New Planes from old companies

"Dude" wrote in message
...
Couldn't they do it like Cirrus, Diamond, and Lancair have done it?


They have not done it yet. Cirrus and Diamond have not nearly recouped their
investment. All three manufacturers have had to ask their investors for more
money. Lancair darned near didn't make it.

I think it is an outrage. Right now the biggest impediment to aviation
safety has to be the FAA, followed closely by the insurance companies and
the trial lawyers.

They have not done it yet. Cirrus and Diamond have not nearly recouped
their
investment. All three manufacturers have had to ask their investors for
more
money. Lancair darned near didn't make it.


I believe you are mistaken, where did you hear Diamond asked investors for
more money? Also, I know Cirrus has investors, but I did not hear about any
rounds of fundraising in the last couple years.

"C J Campbell" writes:

"Dude" wrote in message
...
Couldn't they do it like Cirrus, Diamond, and Lancair have done it?


They have not done it yet. Cirrus and Diamond have not nearly recouped their
investment. All three manufacturers have had to ask their investors for more
money. Lancair darned near didn't make it.

I think it is an outrage. Right now the biggest impediment to aviation
safety has to be the FAA, followed closely by the insurance companies and
the trial lawyers.

How are the insurance companies against safety?

-jav

Its not that they are against safety, just that they do not seem to be to
responsive to adjusting their premiums to reward safety improvements. Also,
by their reluctance to cover new planes and engines, they make it harder to
justify the costs of innovation.

I would love them to be more transparent. It would really help everyone,
from the manufacturers to the pilots and owners make better decisions.

I think that most of the people in the insurance companies are good people,
trying to do the right things, but sometimes the nature of the institutions
works against them.

I dunno what CJ meant, but that is my take on it. Overall, the insurers are
likely an advantage to safety, but in a few areas, it seems they hurt us.



"Javier Henderson" wrote in message
...
"C J Campbell" writes:

"Dude" wrote in message
...
Couldn't they do it like Cirrus, Diamond, and Lancair have done it?


They have not done it yet. Cirrus and Diamond have not nearly recouped
their
investment. All three manufacturers have had to ask their investors for
more
money. Lancair darned near didn't make it.

I think it is an outrage. Right now the biggest impediment to aviation
safety has to be the FAA, followed closely by the insurance companies and
the trial lawyers.

How are the insurance companies against safety?

-jav

"Dude" wrote in message
...
Its not that they are against safety, just that they do not seem to be to
responsive to adjusting their premiums to reward safety improvements.
Also,
by their reluctance to cover new planes and engines, they make it harder
to
justify the costs of innovation.

Cars are safer but car insurance rates keep going up, and that's a much more
competitive market than GA.

The fact is that neither parachutes nor airbags do anything to protect the
airplane, and that is the main thing that is being insured. Neither of these
makes accidents less likely. This is quite different from, say, ABS and
traction control in cars, which actually reduce the odds of metal getting
bent in the first place. Also, the car insurers have tons of data to analyze
to see what's really going on. It will take years before a clear picture
emerges whether airbags actually help reduce, say, liability claims.

The one thing which does reduce the likelihood of an accident in an airplane
is training, and the insurance companies are quite responsive in this area.
In many cases you cannot get any insurance without it, and in others there
are programs that can help you reduce your rates.

As for new planes and engines, they're not reluctant, they just charge a lot
of money. Remember when you look at those rates that you are talking about
insuring some $300-400k of machine. If a $50,000 Skyhawk costs $1000/year to
insure we should not be surprised that an SR-22 costs $6000 or more. FWIW I
pay over $1000 to insure a $3500 car in Boston (no collision) so from that
perspective airplane insurance seems like a reasonable deal. And before you
say anything, my record is crystal-clear and no, I can't call Geico, because
they're not allowed to do business in this infernal state.

-cwk.

Cars are safer but car insurance rates keep going up, and that's a much
more
competitive market than GA.


Whoa, I didn't complain about the amount, only that the differences in the
rates seem arcane on the customer end. They are happy to explain different
rates for pilot skills, but turn into a black box when it comes to
explaining the difference in planes.

The fact is that neither parachutes nor airbags do anything to protect the
airplane, and that is the main thing that is being insured. Neither of
these
makes accidents less likely. This is quite different from, say, ABS and
traction control in cars, which actually reduce the odds of metal getting
bent in the first place.

So, that explains hull a little, but not the differences between models.
Nor does it say anything about liability. Its a good point, but doesn't
really cover what is a mystery to me.

Also, the car insurers have tons of data to analyze
to see what's really going on. It will take years before a clear picture
emerges whether airbags actually help reduce, say, liability claims.


Again, a good point. What a want to know is how many years? How many
dollars? What's the correlation? I have heard lots of people saying
premiums equals claims. However, we are never allowed to see claims data.
USAA used to publish a document that gave you a good idea about claims
levels betweens models of cars. They stopped though, and I want it back,
and I want it for planes!

The one thing which does reduce the likelihood of an accident in an
airplane
is training, and the insurance companies are quite responsive in this
area.
In many cases you cannot get any insurance without it, and in others there
are programs that can help you reduce your rates.


Agreed.

As for new planes and engines, they're not reluctant, they just charge a
lot
of money. Remember when you look at those rates that you are talking about
insuring some $300-400k of machine. If a $50,000 Skyhawk costs $1000/year
to
insure we should not be surprised that an SR-22 costs $6000 or more.

Not so at all. Many insurers balked at ANY coverage for some of the
composite planes for a good while. Then, they charged enormous rates
without really having any reason other than "lack of claims data". To me,
this fails to hit the mark because the rates they charge now do not seem to
correlate with incidents as it is.

Also, your example is not the best. Let's take a look at a different one.

A new 200k 172 costs about 14k per year for a school. An older model which
costs a quarter of that is about 5k. Repairs on the two models cost nearly
the same. I suspect the new ones have less incidents because they likely
have fewer incidents due to malfunction ON AVERAGE. (please spare me the
new plane problem stories).


FWIW I
pay over $1000 to insure a $3500 car in Boston (no collision) so from that
perspective airplane insurance seems like a reasonable deal. And before
you
say anything, my record is crystal-clear and no, I can't call Geico,
because
they're not allowed to do business in this infernal state.


I never said the rates were not reasonable. I am talking about the
information that I believe we should be given to back up the differences in
rates on different models.

As for your car situation, Boston is a historical and lovely place. Too bad
about your government, Komrade.

Dude wrote:

I have heard lots of people saying premiums equals claims.

Those people are wrong. Insurance companies take in premiums, invest the money,
and make or lose money on the investments. If they are losing money on their
investments, premiums may well be increased to provide more income regardless of
the amount of claims in the same time period.

In the long run, most insurance companies will take in less money in premiums
than they pay out in claims. During periods in which investments are performing
poorly, premiums will usually go up.

George Patterson
If a man gets into a fight 3,000 miles away from home, he *had* to have
been looking for it.

"Dude" wrote in message
...

Whoa, I didn't complain about the amount, only that the differences in the
rates seem arcane on the customer end. They are happy to explain different
rates for pilot skills, but turn into a black box when it comes to
explaining the difference in planes.

If you read some of Collins' safety articles in Flying every so often some
very interesting numbers come out. I recall one article where he was
comparing night accident rates across Mooney, Piper, Cessna, and Beech
retracts. IIRC, the accident rates for Mooneys was significantly lower--like
half as much--as the others. I may be wrong on the type but there was
definitely a big difference. Now, why might this be true? Who knows. But
it's hard to ignore, and there are many similar situations where
seemingly-similar planes expose non-trivial differences in accident rates.
Underwriting small fleets with widely-varying operator types under these
circumstances is going to be as much art as science. Since there's very
little transparency as to how they work, I can't really comment on their
methods. Since they stay in business I have to assume they are doing
something right.

Again, a good point. What a want to know is how many years?

I'd guess ten as a minimum. Just my WAG. Of course a blip of bad accidents
in six months would be all it takes to send things through the roof.

How many
dollars? What's the correlation? I have heard lots of people saying
premiums equals claims. However, we are never allowed to see claims data.
USAA used to publish a document that gave you a good idea about claims
levels betweens models of cars. They stopped though, and I want it back,
and I want it for planes!

These are trade secrets, so I suspect you won't see too much of the
internals. Look around here and you'll see plenty of stories of people
receiving widely-varying quotes from different insurers. This tells me that
there are meaningful differences in how each insurer handicaps the risk.
Again, I suspect they run a bunch of numbers and then apply some fancy
guesswork and prejudice.

Not so at all. Many insurers balked at ANY coverage for some of the
composite planes for a good while. Then, they charged enormous rates
without really having any reason other than "lack of claims data". To me,
this fails to hit the mark because the rates they charge now do not seem
to
correlate with incidents as it is.

Again, are we talking about the Cirrus? Because if we are I'm going to say
that I sympathize with the evil insurance companies a little. Here's a plane
that has a lever that you pull. The pilot looks at it and sees a label that
reads, "Save your ass." The insurer looks at it and sees it marked, "total
the airplane." In the past, saving your ass generally meant saving the
airplane too. Now it doesn't. Who knows what is going to happen? So it
doesn't surprise me that it took a few years for the market to work this
problem through.

Also, your example is not the best. Let's take a look at a different one.

A new 200k 172 costs about 14k per year for a school. An older model
which
costs a quarter of that is about 5k. Repairs on the two models cost
nearly
the same. I suspect the new ones have less incidents because they likely
have fewer incidents due to malfunction ON AVERAGE. (please spare me the
new plane problem stories).

Uh, not sure what you're trying to prove here. The new plane costs 4x as
much to buy, and 3x as much to insure. If the newer planes do indeed have
fewer incidents for whatever reason then this makes sense.

As for your car situation, Boston is a historical and lovely place. Too
bad
about your government, Komrade.

It could be worse--my sister lives in Berkeley. Also a lovely place but it
makes Boston look like Houston by comparison.

-cwk.

"Matt Whiting" wrote in message
...
I don't think Cirrus has come even close to making money yet, on a total
investment basis. I haven't keep track of the total amount of venture
capital they've secured, but I think it was north of $200MM. That will
take a long time to recoup. They may well be profitable at the operations
level, but that isn't the same thing as "making money" overall.

I'm sure you're right but a quick look at the numbers makes me wonder how
they AREN'T going to recoup that $$. Cirrus is selling something like 50
planes a month. You'd think their profit margin on a 300k airplane would be
at least 20k. If so, that's roughly 10Mil in profit every year and a 20
year break even on the initial 200Mil investment.

Diamond's numbers are roughly the same. Supposedly the Austrian factory
pumps out 400 planes/year and another 100 come out of Ontario. Unless these
guys are operating on Dell like profit margins it's hard to see how they
won't make their investments back.

I suspect that Cessna has run the numbers and realizes that the cost of a
"clean sheet" light airplane would simply never be recovered in today's
market.

Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
designs in less than 10 years - including a light jet. Why can't Cessna and
Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
european equivalent is)? You also have to wonder how much longer Cessna and
Piper can afford to NOT bring out a new design.


-Brian
Iowa City, IA

"C Kingsbury" wrote in message
ink.net...

"Dude" wrote in message
...

Whoa, I didn't complain about the amount, only that the differences in
the
rates seem arcane on the customer end. They are happy to explain
different
rates for pilot skills, but turn into a black box when it comes to
explaining the difference in planes.

If you read some of Collins' safety articles in Flying every so often some
very interesting numbers come out. I recall one article where he was
comparing night accident rates across Mooney, Piper, Cessna, and Beech
retracts. IIRC, the accident rates for Mooneys was significantly
lower--like
half as much--as the others. I may be wrong on the type but there was
definitely a big difference. Now, why might this be true? Who knows. But
it's hard to ignore, and there are many similar situations where
seemingly-similar planes expose non-trivial differences in accident rates.
Underwriting small fleets with widely-varying operator types under these
circumstances is going to be as much art as science. Since there's very
little transparency as to how they work, I can't really comment on their
methods. Since they stay in business I have to assume they are doing
something right.


Exactly my point. Did the rates for Mooney's become lower to affect the
claims differences or not?

Again, a good point. What a want to know is how many years?

I'd guess ten as a minimum. Just my WAG. Of course a blip of bad accidents
in six months would be all it takes to send things through the roof.


If you need ten years data, then no one will innovate. The market will not
bear it.

How many
dollars? What's the correlation? I have heard lots of people saying
premiums equals claims. However, we are never allowed to see claims
data.
USAA used to publish a document that gave you a good idea about claims
levels betweens models of cars. They stopped though, and I want it back,
and I want it for planes!

These are trade secrets, so I suspect you won't see too much of the
internals. Look around here and you'll see plenty of stories of people
receiving widely-varying quotes from different insurers. This tells me
that
there are meaningful differences in how each insurer handicaps the risk.
Again, I suspect they run a bunch of numbers and then apply some fancy
guesswork and prejudice.


If the insurance companies actually came out and said that its a trade
secret, then we would all say they don't care about safety. Bad PR. It
would seem that one could stay in business more efficiently without spending
too much to figure out the differences. Just treat all the retracts the
same except for the worse offenders. Its easy and its cheap.


Not so at all. Many insurers balked at ANY coverage for some of the
composite planes for a good while. Then, they charged enormous rates
without really having any reason other than "lack of claims data". To
me,
this fails to hit the mark because the rates they charge now do not seem
to
correlate with incidents as it is.

Again, are we talking about the Cirrus? Because if we are I'm going to say
that I sympathize with the evil insurance companies a little. Here's a
plane
that has a lever that you pull. The pilot looks at it and sees a label
that
reads, "Save your ass." The insurer looks at it and sees it marked, "total
the airplane." In the past, saving your ass generally meant saving the
airplane too. Now it doesn't. Who knows what is going to happen? So it
doesn't surprise me that it took a few years for the market to work this
problem through.


Not just the Cirrus, even Diamond. I say "even Diamond" because if you look
at the numbers it is an over the top revolution in safety. They will show
you lots of little things they did to make their planes safer, and it
appears to work. However, lots of people from the other camps are saying
they are just lucky. At some point, it doesn't ring true to keep saying
that. Also, Lancair seems to have taken the note of Diamond's changes and
incorporated many of them, including full crash cage testing on the 400. I
don't blame the insurers on the Cirrus at all. Its not the parachute, its
the claims. The darn things were all crashing into little bits until they
got the training regimen in place, and fixed the chutes. Now they seem to
be doing much better, and for me, another year of Cessna level accident
records will convince me.


Also, your example is not the best. Let's take a look at a different
one.

A new 200k 172 costs about 14k per year for a school. An older model
which
costs a quarter of that is about 5k. Repairs on the two models cost
nearly
the same. I suspect the new ones have less incidents because they likely
have fewer incidents due to malfunction ON AVERAGE. (please spare me the
new plane problem stories).

Uh, not sure what you're trying to prove here. The new plane costs 4x as
much to buy, and 3x as much to insure. If the newer planes do indeed have
fewer incidents for whatever reason then this makes sense.


What I am saying is that the repairs cost the same. Unless the plane is
totaled, the claims are lower on the new plane. Too few get totaled to
justify the difference.


As for your car situation, Boston is a historical and lovely place. Too
bad
about your government, Komrade.

It could be worse--my sister lives in Berkeley. Also a lovely place but it
makes Boston look like Houston by comparison.

-cwk.


Walked through Berzerkly in my dress greens one time. My cousin was
horrifed, and sure there would be an incident. At least they are patriotic
in Beantown.