Thursday, September 07, 2006

Insurance - Guest Editorial

For new readers to this blog, this is the 23rd post that started April 11, 2006. For content on the previous 20, check the August 12 summary. Also, there are knowledgeable and thoughtful readers posting comments as well. This is especially true for the past three posts, the material is certainly worth reading.

One reader has knowledge of insurance issues and has evaluated the program offered by Eclipse. It is not my area of expertise, I don't know if he is right or wrong, but he is waving a warning flag so we are going to put it up.

SRMach5 said...

Stan:

Thanks for the comments. I would like to point out some of what I believe to be flawed data on the Eclipse website, specifically your insurance link.

First of all, did anyone notice the limits of liability at $1M, $5M and $10M respectively? A very important question is whether or not this is a 'smooth' limit or a per seat limit.

Secondly, their resource is a broker. I would like to preface my comment to follow by stating how important brokers are and the value they bring to many aviation businesses. In the case of policies however; they (as everyone else) are at the mercy of the underwriters. If anyone is even remotely familiar with aviation insurance coverage they will quickly understand who finite the market is with the availability of desirable underwriters. I would love to know which underwriter is willing to take the risk on a pilot (ASMEL) with only 500 hours of total time and limited instrument and multi-engine ratings.

Third, note how only a $1M policy is available for a pilot with the minimum qualifications. I anticipate many of the individuals purchasing this caliber of aircraft will have insurance policies in place at their place of business requiring far more than a $1M limit.

Fourth, as a point of comparison on the premiums, I find it intriguing how high some of the rates are, even for the experienced level pilots. I have personally seen premiums for single engine turbine aircraft which have a higher hull value and $5M smooth liability limits for what Eclipse considers to be an experienced pilot somewhere in the $18K - $20K range...not ~ $30K as indicated on the Eclipse web site.

Mark my words....insurance will be a well underestimated thorn in the side of Eclipse in the not too distant future.

I wonder as a point of interest how Vern has has product liability spread amongst the underwriters. God forbid, when the first Eclipse 500 becomes a smoking hole in the ground (hopefully it never will, but for the time being let's just pretend it might happen), the underwriting community will not be very kind to Eclipse and it's owners.

I don't know about anyone else but I have never heard of an insurance underwriter being forgiving or loyal to an OEM when it comes to policy renewal time.

2:00 PM, September 07, 2006



1 comment:

Kaptain Kool-Aid said...

First off, thank you, Stan, for this creating this forum. I have followed it for the past several months and enjoy your witty style of presenting the facts as you see them. The recent comments generated by your other readers have inspired me to join the discussion and add my own two cents.

srmach5 makes some great points and I agree that insurance requirements are going to be a major road block to many would-be jet jockeys. The Eclipse 500 may well be the easiest to fly, most highly integrated turbine aircraft this side of the Falcon 900EX, but it is still a pressurized, FIKI-approved, twin-engine jet, capable of flying nearly eight miles high at more than 350 ktas (but not at the same time). The point is, you just simply cannot transition directly from a piston single into a twin jet and safely fly by yourself – no matter how “easy” the plane is to fly. A pilot with less than 1,500 TT, 500 multi, and at least some turbine time should expect to be sitting next to a “mentor pilot” for quite some time. Insurance companies like to see pilots gradually progress from flying simple, trainer-type aircraft to more and more complex aircraft before reaching the “holy grail” of the twin jet. Yes, I realize that turbine aircraft are actually easier to operate and Eclipse has gone to great lengths to ensure their product is the simplest jet ever built, flying-wise. However, the problem is not just flying the aircraft, but rather operating it safely within today’s congested and complex airspace. Controllers are used to dealing with professionals in the upper flight levels, not dilettantes. Additionally, although Eclipse touts the ability to “fly up to 41,000 feet, avoiding almost all weather” (a direct quote from the FAQ on Eclipse’s website) you still have to occasionally deal with adverse weather when you decide to land. And while AVIO is very capable, it cannot land the plane in IFR minimum conditions… at Teterboro… at night… in February! Speaking of AVIO, this leads me to the real topic I would like to address in this post.

Avidyne has enjoyed much success since introducing the world’s first truly “glass panel” flight deck for general aviation. Their first generation product, FlightMax Entegra, got its launch in the Cirrus SR20/22 in 2003. From there it made its way into the panels of Diamond, Columbia (nee Lancair), Piper, Adam and Symphony aircraft. Garmin subsequently introduced its G1000 glass panel system into the marketplace. It first appeared in the Cessna singles, then Mooney, Beech and even Tiger aircraft. Diamond and Columbia have since certified the G1000 in their aircraft as well (Diamond has dropped Avidyne, while Columbia still “officially” offers it, but it is my understanding that since introducing the G1000 not one customer has opted for the Entegra package). Garmin has a great reputation, solid company financials (over $1B in the bank and ZERO debt!) and, most importantly, stellar customer service. Avidyne’s reputation in the customer service area is dismal by comparison. Please note: I do NOT work for Garmin, but I am in the aviation industry and have sampled products from both companies firsthand. The fact of the matter is both companies produce good products, each with their own set of pros and cons. When they are functioning properly they’re great, but when the electrons start misbehaving that’s where Garmin is light-years ahead of their competition.

Vern Raburn has stated publicly in a variety of outlets that the certification delays affecting the Eclipse program are the direct result of his vendors not meeting their timelines. His strongest criticism is aimed at Avidyne. When the Eclipse 500 finally receives its certification in the near future, it will be delivered WITHOUT the following avionics capability:

Flight Management System (FMS)
GPS Navigation (i.e., no moving map)
Weather Radar
Electronic Checklists
Electronic Charts
Traffic Collision Avoidance
Ground Proximity Warning
XM Weather


Note: In addition to the above, both Autothrottle capability and Flight Into Known Ice (FIKI) approval will NOT be available when certification is granted.

To make up for this appalling lack of flight critical items, Eclipse is going to issue each affected customer a brand new Garmin (hmmm?) GPSMAP 496 to restore at least some of the missing functionality caused by Avidyne’s delays.

This whole avionics snafu is ironic as Eclipse has fought their customers repeated requests to install electromechanical backup instrumentation because it was deemed unnecessary due to their huge reliability factor (They claim a 0.00000001% chance of failure). So, let me get this straight. Eclipse’s $775k… I mean $837.5k… er, $995k… um $1.295M… Oh, wait a minute, its not June 2000 anymore! O.K., so their $1.52M aircraft can’t do what a $2,800 handheld wonderbox can! Unbelievable! This all gives credence to my belief that Eclipse is going to continue to have serious issues with AVIO - and its manufacturer - from the day they hand over the first set of keys. If they’re having this much trouble now, just wait until they have upwards of 200 airplanes scattered about the country with ADAHRS failures popping up like dandelions in Stan’s neighbors yard! And those customers who signed up for the JetComplete enhanced service program, are in for a rather rude awakening if they expect to make one phone call and have their electronic demons exorcised within 24 hours as promised by the program. Let’s just say that Avidyne is not known for carrying a large stockpile of spares on hand.

Before I conclude this post, for anyone with an extra 90 minutes to kill you can listen in on an Eclipse teleconference between Vern Raburn and his deposit holders. Here is web address:

http://easylink.playstream.com/eclipseaviation/
progressive/eclipseconf070706.wav

The teleconference originally took place on July 7, 2006 and is primarily comprised of Vern explaining the deficiencies in the current aircraft followed by a lengthy Q&A period with individual deposit holders. It’s a very interesting conversation to say the least. My personal favorite quote from Vern comes near the end of the recording where he says, “…in essence, what I have said is we have used up all of our design margin”. In other words, folks, it’s as good as it going to get. I am now reminded of one of the oldest axioms of our industry: It’s easy to make a small fortune in aviation… just start with a large one! Good luck, Mr. Raburn!

P.s. Does anyone happen to have one of those WCSYC (We Couldn’t, So You Can’t) stickers Eclipse handed out years ago lying? I bet a pristine one would bring big money on eBay today!