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USHPA wrote: Notice Regarding USHPA Insurance and Dues
Fellow Pilots, Chapters, Instructors, and Schools,
Insurance is a critical element in support of free flight in North America, and a significant benefit that members expect from USHPA. To support our mission of ensuring the future of free flight, insurance is a top priority. Without it, site landowners would no longer be protected, members would no longer have protection from third party claims and therefore would face increased financial burden in the event of an accident, and all pilots would lose access to a significant number of our flying sites, including hallmark sites like Fort Funston, Yosemite and the Point of the Mountain.
We are in a difficult situation: we are being forced to evaluate new insurance options in order to protect the future of free flight, and this will impact our entire membership. We're writing this letter to share with you - our members - information about upcoming changes and how they are likely to affect you. We want you to understand what's happening, and the actions we are taking to navigate this complex situation.
Background
USHPA has experienced increased insurance premiums in recent years (200% in the last 5 years). Even more disturbing, in the last few months hang gliding and paragliding schools have been notified by the underwriters that they will not be able to renew their individual school policies. For many reasons we anticipate that at our upcoming renewal (March 2016) we will be facing, at best, major premium increases, and, at worst, an inability to renew our policy. We were first made aware of this possibility two months ago, and have devoted an enormous amount of time and resources into confirming the likelihood of this event and exploring possible solutions. Here are some principles that have guided our research:
- First, USHPA must continue to have insurance that covers its pilots, chapters and flying sites for recreational flying, and must identify a sustainable insurance solution that will protect free flight for years to come.
- Second, we must identify a solution that imposes the least financial burden on members possible.
Identified Solution
We've explored every option we can imagine, researched other action sports communities, explored other insurance carriers, and run analysis on our claims history and all of the complex analytics available to us. We've enlisted feedback and expertise from all across the industry. We know that losing insurance, and thus most of our flying sites, is unacceptable to our members. These are challenging, complex circumstances that require making bold and creative steps to protect our sport. In response, we've started the process of forming a self-insurance entity called a Risk Retention Group.
What is a Risk Retention Group?
A risk retention group (RRG) is an alternative risk transfer entity created by the federal Liability Risk Retention Act (LRRA). An RRG must be established as a liability insurance company under the laws of at least one state - its charter state or domicile. The policyholders of the RRG are also its owners. In our case, the owners of the RRG will be USHPA (who will purchase insurance from the RRG similar to its current insurance) and various hang gliding and paragliding schools (who will purchase commercial school insurance from the RRG). More info: Wikipedia page on Risk Retention Groups
How Will We Fund the RRG?
One unavoidable fact is that significant capital will be required in the short term to establish the RRG before our March 1st insurance policy renewal date. The vast majority of USHPA's assets will be pledged to the RRG to fund the initial investment. The Foundation for Free Flight (FFF) will make a major contribution; insured schools will also invest. We will solicit donations and investment capital from members who are able and willing to help. Within the next month or two, we need to raise a total of $2 million to fund the RRG. We believe that between USHPA, the FFF, the schools, and member donors we can achieve this goal.
Creating the RRG will result in increased expenses for USHPA, and will force us to increase dues in order to continue obtaining the insurance that members and free flight rely on. We do believe this option imposes the least financial burden on our members. Here are the proposed dues that would be effective starting January 1, 2016:
- Pilot membership: $150
- Rogallo membership: $350
- 30-day membership: $8
Even with these proposed increases, dues would still be comparable to or less than other international free flight organizations. Refer to chart below.
The initial capitalization is the first challenging aspect to obtaining insurance through an RRG. From the beginning, the RRG must be self-sufficient; the insurance regulators will require it to be profitable. The profits of the RRG ultimately return to its owners: USHPA and the flight schools that purchase the insurance. It is our hope that as loss ratios improve, premiums will decline and we'll be able to hold the line or reduce dues over time. If we are able to reduce dues while still ensuring the future of free flight, it is our commitment to do so. We will be revisiting this possibility annually.
Risk Management and You
If we continue to have accidents that injure third parties, damage their property, and generate claims, we'll exhaust the reserves and be forced to shut down both the RRG and USHPA. We hope it never comes to that - and with your help it won't. Risk management is every member's responsibility.
Each of us can have an impact through our individual actions, and also through our influence on others. We need to change our culture and celebrate incident-free flight. We need systems for identifying risk and modifying behaviors and practices to reduce the risks we all face when we fly. We need to tighten standards for site management plans, take a harder look at instructional practices, and enforce a zero-tolerance policy for violations of the rules, particularly with respect to tandem instructional flights. If we are able to improve our overall level of risk management and reduce accidents (and claims), the RRG could become financially strong enough to provide benefits back to the members.
Next Steps
Nobody WANTS to increase dues; in fact, USHPA has fought year after year to keep our dues among the lowest in the world. However, the board sees no other option to keep our association and our sport viable. The board will meet by conference call on Monday, November 2, 2015 to vote on the 2016 budget and to set the dues rates effective January 1, 2016. This letter is intended to give you some advance warning of what's coming, and let you know why it's happening. Normally the budget is approved at the October Board of Directors meeting, but has been delayed to provide time to gather feedback. However, it can not be delayed any further due to requirements related to forming the RRG.
If you have comments for the board's consideration before they vote on the proposed budget and potential allocation of assets to form the RRG, please send them to me at insurance@ushpa.aero and I will share them with the directors in advance of Monday's call. Alternatively, you can contact your Regional Director directly via the Board of Directors list (in the Members Only area).
Mark G. Forbes
USHPA Finance/Insurance/Risk Management Committee Chairman and Treasurer
Here's what's really ironic about what Mark Forbes wrote:
Mark Forbes wrote:Each of us can have an impact through our individual actions, and also through our influence on others.
Unless U$HPA is protecting certain businesses like Torrey Pines. Then you had better have no influence ... or you'll be expelled.
Mark Forbes wrote:We need to change our culture and celebrate incident-free flight.
Unless you're someone who speaks out, then you'll be expelled for your years of incident-free flights.
Mark Forbes wrote:We need systems for identifying risk and modifying behaviors and practices to reduce the risks we all face when we fly.
Why? Hasn't the current system of expelling anyone who speaks out been working for you?
Mark Forbes wrote:We need to tighten standards for site management plans, take a harder look at instructional practices, and enforce a zero-tolerance policy for violations of the rules, particularly with respect to tandem instructional flights.
Why bother? Just expel anyone who points out poor standards, sloppy practices, and repeated violations of the rules.
It should be very clear to everyone by now that USHPA has mismanaged their insurance program and they've mismanaged their FAA tandem exemption. They did this so they could protect their buddies at sites like Torrey Pines. They did this without regard to the consequences it would eventually have on the sports of hang gliding and paragliding. USHPA's leaders (particularly Rich Hass and Mark Forbes) should resign in disgrace. But they won't. Instead they'll try to find someone else to blame. Where does the "buck" stop at USHPA?
