John Lotzer, president of Gran-Aire at Milwaukee Timmerman Airport, and Waukesha Flying Service, Waukesha, Wis., briefed fellow members on increasing insurance premiums and reductions in coverage. Gran-Aire has noticed an 8 percent increase in premiums, and expects up to a 28 percent in two years, and 40 percent in three years, and noted that there are a dwindling number of underwriters willing to write commercial aviation insurance.

Like most fixed base operators, Gran-Aire has gone shopping for better coverage at affordable prices, and out of seven requests for quotes, Lotzer received only two. A number of underwriters are no longer quoting large fleets of piston aircraft, thereby leaving the majority of fixed base operations like Gran-Aire out on a limb, even though the company has never had a claim which has exceeded their annual premium. Where there was once 12 underwriters in the market, today there are only 2-3 available, so now is not the time to be shopping around, said Lotzer. Rather, now is the time to hang on with the coverage operators already have.

Lotzer says that many reinsureds pulled out of the U.S. market because of litigation, and the attack on the World Trade Center on September 11 is causing many underwriters to go out of business. War risk coverages for fixed base operators is being terminated, when it used to be free! It now costs Lotzer $22,000 a year to cover his two fixed base operations. Some operators in attendance noted that their annual premiums are increasing from $250,000 to as much as $379,000, and the only way they can have insurance is to take out a loan at 6 percent a year, which adds to the cost of insurance.

Despite increases in insurance premiums, upper limits are being reduced. The average limits may have been $3 million for single-engine commercial aircraft insurance, $5 million for twin-engine pistons, and $10 million for turboprops, but the limits for all categories have been reduced to $1 million. Lotzer noted that while on the surface product liability reformed seemed like a victory for general aviation, and was a victory for manufacturers, the liability has switched from the manufacturers to fixed base operators since manufacturers have limited time risks of 17 years, and there are no time limits for operators.

Lotzer noted that recordkeeping is more important today than ever before, and warns against allowing customers from bringing their own parts in to be installed. It is no longer a matter of not making a profit on the parts operators sell; it is a matter of assuming liability for parts which have a limited life, and operators who need to control the quality of parts they install.

Owner assisted annuals continue to be perceived as "educational" in nature, and therefore not an insurance concern at this time. Aircraft owners are urged to select a fixed base operator who is licensed and insured. Likewise, pilots are urged to get instruction from instructors who are insured, and who have workman's compensation insurance. If an accident occurs, the pilot and aircraft owner may be at risk liability-wise. With increased attention to airline security or the lack thereof, charter business which has been on the rise this past decade, will likely increase even more in the years to come. With 90 percent of the corporations in the country unaware of the time savings of charter air service, the potential for business is tremendous, noted members. Additionally, insurance companies are now demanding that charter companies meet the same pilot recurrency training as corporate flight departments in hopes of reducing their risks.

Jeffery Taylor, aviation consultant with the Wisconsin Bureau of Aeronautics, briefed WATA members on security measures being taken by the state's new "Aviation Security Team" created by the Wisconsin Department of Transportation and headed by former Middleton, Wis. police officer, Michael Jordan. Taylor noted that the ban on general aviation was abrupt and that there were many breaches of airspace following September 11. He also noted that the decisions for temporary flight restrictions and closure of airspace came from the National Security Council (NSC) and not the FAA. Taylor noted that NSC can't secure airspace without securing the airports and airplanes on the ground, and asked for the cooperation of fixed base operators to operate their businesses with security in mind. He noted that a major problem with GA airports is their wide openness and lack of any security measures.

Operators in attendance raised a concern with the expectation that fixed base operators are now expected to become policemen when they aren't being paid to provide such services, nor is police protection a part of the services they provide. In addition, operators expressed concern that they are not recognized as law enforcement officials, and therefore do not have the authority or resources to provide such services. Taylor urged operators to work more closely with local law enforcement so they assume the bulk of the responsibility, and for operators to participate in airport security meetings with tenants and airport management.