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Caveat Emptor: Buyer Beware

09/12/2022 Written by: Stuart Hope

As the hard insurance market progresses, we are starting to show signs of softening up, so look out for unscrupulous aviation insurance brokers promising deals too good be true. Insurance is a product that particularly lends itself to misleading advertising and unscrupulous tactics because it’s a product most purchasers don’t understand. Let the buyer beware!

I was recently forwarded an email a good client of mine received who owns a Cessna Citation CJ4.  He had been sent this email by an “aviation insurance broker” who addressing my client by his first name, insinuated they had already been in contact and that he had been “researching the insurance market to find him the best rate”. He then listed several prominent insurance companies he suggested were giving him preferred terms. Next he stated he received preferred premium rates on CJ4’s (he did not give the year model) and proceeded to provide an estimated premium on the client’s aircraft. Further, he implied he always gets insurers to grant a No-Claim Bonus, Lay-Up Credits, and flexibility on Pilot Training.

The term scam ‘artist” is apropos as these individuals are very good at painting an enticing picture. Like most scam emails or letters we receive, although very convincing, if we take a little time and break them down piece by piece, it becomes apparent we are being “worked”.

Let’s look at the above email and find the tell-tale signs of a scam in progress.

  • How did he know my client’s first name, email address and that he owned this aircraft? That one is easy. There are several companies that sell this type intelligence information. Login and ask for information on all large cabin business jets (or a specific bizjet) and the registered owner, address, chief pilot’s name, CFO, & secretary along with their office, cell phone numbers and email addresses appear.  It’s scary.

By suggesting they had already been in contact, my client thinks well maybe my pilot or CFO has been seeking a quote here since clearly if he has been “researching the insurance market” someone gave him permission to do this on our behalf.

  • Our “artist” then lists several well-known insurance companies with national brand names he is getting preferred rates from. Since no one would be familiar with this broker’s name or firm, he uses the age-old trick of coat tailing off a known brand.
  • The last, but perhaps most effective tactic, is stating the premium rates he has gotten for other owners of the same model aircraft. As stated earlier, he didn’t mention the year model, only the type aircraft.

The only way to get a potential victim’s attention is to promise what they want to hear - a premium too good to be true. Otherwise, his game is over. But he doesn’t lie. He simply quotes the lowest rate possible on a CJ4 which would be for a brand new one flown by a highly qualified dual crew for non-commercial uses. My client’s aircraft is 10 years old and flown single pilot and would not get anywhere near that rate from any insurance company.

To use a fishing term, he then throws out some “chum” - offering potential coverage options such as a No-Claims Bonus, Lay-Up credits, and flexibility on pilot training. These options are not always available but then again he didn’t say they were.

The signs are all there.  The red flag is when we must ask - “who is this guy”? Use Google for a quick background check. Most will have a legitimate looking website but dig a little deeper and there is no substance to it. It’s all smoke and mirrors. There is typically no indication how long the broker has been in business, his insurance credentials, etc.

Also, these brokers will imply they do business with all aviation insurance carriers and will list the insurers by name on their website even though often they are not licensed with them.  As it turns out, this broker had already had his license revoked by the same insurers he said were giving him “preferred rates”.

It’s unfortunate we have to put up with these type individuals, but they are out there. They trash the market creating the perception there are better deals while indirectly implying their current aviation insurance broker and insurer have been “ripping them off”. Rather than try to compete based on honesty, integrity and excellence, there are always those that cannot escape the lure of easy money and instead adhere to the philosophy “a fool and his money are soon parted”. Don’t let that be you!

Contact your AssuredPartners Aerospace broker for an honest conversation about your insurance program.

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