AOPA President Phil Boyer has served the association's 390,000-plus members since 1991.
In recent months my column has covered major issues and initiatives that AOPA has been working. They have spanned the possibility of a legal challenge to the TSA rule that allows the unilateral revocation of a pilot certificate with no due process in the appeal, the proactive AOPA Airport Watch Program, the lawsuit filed to challenge Michigan legislation requiring background checks for student pilots, and the investment in advertising to bring the public's attention to the positive side of general aviation by promoting www.gaservingamerica.org. All of these initiatives take resources, or to put it simply, dollars! Surprising to many members is the fact that less than one-third of AOPA's annual operating income comes from membership dues. How have the annual dues stayed the same $39 for the past 12 years, with an increasing stream of issues and regulations to battle? The answer lies in our alternative sources of annual income — non-dues revenue. Two categories cover almost two-thirds of our annual expenses: advertising in your association magazines, and the greatest percentage comes from our "AOPA certified" products. The AOPA/MBNA credit card is a major contributor to this category, and like other associations, we receive income based on a small percentage return from the purchases you charge. Most of our certified programs operate in this manner, but one exception is the AOPA Insurance Agency.
When I became an AOPA employee in 1991, one of my first challenges was to develop a revenue stream from aircraft insurance products. Even today, the typical aviation or trade association merely affiliates with an insurance underwriter or broker and receives a small royalty from every policy sold. This is the norm, with little active participation by the association management and staff in the actual details of the insurance policy or product. After examining all the alternatives, AOPA found a partner with substantial insurance agency experience that brought us to a decision that would be a much harder road to follow, but had more long-term benefits for you. We elected to form a 50/50 partnership with what is now AON Corp., one of the world's leading insurance brokerage firms. That decision meant that AOPA members would, in effect, own their own aircraft insurance agency. The huge advantage of this arrangement was that as an independent agency AOPA could look for the best policy at the right price based on a member's needs.
Little did we realize at the time what would occur in the aircraft insurance market, and how important this early 1990s decision would become. In 1993, the AOPA Insurance Agency began operations, and my wife and I purchased Policy #1 for our Cessna 172N. Our original idea continues to hold merit: to establish and maintain a non-commercial insurance agency that makes use of the latest technology to efficiently quote and bind aircraft insurance for the typical AOPA owner or renter.
With 50 employees, your Wichita-based insurance agency employs state-of-the-art computer equipment to quickly price a product for you. Recently, we became the first U.S. agency to allow the quoting and purchasing process to be available online 24/7 ( www.aopaia.com). Later this year existing policyholders will be able to renew online.
The AOPA Insurance Agency is an agency, not an insurance underwriter. As a membership organization AOPA does not shoulder the financial risk; we leave that to companies that know this complex business. Therefore, we don't set insurance rates, which has been a controversial issue as the number of aviation underwriters has declined almost 50 percent in less than 10 years. However, we are the largest agency in the United States serving what's termed the "pleasure and business" category of personal aviation coverage. Because of our size and experience AOPA Insurance Agency management works with underwriters to supply products that address the needs of members by allowing them to adequately insure themselves, their passengers, and the aircraft in the unlikely event of a mishap. The Wichita staff is fully licensed and trained to explain the complex world of aviation insurance terms and clauses. Your association has continually worked to improve insurance coverage for its diverse membership. Over the years products have been added for flight instructors and renter pilots.
So as an agency, we can't really control the cost of your annual aircraft insurance policy, but we can seek the best price from a variety of companies. We continue to encourage members to look beyond the price of their policy to fully understand what your association feels is proper coverage. This includes such things as smooth limits on liability, no sub-limits on passengers, and no family exclusions. One insurance company, AIG Aviation, one of the world's most secure aviation insurers, rated A++, crafted a policy recognizing the AOPA guidelines, and it has been very popular among average aircraft owners. Late last year, the AOPA Insurance Agency and AIG Aviation agreed on a 5-percent insurance premium discount for all qualified AOPA members. The discount went into effect January 1. The response has been overwhelming. We're most pleased that AIG has recognized AOPA to be able to offer this 5-percent discount to members.
While you think of your association in terms of advocating the GA position with the FAA, the TSA, Congress, and others, keep in mind that our continuing aim is to be able to reduce your cost of flying, and the AIG Aviation 5-percent owner insurance discount is just another way we're doing that.
