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20 CHAPTER FIVE PRACTICES FOR CHOOSING DEDUCTIBLES AND LIMITS DEDUCTIBLES Reasons compelling an increase in smaller airport operator deductibles include the cost of insurance, the condition of the Seven of 19 survey respondents stated that they review insurance market, and support for a higher rate of retention. deductibles annually. Seven respondents indicated that they tend to change their deductibles when market conditions yield premium savings. A smaller group of total partici- LIMITS pants, five of 19, indicated that deductibles at their facility have remained the same for many years. Modification of Liability Limits Four of six large airport operator respondents adjust Seven of the 19 survey respondents adjust liability limits deductibles as market conditions yield premium savings. according to market conditions. Six operators replied that Two large airport operators stated that they review and liability limits have not changed for many years; none of assess deductibles annually on policy renewal. these were in the largest category. Two of the 19 participants stated that they evaluate their limits annually, whereas two As for medium airport operators, two of the six review and respondents indicated that they do not adjust liability limits assess deductibles annually on policy renewal. Two operators at all. adjust deductibles according to conditions within the market, and two reported no change in deductibles for many years. Large airport operator respondents change liability limits depending on market conditions. Other large airport operators Likewise, three of seven small airport operators have not indicated that they evaluate limits annually on policy renewal. changed the amount of their deductibles in years. Two of the small airport operator respondents review and assess deduct- Three of the six medium airport operator respondents ibles annually. A lesser percentage of small respondents change limits according to changes in market conditions. indicated that adjustments to deductibles are dependent on Two of the medium airport operator respondents stated that market conditions or that they do not adjust deductibles at all. limits have remained the same for years, and one medium airport operator evaluates limits annually at renewal. Results of the survey instrument show that large airport operators review deductible levels more frequently than Of the responding small airport operators, all but one indi- small and medium airport operators and tend to be more cated that liability limits have not changed in years or do not sensitive to market conditions when assessing deductibles. change at all. Only one indicated that liability limits change On the other hand, small and medium airport operators tend according to conditions in the insurance market. Figure 5 to leave deductible levels unchanged or assess deductibles shows the distribution of responses by airport operator size. annually on renewal. The survey instrument revealed that as airport size The survey also inquired whether respondents have increases, so does the likelihood of that airport operator to increased deductibles within the past 3 years, and if so, evaluate and adjust liability limits. Large airport operators the reasons for this increase. Of the airport operators who are more sensitive to market conditions and look for cues in acknowledged having increased deductibles in the past, five the marketplace to signal a change in their insurance strate- of 10 have not made any changes in the past 3 years. Three gies, whereas medium and small airport operators tend to of the 10 respondents to this question reported that the cost keep the same limits of insurance each year. of insurance has been a factor that has caused their airport to obtain higher deductibles, and two respondents indicated Selection of Liability Limits that the loss exposure supports a higher retention. Cost, exposure, and broker or consultant recommendation None of the large or medium airport operator respondents are three factors respondents cited as influential in establish- reported an increase in deductibles within the past 3 years. ing liability limits for their airport facility.