On 2007-07-15, Tina wrote:

I am pretty sure no one here with the resources to do so would be
willing to accept the 'bet' you are proposing -- ie, that as a not
very frequent pilot your exposure is less and therefore so also
should be your premium.

Consider this: Two pilots with identical histories apply for
insurance. Pilot A plans to fly 50 hours this upcoming policy period,
and pilot B plans to fly 500 hours. The first 50 hours that pilot B
flies are just as risky(*) as all the hours from pilot A, but pilot B
still has 450 hours to go. Although the risk is lower on those 450
hours, none of them are risk-free (and in order for pilot B to have a
lower net risk than A, those 450 hours would have to be a negative
risk).

(*) There is one difference between A's 50 hours and B's initial 50
hours: A's hours are potentially more sparse. However sparsity is (or
certainly can be) accounted for. Apparently Mr. Barrow's insurer asks
him for a number of hours per unit time as a part of his quote. It
can also be estimated from the history. So the pilot already pays a
price for having sparsely distributed hours. Thus, charging those
pilots for a very significant amount of unused time results in a
secondary penalty - but it makes sense for insurers to do this when
there's not enough competitive pressure not to.

I also claim that there is a sweet spot for optimum sparsity. Pilots
can forget things when the hours are too sparse; and when the hours
are extremely dense, the pilot has not had an ideal amount of time to
process what they've experienced (which is comparable to students who
cram to get through an exam and forget the material shortly after). I
suspect a pilot who takes short flights daily is closer to the
sparsity sweet spot than a weekly pilot, but it's already been
accounted for in the base premium anyway, before any sort of
weekend-only discount would be applied.

--
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