Jim Lauerman, AVEMCO's Chief Underwriting Officer, made public this letter he wrote to those involved in the new FITS (FAA/Industry Training Standards) program. He's still mulling over the direction that FITS will take, but so far, he's not 100% impressed. We bring this to you, so that you can add to your knowledge of how things work, when DC really wants to help...

The two days last week were my first as a participant in the FITS process, I wanted to listen a lot and say little. I'm glad I did, but in retrospect I believe that I need to give some perspective on my participation in the process and what Avemco Insurance Company wants to see accomplished through FITS.
 
It was interesting to note the remarks made in the FOC regarding insurance which I believe revealed a significant lack of understanding of the way the insurance mechanism works. The were several references to de facto regulation of pilots by insurance companies with the clear implication that such "regulation" is a bad thing for general aviation. It is helpful to remember that the FARs are, by design, minimum requirements, leaving much discretion to the pilot -- and that's a good thing that provides us with much freedom of action. It is also significant to remember that while the FAA is tasked to protect public safety, it does not have a direct financial interest in the safety of GA operations.
 
Aviation insurers live in a different world. Every time one of their customers operates their aircraft, their insurer is putting large sums of money on the line regarding the pilot's behavior and performance. The insurer can rely to some extent upon the adequacy of the FARs, but it would be foolish to bet the farm on it. Thus the extra training requirements (and incentives) insurers place on their customers. Call it de facto regulation if you want; but any company that fails to exercise that discipline won't be around long. Ask the many insurance companies that have failed or withdrawn from insuring general aviation. 
 
The remark was also made that "insurance companies are always five years behind." That is actually in some ways an accurate statement because of the way insurance works. Insurance uses the past to predict the future and it often takes five years to develop credible data. Insurance companies that get too far ahead of that curve pay dearly for their impatience.
 
Avemco Insurance Company is committed to helping general aviation survive and thrive. We understand, however, that a failure to address a real economic issue (insurability) threatens to destroy the very industry that we serve. Pretending those problems don't exist will not solve them. What is needed is bold and honest action to deal with them.
 
An aspect of that challenge is the revolutionary new technology that is coming at us. This technology is changing the way that general aviation aircraft are used and from my perspective the current training environment is woefully inadequate to address the challenges that this technology presents. It is Avemco's genuine hope that by working with FAA, the flight training industry, and the manufacturers, we can voluntarily come up with training methods and standards that will make the expensive new technology insurable.
 
If we succeed in accomplishing that, there will no doubt be some de facto regulation by the aviation insurance industry as they write some of the FITS standards into their policies and underwriting requirements. The beauty of that approach, as opposed to mandatory regulation, is that the free market will automatically keep the de facto regulation in check. Believe me, competition will keep the industry honest.
 
FITS will likely not be perfect. Not creating a voluntary joint effort to solve insurability issues, however, may be fatal to our industry. Avemco Insurance Company  wants to be an active and helpful participant in creating a system that actually works to improve general aviation safety, and thus its economic viability.

[Emphases added --ed.]

FMI: www.avemco.com; www.faa.gov