Disability and loss of licence
It is important to distinguish between disability and loss of licence as there is a lot of confusion and ambiguity for clients. Smit says that in its true form, loss of licence is not a general income disability product such as a doctor or a lawyer might get. “It is specialised and focused on the medical of the pilot. If the pilot loses his medical or his medical is suspended for a period of time, then he cannot fly. This is often not caused by the actual disease, but by the medication used to treat the disease,” says Smit. Hanafay explains that Hollard will apply a loss of licence clause, which means that if the client loses his aviation licence he is not covered. However, he said that the insurer is currently looking at reviewing the clause. The loss of licence clause also applies if the pilot does something that is against aviation law. For example, if the pilot is flying a plane outside of his licence, or if he is flying under the influence of alcohol. Insurers would not want to cover a pilot making a conscious choice to do something he should not. “Educating clients is our biggest challenge – the number of clients we come across who have impairment when they are under the impression they have loss of licence insurance is shocking,” notes Smit.
Full disclosure is essential, and this is why PilotInsure does not even make use of the insurer’s questionnaire during the underwriting process, opting to use its own comprehensive one. Smit says that many insurance companies often don’t ask all the relevant questions at application stage, and the most important information is often overlooked. “The questionnaire will have their specific questions, but at the bottom it will always say “Are there any extra risks associated?” A pilot might not really understand what they want because they are not looking at it from an insurance point of view,” says Smit. Brokers should also prepare their client for the potential loadings, exclusions, and decisions that can come out of underwriting based on the client’s personal risk exposure and profile. “The underwriter can only assess what someone can put in front of them, and quite often it is on paper, so it’s one- dimensional. Giving a little bit more insight into the pilot, and what the pilot does, and the risks the pilot is exposed to, allows the underwriter to do a better assessment of that risk and of that pilot,” Hanafay concludes.