Message-ID: <36781012.103CD252@ucla.edu>
Date: Wed, 16 Dec 1998 11:54:58 -0800
From: Marvin May <maymarv@ucla.edu>
Reply-To: maymarv@ucla.edu
Organization: UCLA
To: lancair.list@olsusa.com
Subject: Insurance IV
Mime-Version: 1.0

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I have had experience with an  industry self insured group. I believe
that most of these groups, like ours, are organized to handle liability
insurance rather than accidents (hull). We had to form an offshore
company (Bahamas), hire a U.S. Company to manage quoting the individual
premiums, another company to manage the claims, along with our own Board
of Directors for the company.

The fixed overheads were high enough to require a substantial amount of
premiums before the project could be justified. The number of
participants was not huge, but certainly larger than the probable number
of Lancair IV owners who would join. The individual company premiums
were often over $100,000.

The major problems were:
1. A  few large losses could eat up all the company's reserves.
2. Whenever the market for insurance became more competitive, for any
reason, the regular insurance companies would cut their rates below ours
and many of our members would leave the plan.
3. In addition to the premiums, the members had to invest
Summary: Probably not practical for the small number of participants
and  amount of available premiums. What might be practical for the
owners who can afford it is to get a regular company to tailor a policy
based on VERY LARGE deductibles.

I presume that most of the accidents have been in low time planes. If
so, the high loss to premium problem will probably be self correcting as
the number of planes flying increases. In the meantime, perhaps the
insurance companies can be persuaded to look at the loss experience
among the older planes and adjust their premiums accordingly for these
planes.

For those of us who crash in new planes, the problem is mostly academic
anyway. Just depend on your mortgage insurance.