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Free Flight Forever Instructor Update:

Professional Liability Insurance, PASA Certification, and more

Hello Instructors,

I wanted to update you on our progress in securing professional liability insurance for commercial activity, and on PASA certification. There is a lot of data just now emerging. Getting it to you all is long overdue. Thank you for your patience.

Instructors and schools are mission critical for free flight in the US. We have had to focus initially on the general fundraising and communications so the specifics of commercial coverage and certification have been taking longer than we had hoped. Since the new year, I have taken that task on and will strive to keep instructors informed as the situation develops.

In August, we received word that nine large schools would be losing their coverage. Subsequently we learned that USHPA's General Liability and Professional Liability policies would be cancelled as well.

The clear option for us was to self-insure via a risk retention group. This will be a standalone company owned by pilots and run by pilots. We see many advantages. First, the RRG will manage the claims process with bias towards accurate assessment of liability. We will not have the burden of corporate accounting and fiscal year end incentives to settle. We will be able to underwrite sites, schools and any other scenario where risk could and should be mitigated before insurance is in place. Finally, our RRG requires us to implement safety and training programs. An example of a common insurance claim is wings striking people, cars, power lines and buildings. Safety programs that highlight the frequency of such incidents and provide advice on avoiding the situation should reduce the incidents.

Over the years, our premiums have been significantly higher than the total of claims. We believe we can further improve that record and make this a fiscally healthy proposition.

What is PASA? Why do we need PASA?
Professional Air Sports Association (PASA) was born from a conversation at a USHPA board meeting over 20 years ago. The concept was to create a template for quality instruction, and to provide third party certification of schools in order for schools to be able to get insurance. PASA is a nonprofit with its day to day operations run by John Harris and Bruce Weaver of Kitty Hawk Kites hang gliding school, under the supervision of a volunteer board of directors. The PASA Board of Directors consists of five voting and six advisory positions. Of the eleven total seats, two are kiteboarding school owners and instructors. Two more have extensive backgrounds operating both HG/PG flight schools and kiteboarding schools. The remaining seven are HG or PG instructors, six of whom own or manage their flight school. The point being that PASA as an entity has a broad range of experience and expertise in hang gliding and paragliding, school management and flight instruction.

The original third party certification concept did not take hold with hang gliding, but it did with kiteboarding. PASA successfully established a strong reputation among kiteboarding schools. Most critical to our purposes, PASA has a strong reputation with conventional insurance providers, and specifically with Lloyds of London.

Why is that important?
The RRG will be responsible for insurance of our activities up to $250k. The RRG will acquire reinsurance above that amount through conventional insurance providers. The RRG must source this reinsurance to provide the required coverage levels. We have not yet secured that reinsurance.

The providers from whom we are seeking reinsurance coverage have made this clear ---  they know and trust PASA. And having PASA certify our schools would be viewed very favorably in making their decision. As our timeline is so very short, we see no other options but to embrace PASA certification. They are highly competent, respected, and they are striving to keep certification fees low. USHPA would not be able to do the certification of Flight Schools any less expensively than PASA.

What are the changes to the USHPA Master Professional Liability (PL) Policy?
Currently, USHPA has a Master PL policy with limits of $500K per occurrence and $1M shared aggregate. Each USHPA instructor is covered under that Master PL policy for instructional activities, both commercial and non-commercial. That is all going to change. USHPA's PL policy will now differentiate depending on whether the instruction is commercial or purely recreational.

If you are instructing purely for fun, and there is no payment of any kind for training, then USHPA's instructor insurance covers you for $500,000 per incident. This is the same coverage we have right now, except that it will ONLY cover purely non-commercial teaching and the deductible will be $5,000 instead of $1,000.

If you are being paid in any way for instruction, then that is commercial. To be covered for commercial training, you must be affiliated with a PASA-certified flight school. Affiliation with a school means to be working for it as an employee or as a contractor. The specific financial arrangements (hourly wage, commission, revenue sharing) are up to you to negotiate with the school. You may form and certify your own flight school if you want to.

That flight school must carry a commercial policy, with a minimum required per-incident coverage of $250,000. You and any other instructors with that school will all share one policy and its limits. Each of you will also be insured by the USHPA PL policy for an additional $250,000 beyond the coverage provided by the school. The USHPA PL policy comes into effect only when the school's policy limit has been reached. This is called "stacked" coverage. With the school coverage at $250,000 per incident, your total coverage becomes $500,000 per incident, just as it is today.

Will PASA certify instructors, or just schools?
PASA will not certify instructors, only flight schools. You must operate as a flight school in order to be eligible for PASA certification. A flight school can have as few as one instructor. If you are the only instructor for your flight school, then you will need to get PASA certification for your one person school in order to be eligible for flight school insurance from the RRG.

What will this cost me?
Schools will pay an initial PASA application fee and annual PASA membership Dues.
  • PASA Application Fee:
    The application fee will be $300 for both large and small schools.

  • PASA Annual Membership Types ---  Small School or Large School:
    PASA has created two types of memberships, termed "Small Business Flight School" (SBFS) and "Large Business Flight School" (LBFS). The SBFS membership type was created to help the smaller schools by allowing them to piggy-back on to PASA's Master Flight School insurance policy, instead of having to go out and purchase their own policy. The PASA Master Flight School policy has limits of $250K per incident with an aggregate of $1M that is shared among PASA and all of the additional insureds on its policy. The main difference between the two types of membership is that SBFS memberships include the member benefit of being named as additional insureds on the PASA Master Flight School policy and LBFS memberships do not.

  • PASA Annual Membership Dues for SBFS:
    Small Business Flight School annual dues will be priced on tiered levels, depending on the amount of teaching that the school does. A school that teaches 25 student lesson days a year will pay less than one that teaches 50.

    The PASA annual membership dues, including school insurance member benefit for a Small Business Flight School teaching up to 25 student lesson days (SLD) a year is targeted to be around $750. Membership levels will increase in tiered steps of 25 SLDs (with a corresponding increase in annual dues) so that schools that teach more lesson days are at a higher membership level and pay higher dues, matching with their level of teaching.

  • What is a student Lesson Day?
    A Student Lesson Day is every day (or portion of a day) that a student of the school takes a lesson from the school, up to a maximum of 5 days per student per year. For example: One tandem flight is one SLD; Two tandem flights with the same student on the same day is also one SLD; A student participating in one or more lessons (ground school, on the hill, in a simulator, launched by tow, etc...) on any one day, is one SLD. Once the same student has participated in lessons on 5 different days during the membership year, any additional days do not count as SLDs.

  • PASA Membership Dues for LBFS
    The PASA annual membership dues for a LBFS is targeted to be around $500, and does not include any flight school insurance membership benefit. A large flight school's PASA membership and certification makes the flight school eligible to become a member of the RRG. As such, it can purchase its own flight school policy, with its own limits, directly from the RRG. Membership in the RRG requires one time capitalization ---  minimum of $500 and a maximum of $100,000. The amount gives the school a proportional equity interest in the RRG, and a proportional vote for RRG directors. Large flight schools can choose limits for their policies from $250K per Occurrence to $1M per Occurrence with Aggregates up to $1M. The cost of that insurance depends on the limits chosen and will likely be in the range of 5% - 10% of gross flight school instructional revenues, depending on limits and upon the risk factors of the individual flight school. The minimum premium for a directly purchased policy with limits of $250K per occurrence and $250K aggregate will be about $2,200.

  • What About Site Insurance for Flight Schools?
    A flight school that needs landowners added as additional insureds on either the PASA Master Flight School policy or their individual flight school policy, will be able to do so. If a landowner wants increased limits, the flight school will be able to obtain those increased limits for their activities on the landowner's land at additional cost.

PASA Certification Process to be Announced Soon
The details on the flight school certification process are still being finalized, but include things like: following the USHPA curriculum, complying with FAR 103, having appropriate training equipment, etc. The details will be announced soon.

This transition will not be without challenges. Some instructors will decide that the numbers no longer make sense. I wish I had better news. One of the forums had a post stating that USHPA was intentionally squeezing out small instructors. That just isn't true. There is a huge effort to make this workable for the skilled single instructor schools. Bear with us, and work with us on this. Ask questions of us, talk to your communities. We can make this work. It won't be easy, but nothing of real value is easy.

As I said earlier, the details are still being worked out, but we expect to have more information out to you the first week of February and the process in full operation before the end of that month. You may be worried that this is taking us very close to the March 1 end of our insurance coverage. We are too, and we are seeking an extension on the existing policies to provide us enough time to get the program in place and through the mandatory notice periods in certain states.

I'll keep you updated as things develop.
Paul Murdoch
USHPA President