IND001: Industry – Aviation Industry Session

1. IND001: Industry – Aviation Industry Session April 28, 2014 2:00PM – 4:00PM

2. General Aviation Risk Issues April 28, 2014

3. General Aviation Risk Issues • Speaker: • Steven W. Whitlock CIC, CRM, CAIP • Senior Vice President – AirSure Limited • B.S. / A.S. Degrees from Embry-Riddle Aeronautical University • Former general aviation underwriter and risk manager for a Miami-based National Airline

4. General Aviation Risk Issues • What is General Aviation? • Aircraft Owners & Pilots Assoc.: All Civilian flying except scheduled passenger airline service • National Business Aviation Assoc. & General Aviation Manufacturers Assoc. (GAMA) jointly through “No Plane No Gain”: Focus on Business Aviation • GAMA: All aviation other than military and commercial airlines

5. General Aviation Risk Issues • What is General Aviation (cont’d) • Wikipedia: All civil aviation operations other than scheduled air services and non-scheduled air transport operations for remunerations or hire. • Merriam-Webster: The operation of civilian aircraft not under the direct control of a common carrier

6. General Aviation Risk Issues • General Aviation Facts • 360,000 aircraft including helicopters, piston-powered airplanes, turboprops and long-range business jets worldwide. (223,000 in the U.S.) • 35,000,000 flight hours per year. (23,000,000 in the U.S. – 2/3rds for business purposes) • 166,000,000 passengers annually. • Primary training ground for airline pilots • 600,000 pilots in the U.S. (majority are comm’l)

7. General Aviation Risk Issues • General Aviation Facts (cont’d) • Employs more than 1.2 million people in the U.S. • 74% of flights do not carry executives. Time critical sales, technical, middle management. • 5000 public-use airports in the U.S. Airlines serve only about 550. • Airlines serve only about 70 major hubs and have abandoned nearly 100 mid-sized cities in just the last year.

8. General Aviation Risk Issues • Risk Classification • Aircraft - Business & Pleasure • Aircraft – Industrial Aid • Aircraft – Commercial • Charter / Aircraft Management • Training • Pipeline / Powerline Patrol • Medical Evacuation • Government Contractor

9. General Aviation Risk Issues • Risk Classification (cont’d) • Rotorwing • Med Evac • Offshore • Heli-logging • Industrial Aid • Pleasure & Business • Air Charter • Training

10. General Aviation Risk Issues • Risk Classification (cont’d) • Fixed Base Operations • Line Services (fueling, parking, catering, car rentals) • Aircraft maintenance • Aircraft completions / paint • Aircraft Storage • Aircraft / Parts sales • Charter • Aircraft rental • Aircraft training

11. General Aviation Risk Issues • Risk Classification (cont’d) • Corporate Non-Owned • Airports • Ground Handlers • Caterers • Maintenance, Repair, Overhaul (MRO) • Manufacturing (Airframe, Engines, Avionics, Components)

12. General Aviation Risk Issues Typical Pleasure & Business Aircraft

13. General Aviation Risk Issues Typical Industrial Aid or Air Charter Turboprop aircraft. May also be Pleasure and Business if “owner flown”.

14. General Aviation Risk Issues Typical Industrial Aid or Air Charter mid-sized Business Jet

15. General Aviation Risk Issues Typical Industrial Aid or Air Charter large-cabin long-range Business Jet.

16. General Aviation Risk Issues Typical Rotorwing Emergency Medical Evacuation

17. General Aviation Risk Issues Typical Fixed Base Operation ramp and hangar

18. General Aviation Risk Issues Typical Fixed Base Operation underground fuel farm and truck

19. General Aviation Risk Issues Typical Aircraft Maintenance hangar

20. General Aviation Risk Issues Typical Helicopter maintenance facility

21. General Aviation Risk Issues Paint preparation

22. General Aviation Risk Issues Completion Center paint and interior preparation Airliner configured for corporate business travel

23. General Aviation Risk Issues Textile preparation for interior installation

24. General Aviation Risk Issues Typical Aircraft Maintenance, Paint Prep, Paint, FBO and Aircraft Storage in one location

25. General Aviation Risk Issues Typical Airframe Manufacturer

26. General Aviation Risk Issues Bad things can happen in an aircraft hangar

27. General Aviation Risk IssuesSelection of Insurers of General Aviation Risks USAIG / USAU Global Aerospace AIG Aviation Starr Aviation Allianz XL Swiss Re QBE Phoenix Aviation / Old Republic Berkley Aviation W. Brown & Associates / Catlin Houston Casualty / USSIC Aerospace Insurance Managers ACE USA Great American Insurance Co. Meadowbrook

28. General Aviation Risk Issues • Corporate Non-Owned Aircraft Liability • Liability arising out of the use of aircraft not owned in whole or part by the corporation. • Typical risk profiles: • Your company charters aircraft from a FAA certificated Part 135 Air Taxi operator, or • You have an officer or employee who uses an owned, borrowed or rented aircraft for company business

29. General Aviation Risk Issues • Corporate Non-Owned Aircraft Liability (cont’d) • Use of Air Charter services • Due Dilligence • Third Party Auditors – IBAC / IS-BAO Certified • International Standard for Business Aircraft Operations • Established or developing formal SMS program • Air Charter Safety Foundation • ARG/US (Aviation Research Group) • Wyvern

30. General Aviation Risk Issues • Corporate Non-Owned Aircraft Liability (cont’d) • Use of Air Charter services (cont’d) • Minimum Insurance Standards • Aircraft Liability (Specify minimum limit) • Additional Insured • Aircraft Hull (not less than market value) • Waiver of Subrogation • Primary Insurance • Breach of Warranty • Set-offs • Insurance company at least A. M. Best A+ • 30 day Notice of Cancellation • Certificate of Insurance

31. General Aviation Risk Issues • Corporate Non-Owned Aircraft Liability (cont’d) • officer or employee who uses an owned, borrowed or rented aircraft for company business • Consider restrictions or prohibition • Published corporate policy • Secure copy of primary policy • Secure as much coverage under primary policy • Consider purchasing a Corporate Non-Owned Policy

32. General Aviation Risk Issues • Own or Operate a Business Aircraft • Evaluate insured value and liability limits • Flight crew – annual simulator-based recurrent training • Active SMS program • Available coverages: • Diminution of Value • Turbine Engine Mechanical Breakdown • Extra Expense coverages with no minimum period or daily limit, not less than 120 days. • Trip Interruption coverage. Evaluate costs to continue a road-trip with a leased or chartered aircraft. • Liability and Hull War Risks

33. General Aviation Risk Issues • Owned Aircraft Managed & Insured by a Third Party Management Company • Management Agreement – Review • What happens if the Management Company damages the aircraft while towing in or out of the hangar? • What happens if the Management Company violates terms & conditions of their insurance?

34. General Aviation Risk Issues Questions? Thank You Steve Whitlock – swhitlock@airsure.com

35. Questions?Thank YouSteve Whitlock – swhitlock@airsure.com

36. Air Methods

37. Eric Marsh • Risk Manager Air Methods Corporation • 2 years with Air Methods • 10 years insurance broker • Master’s Degree Aeronautical Science • Private Pilot • Navy P-3 Orion Hydraulics and Airframes Mechanic • MBA Student

38. Air Methods • HEMS – HELICOPTER EMERGENCY MEDICAL • SERVICES • 387 AIRCRAFT • 321 HELICOPTERS • 26 FIXED WING • 4000 EMPLOYEES • OPERATE IN 37 STATES • Sundance Helicopters – Las Vegas tour operator • Blue Hawaiian – Hawaiian tour operator

39. Safety Management System

40. Enterprise Risk Management

41. What is ERM • Enterprise Risk Management – RIMS defines ERM as a strategic business discipline supporting the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated portfolio.

42. What is SMS • Safety Management System – the formal, top-down business approach to managing safety risk, which includes a systemic approach to managing safety, including the necessary organizational structures, accountabilities, policies and procedures (FAA Order VS 8000.367)

43. DEFINITIONS Risk Safety Possibility of loss or injury peril Someone or something that creates or suggests a hazard Freedom from harm or danger The state of not being dangerous or harmful

44. ERM SMS SMS - safety decision making throughout the organization A structured means of safety risk management decision making Increased confidence in risk controls though structured safety assurance processes • Encompasses all areas of organizational exposure to risk • Provides a structured process for the management of all risks • Prioritizes and manages those exposures as an interrelated risk portfolio

45. ERM SMS A safety promotion framework to support a sound safety culture • Seeks to embed risk management as a component in all critical decisions throughout the organization.

46. SO WHAT!

47. SMS = ERM

48. DO YOU EVER WALK • AWAY FROM A PRESENTATION • THINKING, “THAT WAS GREAT • INFORMATION BUT I HAVE • NO IDEA HOW TO GET • STARTED!”

49. Getting Started SMS ERM STARTER KIT http://www.rims.org/resources/ERM/Pages/ERMStarterKit.aspx ERM • SAFETY MANAGEMENT SYSTEM • (SMS) • IMPLEMENTATION GUIDE • http://www.faa.gov/about/initiatives/sms/reference_library/policy_and_requirements/

50. GETTING STARTED • THE FAA WEBSITE HAS A PLETHORA OF INFORMATION TO HELP A RISK MANAGER PREPARE A FORMAL SMS/ERM PROGRAM • http://www.faa.gov/about/initiatives/sms/