Phoenix's departure
The first thing I think I should do is explain the loss ratio. Insurance companies use the loss ratio as a guide in their underwriting of both their pricing and whether or not they'd accept a particular risk. It is determined by dividing the total $'s paid out by the total $'s taken in and earned. The and earned part is important because if they take in $1000 from a customer, and at 6 months into the policy period he has a $500 loss (assume no deductibles), the insurance company still has 6 months of coverage left out there that could potentially have claims turned in on it. So, they pro-rate that bottom number to adjust for that.
Insurance companies usually do loss ratios in various ways to get an idea of where they're doing well, and where they aren't. They'll do an over all Light aircraft ratio, a tailwheel ratio, a homebuilt ratio, an RV ratio, etc. It can even get down to very specific ratios like one for RV-4s for example.
The last thing I'd say about loss ratios in explanation of them is that for a company to feel they made money they really need to have a ratio of under 70%. This is because their underwriting expenses and the commission paid to the broker/agent is not taken out of those numbers. Direct writers don't really enjoy any better expense ratio because while they don't pay commissions to anyone, they have to employ sales staff of their own. So, their ratio would really also need to be about 70% to be profitable.
Phoenix's loss ratio for each of the first 3 years of the VanGuard Program was over 100%. 2003 was a very good year, and that one good year brought the loss ratio for the life of the program under 100% but not by much. 2004 was not such a good year.
They'd hung with it as long as they felt they could, and I admire them for that. They are a classy company. They made a business decision. As I've heard another insurance executive say, "we can't keep selling $1's worth of Bananas for $.95.
If I had to generalize the type of accidents that I saw a lot of in 2004, it was a lot of landing accidents (mostly in Tailwheel RVs) on both turf and paved strips. We did have a couple in nosegear versions as well on soft fields. It's not that I thing turf is bad, but extremely short turf fields are going to get harder and harder to insure planes on (in my humble opinion.)
RVers and Homebuilders in general fly to strips like that (or base their planes there) more frequently than the vast majority of the production GA planes that these companies insure. I think they're going to have to get over their trepidation of turf strips, but they may do that by ultimately surcharging those who are on grass or if they want to go to any grass strips (other than in an emergency) or something like that. I mean, the EAA's program (which should be pretty homebuilt friendly right?) won't write coverage for planes on turf if it's under 2500'.
I recently talked to the head of Global's EAA Program, and their loss ratio is just under 100%. I would hope that would turn around, and soon. It doesn't do you all any favors to have less choices of insurance companies willing to do homebuilts.
One thing that I think you have going in your favor in a way is the shear number of RVs out there and being built. The underwriters will write coverage for whatever you all are out there flying in large numbers. But, that doesn't mean they're going to give it away. They'll price it like they think they have to make money on it. Not hand over fist, but some. They are in business.
NationAir is doing what we can to continue promoting homebuilding in general, and especially for RVers. I see and visit the heads of the insurance companies on a regular basis. I took the head of AIG's Light Aircraft Division to Van's Aircraft in December. He'd never been before (I was amazed... they write about 1500 RVs). It was a very productive trip. AIG changed several things about how they underwrite RVs because of that trip. (no they didn't lower their premium.) The primary changes were to encompass insuring the RV-10s that are coming fast.
Hope that helps you understand a little better.
JT