MAAC’s Insurance Secret
by Roy Smith
For many decades MAAC has provided a group General Liability Insurance policy for its members. No-one that I have been able to find can remember when this policy was last put out for tender. Until very recently the insurance hasn’t been much of an issue for MAAC members, but now it is.
Almost ever since MAAC had a functional website the insurance policy was available for download from that site. There was also a “layman’s” summary of the coverage available, for those who find it difficult to follow the intricacies of documents such as insurance policies. That summary document, quite rightly, ended with the advice that the member should not rely upon it but should read the policy document for a complete description of the coverage provided. It is important for anyone who believes that they are covered by an insurance policy that they be aware of exactly what situations they are covered for – and, perhaps more important, what they are not covered for.
Sometime around January of 2022, possibly later, the insurance policy was removed from the MAAC website. This was done without any notification to the membership. Upon finding that I could no longer locate the policy I requested a copy be sent to me. That was refused. The message that I received from the president at that time was that “no MAAC member will be allowed to read the insurance policy because it is a corporate document!”. I suspected that significant changes had been made to the policy, changes that the leadership of MAAC did not want me, or any other MAAC member, to know about. A promise was made that a revised ‘summary’ document would be placed on the website. It is 2 years later and that ‘summary’ document still has not appeared. I don’t really miss it because, as already said, a summary document cannot be relied upon – it is the policy that carries actual significance.
Earlier this year I asked yet again to be provided with a copy of the policy, and once again I was refused. This time, the chair of the Insurance Advisory Group gave as his reason that it was “for your own protection!”. What an extraordinary claim – that I must be protected by MAAC against the harm of reading the insurance policy that supposedly provides me with some sort of coverage when I fly model aeroplanes. I did, however, get a response to one of my questions.
I wanted to know whether the geographic coverage area of the policy had been changed. I received the revelation that indeed it had. It was admitted that the policy now only covers flying within Canada! I did not get a reply to the question “when did that change take place?”.
Please bear in mind, reader, that, at that point in time there were two (slightly conflicting) documents on the MAAC website, pertaining to this subject. The first was a NOTAM from 2021, stating that the coverage of the policy was worldwide. The second was a document included under the heading “Out of Country Coverage” in the Documents section of the Insurance Advisory Group page, that said that there was full coverage in Canada and the USA, and “conditional” coverage elsewhere in the world – with no definition of what ‘conditional coverage’ actually meant. Days after my enquiry about the coverage area, that second document was taken down from the website. The NOTAM, however, remained. I was unable to find any document advising the members that their coverage was now limited only to Canada – or when that change came into effect.
I am not a lawyer, but it seems likely to me that, by changing the coverage of the policy, and not revealing that fact to the members, MAAC’s leadership has exposed the association to great risk of being found liable if a claim is made that is not covered in the way that members had every expectation that it should be, by relying upon MAAC documentation. The reasonable course of action, it seems to me, would have been to directly notify members of the change at least 30 days prior to it coming into effect, so that they would be on notice to make other insurance arrangements prior to flying outside Canada.
One of the things that has been said by this leadership, on that issue, is that Canadians now have to have AMA membership in order to fly in the USA. That is not true! AMA membership, and the secondary insurance coverage that comes with it, is only required in order to fly in AMA-sanctioned events or at AMA-registered fields, in the USA. Canadians flying at non-AMA-sanctioned sites could very well have been under the impression that they were covered by their membership in MAAC – they always had been and nobody told them otherwise.
What Has Happened to Your Insurance?
Over the past few years, the insurance that MAAC members have relied upon, has been mangled almost beyond recognition. Here is what has happened :-
- The area of coverage of the policy has been reduced from Worldwide to just Canada. This appears to have happened in two, or more, stages – none of which have been notified to the membership (until now).
- The risk of large claims arising has been reduced – because the USA is no longer a covered area, and that is a far more litigious country than Canada. Removing the coverage in other areas of the world also substantially reduces the risk borne by the insurance company – because it is also liable for the costs involved in defending claims in any geographic area covered and that is a greater cost than for claims within Canada.
- Despite item 2, the claim limit has been increased. Why do we need a higher limit when we have removed the biggest risk of high claims? Strangely, while increasing the claim limit, the anomaly of having the aggregate limit be the same as the single-claim limit has not been addressed. This means that, if there is a single claim that meets that limit, no more claims can be paid out for that year. While this is highly unlikely, that is what insurance is supposed to be for – protection against unlikely, but potentially catastrophic, events. (NB. See Note 1 at the end of this document.)
- Members used to be able to fly anywhere they wished, as long as they had permission from the land owner to enter onto the land in order to do so, and they were covered by the insurance. MAAC’s rules now limit flying to only those sites that MAAC has approved, even for classes of model aircraft that are not limited in any way by the Transport Canada regulations, and for flying sites that are not covered by the regulations (eg. sites not in controlled airspace). The insurance company’s risk has thus been reduced even further. It is not the insurance company that has reduced its risk in this way – it is MAAC’s policies.
- In 2021 there were approximately 9,000 members and the annual insurance cost was $114,250 ($12.69/member). The budget for 2024 is that there will be ~6,200 members and the insurance cost will be $179,800 ($29/member). The total cost is anticipated to increase by 57.3% and the cost per member by 128%, in three years, while the coverage area has decreased dramatically, the number of persons covered has decreased, and the highest risk of large claims has been removed. On the other side, the claim limit has increased by ~33% but, overall, the insurance company’s risk has reduced dramatically and their premium has increased substantially.
MAAC Members have no idea, of course, what other changes to the policy might have been made, or when. This situation is quite intolerable.
The Latest Developments.
I can now report that, belatedly, in the second week of July, 2024, there is a new MAAC NOTAM-7 on the MAAC website, informing members that their insurance coverage is now Canada-only. It still doesn’t inform the membership when this change took place, or whether there have been other changes made that they should know about. What it does do is to perpetrate yet again misinformation about the insurance situation. The claim is made that “This occurred as a direct result of the implementation of RPAS regulations worldwide, including CAR Part IX in 2019, which caused the revocation of various reciprocal modelling/insurance agreements.” That statement is completely untrue! Nothing in Part IX of the regulations had any effect upon the insurance situation. MAAC made its own, unilateral, decision to revoke the reciprocal agreement between the USA and Canada. There were not “various” reciprocal modelling/insurance agreements in effect – just the one between Canada and the USA.
The prior NOTAM, MAAC NOTAM 2021-06, which stated that MAAC members were covered worldwide, has simultaneously been taken down from the website.
Further to that, there is yet another item, MAAC NOTAM-8, that has just been added to the website. It carries the same approval date as NOTAM-7, July 3 2024, but was added subsequently. The purpose of this NOTAM is somewhat obscure. It reports that, in 2021, the AMA notified its members that, effective January 1st, 2022, Canadians would be required to have membership in the AMA in order to fly at AMA sites in the USA.
What Is Known About Claims?
The answer to that question is “NOTHING”. There is never a report from the Insurance Advisory Group letting the membership know how many claims there have been over the year, what type of claims, whether safety guidelines were violated, where they occurred, or how large (or small) the claims were. It wouldn’t be necessary, or wise, to publish identifying information, but the statistics should be known to the membership. MAAC is obligated to pay $4,500 of the deductible, and the member pays $500, the insurance then ‘kicks in’ for the rest. I have never seen a line item in our financial report showing that any such deductible has ever been paid. Does that mean that there has never been an incident involving a financial award? I find that hard to believe but, if it is true, then why do the premiums keep going up?
Note 1. In item 3 of the section above, headed “What Has Happened to Your Insurance?”, it was said that the anomaly of having an aggregate limit the same as the per occurrence limit remained in the policy. It now appears that this might have been changed at some point in time and the limit is now purely “per occurrence” with no annual aggregate limit, or a different annual limit. It is not clear when (or even if) this change was made. The Chair of the Insurance Advisory Group should be consulted for confirmation – as the policy still cannot be read by the members.
Why is that important? For a group policy it is particularly important to know the situation – if one major claim eclipses the single occurrence limit, and the aggregate limit is the same as the single occurrence limit, then no further claims will be paid out for that year, or all could be pro-rated to share the aggregate limit. This can, of course, become quite confused because claims are often not settled in the same year as the incident occurred – it can, nevertheless, create a situation where a member of the group has less coverage than they thought they had.