CAA: GA News, "Insurance Woes Force North Carolina FBO to Suspend Rentals, Flight School"

["Stephen Irwin" <stepheni@cwnet.com>]

Friday, May 12, 2000

INSURANCE WOES FORCE FBO TO SUSPEND RENTALS, FLIGHT SCHOOL
GA News


RALEIGH, North Carolina — Rising insurance rates have KO’d the flight line
at the Triple W Airport (5W5) in Raleigh. Mike Canup, owner of C&C Aircraft
Services, the airport’s FBO, said he had to remove his seven aircraft from
service last month after he was informed that his annual insurance rates
would climb from $27,000 last year to more than $41,000 this year.

“I’m not going to run a flight school; all I’m going to do is sell gas,”
Canup said.

Canup is running into what some in the insurance business say is a
tightening of underwriting standards that could make it expensive for some
FBOs to get their insurance renewed.

“We’ve had insurance companies change underwriting philosophy,” said Tom
Canavera, an agent with Falcon Insurance Agency, one of the companies with
whom Canup has dealt. “Either they don’t do commercial or it has to be risk
free or have few losses or meet other strict requirements; that’s where it
has evolved to.”

(As a point of disclosure, this reporter’s aircraft insurance is carried
through Falcon.)

Set in a tree-lined bowl and sporting a narrow runway, Triple W isn’t the
easiest airport to access. A few incidents of bent metal over the past few
years have underscored the challenge. And though Canup said he hasn’t filed
a claim since 1997, insurance companies typically look at five-year records.

Canup has been in business on the airport for four years, but his bond with
the airport goes deeper. This is where he learned to fly in 1989, and every
airplane he has owned has been based here. He plans to get insurance solely
for the hangar and pilot liability and fuel operations, which he’s
determined to maintain “because there are 60 airplanes on the field, and if
I don’t sell gas there’s going to be a dead airport here.”

As for instruction, “I have two instructors who own their own planes. I’m
going to let them get their own insurance and do it themselves.”

Owner-instructors should be able to get such coverage, Canavera said. “It is
possible; (the insurance buyer) is the flight instructor and sole flight
instructor, so he’s apt to be more cautious and discretionary with the use
of his airplane than anybody else.”

What can FBOs who have had a run of bad luck do if they have trouble getting
affordable insurance rates when it’s time to renew?

“My suggestion to those people is to be extremely flexible and open to
whatever underwriters suggest — higher rates or deductibles,” Canavera said.
“If no accidents happen at renewal time, they’ll reduce the rates, and over
a period of time they’ll get it where it ought to be.

“Or take some action. Say to the insurance company, ‘I have a new syllabus,’
or ‘I have a new chief pilot; we’re going to be very proactive (about
safety).’ That helps them in the long run.”

Meanwhile, whether it has a rental and training fleet or not, Canup vows his
airport will remain vibrant and viable, providing fuel and a warm welcome to
fly-in visitors and based aircraft alike.

Ultimately, Canavera said, the insurance business is cyclical, and in a year
’s time the underwriting standards may loosen up again. Until then, things
could be unpleasant for some who are looking to buy commercial aviation
insurance, and those who are selling it.

“It’s frustrating for the agent too,” Canavera said. “It’s very difficult
sometimes.”


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