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Entries in FBO Insurance (2)

Thursday
Mar282019

Eight Best Practices to Prevent Hangar Rash or Worse

Hangar rash sounds nasty and is the bane of all FBOs.

We’ve all seen it. A line service technician gets in a hurry repositioning a GIV in a hangar and bangs the tail into another Gulfstream.

Say the estimated cost to repair the damage is $175,000. Assume the FBO’s insurance deductible is $25,000. That $25,000 is a big hit to the bottom line.

How does an FBO reduce the risk of this kind of incident? The answer is having a strong safety culture that invests in proper training of line personnel with a defined set of hangar and ramp movement practices as part of standard operating procedures (SOP).

Click to read more ...

Thursday
Sep222011

What’s Your FBO Insurance Story?

A better way to impact your bottom line!

 

Insurance for FBOs is a necessary business expense with a huge impact on your bottom line. Wouldn’t it be nice if you could effectively manage this activity and even reduce the expense?

This is one of the subjects we cover in detail at our next NATA sponsored FBO Success Seminar, scheduled for November in Atlanta. However, for now, here are some ideas you can incorporate into your business. 

If you’re a medium-sized FBO, we would not be surprised to hear that you are paying $1,000 per day for your insurance package. This is one of your more critical expenses; the one you pay all the time and hope you never have to use. So what can you do to actively manage this activity, not to mention the expense?

One of the key points is get to know your insurance broker on a first name basis. You need to get to know your broker. Have your broker visit your FBO, not just at renewal time, but at regular intervals. It’s your broker who can be the person who saves you money.

Yes, your insurance broker makes a fee off your insurance, but you have to establish a level of trust. That’s because one of your broker’s major jobs is to tell the insurance underwriters about your business, including the risks, accident history, training programs and your plan to manage those business risks.

Step 1

The key to your broker’s better understanding of your businesses begins with developing what we call Your Insurance Story. A main ingredient of your insurance story is establishing a comprehensive preventative safety and training program. Yes, it is more than just training your line service technicians in fuel quality control or fuel and ramp operations.

Whether you use the NATA Safety 1st program or another program, it’s a first step in the development of a strong company culture fueled by constant operational improvement and active participation to reduce risks.

Step 2

So how do we put this important first step into action?

  • Senior management must have a sincere commitment to establishing an active risk management program.
  • Pick a training program and stick with it—don’t just teach it, put it into practice.
  • Assign the training responsibility to active-hands on employees
  • For Line Service—assign a Senior Experienced Supervisor.
    — The Customer Service component must have its own training program.
    — A&P’s must have more than technical training; they also need customer interaction skills.
    — If you employ Pilots and/or Flight Instructors, they need to be intimately involved in your training
        programs. Flight Operations insurance coverage is some of the most expensive in your insurance
        package. 

Step 3

For the third step, you need a good internal audit program. There are many tools out in the industry which can assist you in developing an internal audit program.  This is where your training programs are tested, your employees are seasoned and the company’s policies are validated. Where do you get an internal audit checklist? Talk to your insurance broker or talk to the fractional aircraft operators. For instance, NetJets’ web site posts the FBO Standard of Service document (www.suppliers.netjets.com)

Then follow these steps:

  • Review your training program and develop your own checklists.
  • Talk to your insurance underwriters.
  • Conduct selected internal audits at least quarterly.

Step 4

As part of your good operating practices, you should have, or be willing to develop, a Standard Operating Procedures (SOP) guide. I know, you’re a small company and you don’t want any of that “big company” and “big bureaucracy” feel in your own firm. In plain terms, you want to keep it simple!

However, in the aviation world, you need to operate a tightly run ship. It is a precise business, involving the care of multimillion-dollar aircraft. Therefore, you have to use standardized procedures.  The checks and balances that are built into aviation are what keep our operations safe.  

No matter what size your company, use standard training and operating procedures. This is no different than the standardized accounting practices that you must use to keep your books, file your taxes and pay your bills. What happens on your ramp needs to be standardized also!

So what will keep your insurance broker happy and also allow you, as the manager/owner, peace of mind? It’s knowing that your firm is operating well, even when you’re not in attendance.    

Step 5

You need to conduct regular external audits. Internal audits are not enough.

  • The company needs an unbiased “third party” audit.
  • It eliminates the “fudge factor.”
  • It provides a true evaluation and validation of your own internal audit program.
  • It helps build insurance story to brokers.
  • It results in lower premiums, fewer costly accidents.

Your employees, probably the most important part of your safety program, need to have guidance and empowerment to have the confidence to enforce good operating practices.

Step 6

Therefore, give the power to your employees to enforce the standard operating practices. If they see unsafe operations, they should have the power to stop those operations.

As the old saying goes, “do it right the first time.”  For example, your SOP requires that you have a tug driver and two wing men to tug an aircraft out of a hangar.  On Sunday morning, a customer wants his aircraft and there is only a tug driver available, what does the supervisor do?

If you run a good operation, the aircraft does not get out of the hangar until the SOP requirements are met. Which would you rather have, a damaged aircraft or a customer who can be educated on the correct tugging and towing procedure? An extra employee is less cost to your business than dealing with damage claims.

In addition, your employees need to be recognized for their good works.

  • Develop a good rewards program.
  • Establish achievable goals and stick to them.  

The Five Most Important Tips for Effective Recognition

  • You need to establish criteria for what performance or contribution constitutes rewardable behavior or actions.
  • All employees must be eligible for the recognition.
  • The recognition must supply the employer and employee with specific information about what behaviors or actions are being rewarded and recognized.
  • Anyone who then performs at the level or standard stated in the criteria receives the reward.
  • The recognition should occur as close to the performance of the actions as possible, so the recognition reinforces behavior the employer wants to encourage.

So what is your insurance story? It is a concise document that details your actions, training, management culture, audit results and most of all, your accident/incident history. Your investigation of the incidents to find the root cause, and what you’ve done to prevent future incidents: this is what the agents and underwriters want to know. Tell your broker and tell your insurance underwriter(s). 

There are many do’s and don’ts for insurance. But the above actions and efforts will make your company safer and reduce your exposure. And, as a result, you will reduce your claims and reduce your costs. Make sure your employees enjoy the fruits of their labor and reward them.

I’d like to hear from you—email me at jenticknap@bellsouth.net

John Enticknap

John Enticknap founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.