Aircraft Repair Stations Choose AAIRRG As Insurance Carrier


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Aircraft Repair Stations Choose AAIRRG As Insurance Carrier

By Shane Nolan

April 20, 2011 - Bill Perdue, president of the Aviation Alliance Insurance Risk Retention Group, Inc. (AAIRRG), proudly announced at the 2011 Aeronautical Repair Station Association (ARSA) Symposium that “we have just enrolled our 50th member, which is a significant milestone in our progress as a new insurance company”.  

AAIRRG was formed by a group of the leading independent Federal Aviation Administration-certificated repair stations in the United States and is sponsored by ARSA. 

The driving rationale for forming AAIRRG was the astronomical premiums that repair stations were forced to pay for aircraft products liability insurance. Traditionally, few aviation insurance markets have considered covering repair stations. Insurance rates became even more burdensome after the Sept. 11 terrorist attacks when most saw their premiums jump as high as 350 percent!

Aircraft Propeller Service, Wheeling, Illinois

Understanding that repair stations bore no responsibility for the increased market rates, ARSA researched alternatives to the then-limited aviation insurance market. This led to retraining Polaris Enterprise Group, Inc, Saint Helena, CA, experts in insurance alternatives, to explore the feasibility of forming an insurance company that would specifically provide aircraft product liability insurance for ARSA members. 

AAIRRG obtained its insurance license from the State of Montana on June 18, 2010, and began the process of quickly registering 22 states. In nine short months AAIRRG enrolled its 50th member, Wheeling, IL’s, Aircraft Propeller Service, Inc., specialists in the repair and overhaul of Hamilton Sundstrand composite propellers.  

This accomplishment is all the more impressive considering that the aviation insurance market has rapidly been cutting prices for repair stations since the fourth quarter of 2010 perhaps a begrudging tribute to AAIRRG’s presence in the marketplace.  

Aviation in the United States is the second most profitable line of liability insurance just after surety (principally, performance and completing bonds). All other liability lines would be delighted with an 80% loss ratio (percentage of dollars paid out in claims from premiums paid) whereas aviation has averaged in the mid 50% range for the past twenty plus years. That’s thirty points more profit than the average! 


Over the years, other insurance providers have tried to break the cartel, but each time, the cartel has driven them out of business by savagely cutting prices until the new competitor fails and then they predictably revert back to their old ways. AAIRRG will survive with, each new aviation marketing effort in the past have been ‘generalized’ whereas AAIRRG is exclusively focused on certified Part 145 repair stations.

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