An Imbalance With Insurance

Insurance analyst says that high rates can be offset to some degree by implementing risk control programs.

Frank Kinnett, managing director of Marsh USA Inc., told the into-plane refueling reps at this year’s Jet Fuel Conference, "The insurance companies have made a lot from your industry." He cites numbers that show in the past two years, some $440 million in premiums were paid by the refueling sector, while claims accounted for $150 million during the same period. Profit from refuelers: $92 million.

Kinnett says refuelers’ insurance rates still increased by an average minimum of 75 percent for companies that experienced no losses. Two reasons: insurance companies underpricing their own product for a period of nearly ten years and the impact of 9/11.

Dramatic premium jumps since 9/11, he says, are the result of the underwriters trying to recoup in one year’s time some $4 billion in losses from the terrorist attacks. A war with Iraq or similar future attacks will not have as hard-hitting an impact, he says, because insurers are only providing $50 million limits for war risk insurance.

Kinnett recommends that companies reduce their risk by putting in place risk control programs, particularly in light of the fact that the refueling industry inherently has high employee turnover. "Set up a triage process," he adds, for dealing with claims very quickly to get them settled before having to go through the trial process.