underwriting practice.
Method of selecting insureds:
Preselection: the process of how to decide whether to accept or reject an application of insurance.
Post selection: the process of how to get rid of undesirable insureds.
Airlines: refers to that class of business involving the operation of major, national, and regional air carriers.
Industrial Aid: applies to corporate-owned aircraft which are used for the transportation of employees, business associates, and executives and which are flown by professional pilots hired on a full-time basis specifically for that purpose.
Special use: is reserved for unusual purposes, several of which require waivers form the FAA, like crop dusting, low altitude photography, banner towing , flight testing, hunting, law enforcement and many others.
Rate Making: is the pricing of insurance.
Rate are ordinarily quoted on an annual basis. expressed either as a percentage of the insured value or as a dollar amount applicable to each $100 of insured value. For example, a fleet of B-737 can have a rate of 0.05% on the average of fleet value during the policy period.
Book: Introduction to Aviation Insurance & Risk Management, 3rd edition Wells and Chadbourne Krieger Publishing
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