Insurance grounds Kenai Helicopters
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Insurance grounds Kenai Helicopters
Insurance grounds Kenai helicopters
By Wesley Loy
Daily News Reporter
(Published November 7, 2000)
A Kenai helicopter company has all but grounded its fleet because of trouble getting enough affordable insurance.
The problem for Kenai Air Alaska Inc. isn't a bad safety record, said owner Craig Lofstedt. Rather, it's an intense hardening of the insurance market that is putting the squeeze on Alaska aviation companies.
It's a crisis that reflects the state's chronic high rate of accidents and could lead to higher rates and less seat availability for travelers using Alaska's small commercial air carriers, aviation and insurance industry professionals say.
Other small airlines and air taxis are scrambling to find affordable coverage amid a steady tenor from fliers, insurers, the Federal Aviation Administration and others that Alaska is paying the price for a high rate of accidents.
From 1990-98, the state had 351 commuter and air taxi accidents, not counting helicopter crashes, with 140 fatalities, including 51 pilots, according to the National Institute for Occupational Safety and Health.
Lofstedt said his company's insurance woes began in May when Kenai Air renewed its policy.
Most of the company's business is flying oil workers to and from platforms and other petroleum facilities in Cook Inlet. The oil companies require at least $1 million in passenger liability coverage per seat, Lofstedt said.
To keep that coverage, he said his insurers required a rate increase of more than 200 percent. He said his company also was forced to sell two of its biggest helicopters, both twin-engine, nine-passenger Bell 212s, because the insurance companies said they wouldn't cover them.
Left with a diminished fleet of eight smaller, single-engine choppers, Lofstedt said he was just hoping to ride out the higher insurance costs. Then on Oct. 9, he received a letter that one of his insurance policies was not in place, leaving most of the helicopters with only $300,000 in coverage per seat.
Since then, the company's fleet has been mostly idle, and Lofstedt's insurance broker is searching the world insurance markets for enough coverage to get the helicopters back in business.
Meantime, he said, his main clients, Phillips Alaska Inc. and Cook Inlet Pipeline Co., are using other carriers. And Lofstedt's 12 employees are hoping for the best.
"Everybody has been on pins and needles since this started," Lofstedt said. "We've had no claims of any sort in over 16 years. That's the injustice of all this."
Insurance brokers say the tightening insurance market is a nationwide trend as companies try to improve lagging profits. Alaska is suffering worse because of a crash rate that last year remained three to four times higher than that of the other 49 states.
Other carriers, including Safety Aviation of Anchorage and Frontier Flying Service of Fairbanks, report their insurance rates also have skyrocketed despite good safety records. The heads of those companies have said they considered either quitting business or carrying only cargo to reduce rates.
Lofstedt said his company, based at Kenai Municipal Airport, is a family operation started by his father in 1953. He said it's painful to see the company's business go to other carriers, but he praised Phillips and Cook Inlet Pipeline for encouraging him to keep up the search for insurance.
"It's been pretty devastating for us," he said.
Bob Love, a longtime insurance claims adjuster in Anchorage, said he's handled hundreds of Alaska aviation accident cases and looks forward to the day when he has less business.
Insurance companies are just reacting to economic conditions and are not to blame for what's happening to Alaska rates, he said.
However, Love believes insurers could team with Alaska's commercial air carriers to improve testing for pilots who sometimes don't seem to have the experience and training necessary to cope with tense situations over Alaska's rugged terrain.
Love is working to bring an internationally recognized testing program called WOMBAT to Alaska that he believes could improve safety.
"We've got to take a good, positive effort to look at some new things," he said.
Insurers regard large airlines as better risks and so they've been less affected by insurance hikes, according to the National Air Transportation Association
By Wesley Loy
Daily News Reporter
(Published November 7, 2000)
A Kenai helicopter company has all but grounded its fleet because of trouble getting enough affordable insurance.
The problem for Kenai Air Alaska Inc. isn't a bad safety record, said owner Craig Lofstedt. Rather, it's an intense hardening of the insurance market that is putting the squeeze on Alaska aviation companies.
It's a crisis that reflects the state's chronic high rate of accidents and could lead to higher rates and less seat availability for travelers using Alaska's small commercial air carriers, aviation and insurance industry professionals say.
Other small airlines and air taxis are scrambling to find affordable coverage amid a steady tenor from fliers, insurers, the Federal Aviation Administration and others that Alaska is paying the price for a high rate of accidents.
From 1990-98, the state had 351 commuter and air taxi accidents, not counting helicopter crashes, with 140 fatalities, including 51 pilots, according to the National Institute for Occupational Safety and Health.
Lofstedt said his company's insurance woes began in May when Kenai Air renewed its policy.
Most of the company's business is flying oil workers to and from platforms and other petroleum facilities in Cook Inlet. The oil companies require at least $1 million in passenger liability coverage per seat, Lofstedt said.
To keep that coverage, he said his insurers required a rate increase of more than 200 percent. He said his company also was forced to sell two of its biggest helicopters, both twin-engine, nine-passenger Bell 212s, because the insurance companies said they wouldn't cover them.
Left with a diminished fleet of eight smaller, single-engine choppers, Lofstedt said he was just hoping to ride out the higher insurance costs. Then on Oct. 9, he received a letter that one of his insurance policies was not in place, leaving most of the helicopters with only $300,000 in coverage per seat.
Since then, the company's fleet has been mostly idle, and Lofstedt's insurance broker is searching the world insurance markets for enough coverage to get the helicopters back in business.
Meantime, he said, his main clients, Phillips Alaska Inc. and Cook Inlet Pipeline Co., are using other carriers. And Lofstedt's 12 employees are hoping for the best.
"Everybody has been on pins and needles since this started," Lofstedt said. "We've had no claims of any sort in over 16 years. That's the injustice of all this."
Insurance brokers say the tightening insurance market is a nationwide trend as companies try to improve lagging profits. Alaska is suffering worse because of a crash rate that last year remained three to four times higher than that of the other 49 states.
Other carriers, including Safety Aviation of Anchorage and Frontier Flying Service of Fairbanks, report their insurance rates also have skyrocketed despite good safety records. The heads of those companies have said they considered either quitting business or carrying only cargo to reduce rates.
Lofstedt said his company, based at Kenai Municipal Airport, is a family operation started by his father in 1953. He said it's painful to see the company's business go to other carriers, but he praised Phillips and Cook Inlet Pipeline for encouraging him to keep up the search for insurance.
"It's been pretty devastating for us," he said.
Bob Love, a longtime insurance claims adjuster in Anchorage, said he's handled hundreds of Alaska aviation accident cases and looks forward to the day when he has less business.
Insurance companies are just reacting to economic conditions and are not to blame for what's happening to Alaska rates, he said.
However, Love believes insurers could team with Alaska's commercial air carriers to improve testing for pilots who sometimes don't seem to have the experience and training necessary to cope with tense situations over Alaska's rugged terrain.
Love is working to bring an internationally recognized testing program called WOMBAT to Alaska that he believes could improve safety.
"We've got to take a good, positive effort to look at some new things," he said.
Insurers regard large airlines as better risks and so they've been less affected by insurance hikes, according to the National Air Transportation Association
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"Most of the company's business is flying oil workers to and from platforms and other petroleum facilities in Cook Inlet." and
"...his company also was forced to sell two of its biggest helicopters, both twin-engine, nine-passenger Bell 212s, because the insurance companies said they wouldn't cover them."
It's a bit strange that the insurance company was forcing him to use single engine aircraft for over-water flights, isn't it? And very unfortunate that they should be driving him out of business.
"...his company also was forced to sell two of its biggest helicopters, both twin-engine, nine-passenger Bell 212s, because the insurance companies said they wouldn't cover them."
It's a bit strange that the insurance company was forcing him to use single engine aircraft for over-water flights, isn't it? And very unfortunate that they should be driving him out of business.
