Bridgeford Flying Services: A Vintage Napa Valley FBO You ... - NATA

Lessons Learned...
Insurance Traps to Avoid
Sure to raise the hackles of some insurance brokers, Jim Strang approaches
the insurance game from a unique perspective.
Jim Strang is a rare bird of a sort. He’s an insurance
consultant (“Run, run for your life!”), but
as such he plays the role of a buyer’s agent for
aviation insurance and is perhaps the only one
doing so full time.
While buyer’s agents in the real estate industry
are not uncommon, Strang said that, in the aviation
industry at least, he’s about it. He audits the
insurance portfolios of aviation companies with an
eye to reducing costs or improving coverages or
both. He claims to reduce premiums 80 - 90 percent
of the time and to improve coverages almost all of
the time. He pulls those rabbits out of his hat via
40+ years of experience in the insurance and risk
management fields, and Aviation Business Journal
thought it might be interesting to share some of the
lessons learned from that experience for the benefit
of NATA members.
ABJ: Isn’t the broker supposed to look out for the interest of the
insured?
“Well, they say they do. But, it wasn’t too long ago
that brokers in New York were fined, one up to
$850 million for not putting the interests of their
clients first. All had to sign a declaration stating
that going forward any transaction would be
transparent to the client and disclose any brokerage
and fees. Clients have to review and sign that
declaration in advance. “
ABJ: Who then truly plays the role of the advocate for the insured?
“Nobody, most of the time. All large corporations
have risk management staffs. Smaller to midsize
companies just can’t afford it, so they rely on the
brokers. There are a lot of things they do very well,
but the position of the brokers needs to be put into
perspective. They’re paid by the insurance underwriters.
They don’t make any money unless they
sell insurance.
Somebody who performs risk management is
paid by the client. They are there to find ways to
protect the owner or the client and not necessarily
spend money. And depending on the size of the
FBO, management company, or charter operator,
they might be able to negotiate a fee for the broker’s
services.”
ABJ: For a small or midsize company, though, draw a distinction
between a risk manager and an insurance broker. Are they different
people; are they the same people?
“At small or midsized companies, it could vary all
over the lot, from somebody in accounting who
looks after insurance--who pays the bills but really
doesn’t understand insurance--to somebody who
has a sophisticated background and is truly able to
bring about change and help the organization.
“Risk managers work with the clients from the
inside out. They learn the whole operation, review
Continued on page 36
Aviation Business Journal | 2 nd Quarter 2008
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