Risk Insider: Dave Hook

FAA: Do Your Job

By: | January 20, 2015 • 2 min read
Dave Hook is president of Planehook Aviation Services, LLC and publisher of General Aviation Security. He provides security consulting to the general aviation industry and oversees the business operations of the magazine. Previously, he served as U.S. Air Attaché in Western Sub-Saharan Africa and as an Air Commando A-team Leader in Air Force Special Operations Command. He can be reached at david.hook@spaceflightsecurity.com.

It is time for the U.S. Federal Aviation Administration to stop dancing around its duties by sending out policy and guidance documents and issue the aviation industry some well-considered UAV regulations.

The FAA earlier this month released a document to local law enforcement agencies providing guidance on how to handle investigations concerning suspected unauthorized unmanned aircraft systems operations.

The document identifies the legal authority for the FAA to regulate all aircraft within the U.S. National Airspace System. The regulated aircraft range from the very large aircraft that carry passengers and cargo all the way down to model aircraft flown by hobbyists for recreation.

The antediluvian document that provides guidance for unmanned flight operations is FAA Advisory Circular 91-57 Model Aircraft Operating Standards, dated June 9, 1981. In this circular, the FAA established the minimum standards which unmanned aircraft hobbyists have followed ever since.

These standards are using good judgment, flying in unpopulated areas, climbing no higher than 400 feet above the ground, giving way to full-sized aircraft, and notifying an airport operator or control tower in advance of flying closer to three miles of the airport. Note that there is some confusion with this distance as the FAA’s webpage now states the airport distance is five miles, contradicting AC 91-57.

Of particular note in the latest guidance for law enforcement is the requirement for all unmanned aircraft, including model aircraft, to be flown in compliance with any airspace restrictions required for national security. This means that remote-controlled airplane and helicopter flyers must review the FAA’s Notices to Airmen, or NOTAMS, prior to flying.

More specifically, they must be familiar with any airspace restrictions, known as Temporary Flight Restrictions or TFRs. This requirement is absent from the FAA’s long-standing guidance.

Licensed aviators know to review NOTAMs before each flight. Flight instructors teach this requirement in ground school and reinforce it with each training flight.

However, there is no ground school and flight instruction required before flying that freshly unwrapped birthday or holiday gift. So when Little Jonny takes his fully-charged remote-controlled helicopter down to the unused hometown baseball field, is he going to be rolled up and booked by law enforcement for flying when the President of the United States drops into his town for a last-minute visit?

Who taught Little Jonny to check the NOTAMS?

Even more puzzling, who taught Little Jonny or his mom and dad how to read and decipher the cryptic text of a National Security NOTAM?

The intent behind this latest FAA communique seems to be for keeping unauthorized commercial use of UAVs in check by leveraging the long arm of local law enforcement, not tossing Little Jonny and his folks in the hoosegow.

However, the weave of the FAA’s guidance-in-lieu-of-regulation is too fine and nets both whales and minnows. It is the unintended consequences of such guidance that creates risks both to legitimate, law-abiding aviation operators and unforeseen exposures to the insurers who underwrite the flyers.

Read all of Dave Hook’s Risk Insider articles.

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Aerial Risks

Drones Offer Risks, Underwriting Challenges

UAV risks include collisions with aircraft, invasion of privacy, aerial surveillance and data collection.
By: | January 5, 2015 • 5 min read

The increasing use of drones for commercial purposes has become one of the biggest emerging threats to the future of airplane safety, according to Allianz Global Corporate & Specialty (AGCS).

The expected rise in the use of drones or unmanned aerial vehicles (UAVs) for a host of different applications may leave operators exposed to a whole new set of risks, including third-party damage or injury and liability, according to AGCS’s Global Aviation Safety Study.


One of the biggest risks, it said, was from radio frequency interference, resulting in loss of control, and, in the worst cases, fatalities.

Other problems include invasion of privacy, aerial surveillance and data collection.

“With the ability to collect massive amounts of unsolicited data, UAVs present an enormous threat to individual privacy and a significant challenge for insurance carriers,” said Vikki Stone, senior vice president at Poms & Associates Insurance Brokers.

Vikki Stone, senior vice president, Poms & Associates Insurance Brokers

Vikki Stone, senior vice president, Poms & Associates Insurance Brokers

“In drafting policies, it is crucial for carriers to know how such information will be used,” she said.

The production of UAVs has increased by double-digits year-on-year since 2007, according to AGCS, with applications ranging from news gathering and surveillance to sporting events and crop dusting.

The benefits are obvious — the vehicles are smaller and generally easier to operate, particularly in hazardous environments, as well as have lower maintenance and running costs than conventional aircraft.

Such has been the take-up that the Federal Aviation Administration (FAA) estimates that by 2020, there will be about 30,000 small commercial unmanned aircraft in our skies.

However, coverage is limited, with only about 21 insurers and those that do offer policies have been hampered by a lack of historical and analytical data, the study said.


“Annual utilization, number of accidents and repair costs are not readily available and unmanned aircraft are not presently flying at the rate that they will be in the near future in the national airspace,” the report said.

Another problem is that, despite FAA plans to integrate UAVs into the U.S. airspace in 2015, there is a “lack of international, regional and local regulations for the safe operation of UAVs,” said Henning Haagen, AGCS’s global head of aviation EMEA and Asia Pacific.

Rogue Pilots

Stone said that the No. 1 concern among carriers was the lack of certification of UAV pilots. That lack, she said, makes it prohibitive to get any kind of coverage at all.

“I think the bigger problems are going to be the people that don’t follow the guidelines required, so ultimately we’ll end up a number of rogue flyers out there — that’s the scary part,” she said.

Peter Schmitz, CEO of global aviation specialty, Aon

Peter Schmitz, CEO of global aviation specialty, Aon

Peter Schmitz, CEO of global aviation specialty at Aon, outlined other major risks of drones.

“The biggest threat is clearly the taking down of a major aircraft in a mid-air collision,” he said.

“The second issue is the application of these vehicles in urban areas where the risk of damage to properties and individuals is much greater than it would be in rural parts.”

David Williams, assistant professor of aerospace and occupational safety at Embly-Riddle Aeronautical University, said the scale of the damage caused by a mid-air collision was almost incomprehensible.

“These units [UAVs] would cause catastrophic damage if they were to collide with an aircraft,” he said.

Underwriting Challenges

Schmitz said that regulatory authorities across the world face an uphill task in getting to grip with these issues because UAVs are still a relatively new and unknown quantity in terms of repair costs and loss ratios.

“I think that a couple of years down the road, the FAA will have a much clearer picture of the types of risks involved and will be better able to police these kind of aircraft,” he added.

Patton Kline, senior vice president in Marsh’s aviation and space group, said another issue facing carriers was insuring the value of the whole asset.

“From an underwriter’s view,” he said, “the biggest perceived risks are both on the liability side as well as insuring the whole value of the asset, which tends to be much more difficult as there are a whole range of platforms, many of which are still unproven.

“There’s also a lot of debate right now about whether underwriters are going to step up to cover things like privacy and it’s likely that even if they do, we’ll continue to see exclusions in policies for these types of losses.

“Another big issue we foresee is in products liability, with litigators going after large manufacturers of drones with deep pockets in the event of any future accidents.”

Kline estimated that, while losses from UAVs were still in the “small single digits,” rapid year-on-year growth means that number is expected to expand in future years.

Stone added: “I think we’ll see more carriers throw their hat in the ring and because the pricing is so competitive at the moment; often the only way to distinguish yourself is through enhanced coverage forms.”

A recent government white paper reported that the increased use of unmanned aircraft by the U.S. Air Force had resulted in a dramatic rise in the percentage of non-combat accidents ending in death, permanent total disability or damage of at least $1 million between 2003 and 2013.

Of those 75 accidents, UAVs accounted for about 21 percent. By 2011, that figure had increased to 50 percent, however, it has improved over the last two years.


The AGCS report also said that, while technical advances have reduced the risk of dying in a plane crash, the reliance on computers has left the industry open to the threat of cyber attacks.

“Cyber terrorism may replace the hijacker and bomber and become the weapon of choice on attacks against the aviation community,” the report said.

The study said that less than two out of every 100 million passengers died on commercial flights this year, compared to 133 deaths in the 1960s.

But despite improved safety, the cost of claims is still rising, driven by the widespread use of new materials in plane design, as well as tighter regulations and increased litigation, the report said.

AGCS also estimates that the insured value of airline fleets will climb to more than $1 trillion in the next five years, from less than $900 billion this year.

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at riskletters@lrp.com.
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Sponsored: Healthcare Solutions

Diversifying Top Management in Workers’ Comp

Inaugural Women in Workers’ Compensation (WiWC) Forum focuses on advancing more women into top leadership roles.
By: | January 7, 2015 • 5 min read

The panel at the inaugural Women in Workers’ Compensation (WiWC) Forum. From left to right: Eileen Ramallo, Elaine Vega, Nina Smith-Garmon, Nancy Hamlet, Michelle Weatherson, Nanette de la Torre, Danielle Lisenbey.

Across the country, the business community is engaged in a robust conversation about women being under-represented among c-level positions.

Why aren’t more women breaking into upper management roles? Does gender bias still exist? And, perhaps more importantly, what can women and men do to add more diversity to top leadership ranks?

Elaine Vega and Nancy Hamlet, of Healthcare Solutions, the Duluth, Ga.-based health services provider to the workers’ compensation and auto liability/PIP markets, have discussed the issue between themselves many times over the years.

The duo agreed that starting an industry-wide conversation would be an effective start to addressing the challenge. After three years of internal discussions, the inaugural Women in Workers’ Compensation (WiWC) Forum became reality. Judging by the attendance, content and feedback, it was an auspicious, very successful, debut.

Nancy Hamlet, Senior Vice President of Marketing, Healthcare Solutions

Nancy Hamlet, Senior Vice President of Marketing, Healthcare Solutions

Specifically, Healthcare Solutions and LRP Publications teamed up at the National Workers’ compensation and Disability Conference (NWCDC), held Nov. 18-21, 2014 in Las Vegas, to present the first WiWC event focused on the development of women as leaders within the industry. The WiWC debut featured a keynote speaker, a panel discussion and a networking cocktail hour.

“We believe this is just the beginning for the WiWC organization,” said Hamlet, senior vice president of marketing, adding that the event’s main theme was the conversation regarding challenges that still exist for women in the workplace is “current, real … and relevant.”

Originally the forum was allocated a room to hold 150 people. Vega and Hamlet worried about the room being too large, so they asked LRP what the contingency would be to make the room smaller if they couldn’t fill it. They needn’t have worried, as more than 400 women, and some men as well, registered and attended, requiring an even larger room.

“Clearly, the topic is relevant and there was plenty to discuss,” said Vega, senior vice president of account management.

Hamlet explained that WiWC was formed to create an open forum to promote a strong sense of community and support for current and future female leaders in the workers’ compensation industry. Going forward, the WiWC forum will provide insight and ideas with opportunities for members to:

  • Engage … with accomplished industry professionals and build lasting relationships.
  • Enrich … their knowledge base with tactical insights from speakers and panelists.
  • Explore … opportunities and challenges facing women leaders today.
  • Encounter … senior executives’ perspectives on leadership.
  • Examine … leadership strategies and how to effectively apply the strategies.
  • Empower … themselves and others to achieve success and groundbreaking results.

At the inaugural event, keynote speaker Peggy Holtman, co-author of “Leading at the Edge: Leadership Lessons from the Extraordinary Saga of Shackleton’s Antarctic Expedition,” discussed how a seemingly unconnected historical event can offer critical lessons on leadership in the workplace, especially for women looking to move into top executive spots.

Elaine Vega, Senior Vice President of Account Management, Healthcare Solutions

Elaine Vega, Senior Vice President of Account Management, Healthcare Solutions

After Holtman’s talk, a panel discussion, moderated by Vega, offered the perspectives of five workers’ compensation industry executives on ways in which women can navigate past the glass ceiling. Panelists included Eileen Ramallo , EVP Healthcare Solutions; Danielle Lisenbey, CEO Broadspire; Nanette de la Torre, VP Zenith; Nina Smith-Garmon, EVP Mitchell International; and Michelle Weatherson, Director, Claims Medical and Regulatory Division, State Fund of Calif.

The panelists discussed a wide range of topics related to women in workers’ compensation. For example, one topic focused on the need to take the big risks when it comes to moving past workplace barriers. Other topics included the importance of women in higher positions serving as sponsors and advocates for younger, less experienced women; and the impact of industry consolidation on women’s careers and how to best manage that change. Another topic was how women could best master conflict and emotions in the workplace.

“What’s clear is conflict has to be managed; it will not go away. It will only get worse,” said Healthcare Solutions’ Ramallo. “It then can create other rifts that won’t necessarily be visible immediately, but can have a very large impact. You have to be able to understand what it is early on from another’s perspective, why the situation exists, and then encourage and try to resolve a conflict situation, whatever may be driving it.”

In the wake of the first WiWC Forum, Hamlet noted that while there are countless general reports showing that women have not yet achieved equal representation in top leadership positions in the workplace, studies deal with averages rather than individual stories. And while women must continue to look at the data and work toward closing the gap, hearing from accomplished women in the workers’ compensation industry at NWCDC drove home critical messages on a person level.


Today, Vega and Hamlet are looking to expand WiWC to make it “truly owned” by the industry. For example, they expect to recruit companies interested in becoming sponsors, forming an advisory council, creating a charter and discussing future possibilities for the organization on both the national and regional levels.

“Much remains to be done, but I have confidence that we will come together and make the organization stronger so that it prospers for years to come,” Hamlet said. “After all, it’s clear that our industry is filled with talented women who can make things happen!”

Vega added that WiWC has already received requests to live stream the event in the future, so it will examine the feasibility of that option in an effort to be even more inclusive.

“We have a shared vision for improving opportunities for current and future women leaders in workers’ compensation,” Vega said. “It doesn’t matter our gender or our title, it’s all about supporting the greater vision. As was said several times at the event, this is just the beginning. We hope more women and men will join us in this continued dialogue.”

For more information about the WiWC, send email to wiwcleadership@healthcaresolutions.com or join our WiWC group on LinkedIn.


This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Healthcare Solutions. The editorial staff of Risk & Insurance had no role in its preparation.

Healthcare Solutions serves as a health services company delivering integrated solutions to the property and casualty markets, specializing in workers’ compensation and auto liability/PIP.
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