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SPECIALTY LINES MARKETS Leisure risks—Pay for play The ups and downs of theme parks and other related markets By Larry G. France Yes Virginia, there is a Santa Claus. He resides in Indiana, not New York, and you can see him every day at his home in the town of Santa Claus. Being precognizant, I started researching this article in 1949 when I sat on the “real” Santa Claus’s lap, as many thousands have done since. Now that the mystery of where Santa resides has been solved, let’s see if you can answer a few other questions. What was the world’s first theme park? No. Not that one. Not there either. It was Santa Claus Land, now called Holiday World. It opened in 1946 and featured The Freedom Train that stills remains today. The park sits nestled in the hills of southern Indiana and very close to Abraham Lincoln’s boyhood home. Holiday World has grown from seven acres to 120 acres, with more to be developed. In 2005, The Travel Channel reported that Holiday World was voted the friendliest park in the world for the eighth year in a row and the cleanest for the sixth year in a row. It also has two of the top 10 wooden roller coasters in the world in 2005 and opened its third in May of this year. Over the years, Holiday World has added many other attractions including a water park that was number two in the world in 2005. On paper, it’s an underwriter’s nightmare—rides, roller coasters and water features. But, in reality, Holiday World is an example of a safety manager’s dream. And there are a number of reasons why that should be instructive to both underwriters and loss control practitioners. The safety experience starts before you enter Holiday World. You find police directing traffic to parking places in a well orchestrated manner. Transportation is available from the parking lot to the main entrance where you are welcomed by Pat Koch, matriarch of the family that founded and still owns the park. It’s a great first impression. Everyone is responsible for cleanliness and safety. When you enter Holiday World, you notice that the place is clean enough to please a Parris Island drill instructor. But that doesn’t come as a surprise when you understand that the mantra for Michael Kamp, director of maintenance/safety, is: “Clean equates to safety.” When I began my tour of the park, I noticed several employees going through the facility with brooms and dustpans. I asked Paula Werne, director of public relations, how many employees—who I later found are referred to as hosts and hostesses—were responsible for cleanup. Her response was: “Everyone.” Matt Eckert, controller, explains: “The Kochs have made us part of their extended family. We strive to make sure that everyone is on the same bus.” That’s not an easy task with 65 full time and 1,400 seasonal employees. But the difficulty is eased by the fact that many of the employees have returned to the park for years. And one of the reasons appears to be that everyone enjoys working there. Cleanliness extends to the water park Splashin’ Safari, where there are automatic systems to keep the water free of bacteria. In addition, the water is checked manually every hour. Of course, other safety aspects are also evident. The lifeguards in the water park are all professionally trained. Jennifer Lambert, director of Splashin’ Safari, is certified by Allison’s, a company that trains lifeguards specifically for water parks. She then trains the Splashin’ Safari lifeguards. Allison’s makes surprise inspections of the water parks at least three times per year. And Lambert conducts her own surprise exercises. In one instance, she tosses a dummy into the water and clocks the response time of the lifeguards. Michael Kamp regularly meets with Bill Musick, director of loss control service at Hylant Group, which provides coverage for Holiday World. Musick says, “When they call we are more than glad to meet.” In fact, they were meeting the day I was there. Kamp says that, in addition to regular meetings, he meets with the loss control people from Hylant prior to starting any new projects. While mitigation or elimination of losses is the ultimate goal, Kamp says, handling losses quickly and determining the cause are equally important. Recently, he says, First Aid treated three “band-aid cases” which occurred in the same area of the park. The problem was immediately investigated and eliminated. Along with the services of the First Aid station, the park always has an EMT on duty. But visits to First Aid from heat-related complaints were greatly reduced beginning last year, when Holiday World started offering free, unlimited soft drinks and free sunscreen, according to Matt Eckert. When this feature was announced at a theme park association annual meeting, he says, “most people thought we were crazy. But with the drop in visits to First Aid now others are looking into it.” Another Holiday World safety feature is the Phone Find. If you have small children and are carrying a cell phone, each child can receive a free wristband on which the cell phone number is printed. Children are instructed to find a uniformed employee if they become lost. The employee will read the wristband and call the missing parents. What should agents and brokers look for when looking at a risk in this class? Mike Larkin, chief underwriting officer, at Leisure/Sports LLC, offers these observations. Are they meeting the standards? “If you insure risks that are substandard, you increase the chances of paying a loss,” Larkin points out. And, in many cases, determining what is below standard is not subjective. He notes that “the handling of portable soccer goals is the subject of a Consumer Product Safety Commission bulletin. Amusement rides have standards set by the American Society of Testing and Materials. The National Council of Youth Sports has recommended standards for background checks on volunteers. Manufacturers of amusement devices provide standards for installation, operation and maintenance.” Is the coverage with a reputable, experienced provider? “One of our common observations is that newcomers to the industry often do not properly protect insureds,” Larkin says. “Common areas of deficiency include: fireworks, EMTs, and liquor liability.” Does the claims handler understand the situation? “Waivers, assumption of risk defenses, contributory vs. comparative negligence, immunity statutes, etc., all play critical roles in claims handling and the situation varies by state and by activity,” Larkin notes. “A mishandled claim can handcuff an industry for years if it results in bad case law.” Can the carrier offer preventive help to avoid remedial help? Larkin says: “The basic ‘promise to pay’ is the largest part of the agreement between insurer and insured. But that aspect, having to pay, can be significantly mitigated by a well-designed risk management program.” Insureds need to ask themselves a number of questions about their risk management program, he continues: “Have you analyzed all your exposures? Have you implemented a plan to control those exposures? Are you monitoring the results? Can your carrier provide qualified specialized assistance in such areas as nondestructive stress testing for amusement rides, contract analysis, fireworks operation, etc.?” Many of the risks in this class are seasonal. That means they have a relatively narrow window of opportunity in which they can attain their profit goals for the year. If the activity is slowed by weather—be it by rain, heat, or severe storms—the profit picture can become very cloudy. There are solutions to avoid that downfall. Chris Ingraham, CIC, of WKF&C Specialty, says, “Weather insurance contracts respond to any business with a need to stabilize cash flow against uncertain weather conditions, particularly businesses relying on seasonal income.” Ingraham lists the following as some of the categories of interest: • Fantasy baseball or any sports camps The next three Specialty Lines articles include Professional Liability in October; Apartments/Condos in November; and Preview of the Industry 2007 in December along with the 2007 issue of The Insurance Marketplace specialty lines directory. The following have responded to our survey and indicated that they are a market for certain risks in the Pay for Play class of business. Agency Marketing Services, Inc. An E&S broker that operates in FL and GA only with primary GL limits of $1 million/$2 million/$1 million, and excess of $5 million. Target markets are bowling centers, miniature golf, golf courses, amusement rides, animal rides (sweeps or hand-led), tennis/racquet clubs, and campgrounds. Will not write trail rides, outfitters, or rafting. Can offer commercial umbrella ($5 million). All carriers are A rated. Agency Specialty Product Network An MGU network that operates in all states with varied limits. Will consider many classes except for billiards centers. Can offer outfitters/guides, venues, athletic fields, health clubs, sports instructors, and sports clubs/complexes. Various carriers are used to place coverage. Aggressive Insurance Brokers, Inc. An E&S broker that operates in various states depending on class with various limits that can include excess medical and injury to participants, depending on class. Target classes are miniature golf, fairgrounds, canoe trips, golf courses, outdoor recreational facilities, tennis/racquetball centers, weather insurance, indoor/outdoor batting cages, and indoor/outdoor skating parks. Will not write amusement parks/rides, animal rides, trampolines, river rafting, horse/carriage rides, water parks, paintball centers, trail rides (equine), and campground owners. Can also offer coverage for various youth and adult sports teams. All carriers are rated A or better. Arlington/Roe & Co., Inc. An MGA/wholesale broker that operates in IL, IN, KY, MI, OH and TN with limits of $1 million. Target classes are spectator liability, concerts, haunted houses, tennis centers, exercise studios, health spas, skating rinks, and suntan beds. Capitol Indemnity, Nautilus, Western World, and Northland are the carriers. Bohrer, Croxdale & McAdoo, Inc. An MGA operating in AR, IL, KS, MO, and OK with limits of $1 million/$2 million. Target classes are campgrounds and ATV courses. Will not write paintball centers. Can offer umbrella. Carriers are Atlantic Casualty (A-), Capitol Indemnity (A), Capitol Specialty (A), Maxum Specialty (A-), National Fire & Marine (A++), Northland (A), and Scottsdale (A+). Bollinger, Inc. A program administrator that operates in all 50 states (limited coverage in coastal counties) with limits of up to $50 million. Target classes are golf courses (private, equity, semi-private, daily fee), private tennis clubs, and private eating clubs. Will not write resort facilities. Can offer package, pollution, liquor, auto, and excess. Carriers are AIG (A+), Philadelphia (A+), and Fireman’s Fund (A). Capitol Insurance Companies An insurer that operates in all 50 states with limits of $1 million occurrence and $2 million aggregate. Target classes are bowling centers, miniature golf, golf courses, and campground owners. Will not write amusement parks/rides, water parks, weather insurance, or paintball centers. Capitol Specialty is an A rated carrier. Continental Bloodstock Agency, Ltd. An agency that operates in all states with limits of $1 million. Target class is equine and bovine; will offer all risks except trail rides without supervision. Gemini (a division of W.R. Berkley) is the A rated carrier. Entertainment Brokers International A managing agency that operates in all states with GL limits of $1 million. Target classes are bowling centers, golf courses, miniature golf, campground owners, roller skating rinks, casinos, outdoor recreational, family fun centers, country clubs, sports teams, fairgrounds, tennis/racquetball, sports venues, special events, contingency, motor sports, horse tracks, card clubs, and dog tracks. Will not write amusement parks,/rides, canoe trips/river rafting facilities, horse/carriage rides, paintball centers, animal rides, water parks, trail rides (equine), or weather insurance. Can offer AL, GL, workers comp, property, inland marine (will also write tenant user liability). Everest National is the A+ rated carrier. Evolution Insurance Brokers (EIB International) An E&S broker that operates in all states with all limits. Will consider all classes. Can offer monoline liquor, assault and battery, and after 3 a.m. closing time. Prime Insurance is a B rated company. Francis L. Dean & Assoc., Inc. An MGA that operates in all states with limits of $1 million (excess to $5 million). Target classes are family fun centers, outdoor recreational facilities, batting cages, etc. Will not consider saddle animal exposures or weather insurance. Can offer package with accident medical insurance. Capitol Specialty and QBE Insurance are the A rated carriers. Gagliardi Insurance Services, Inc. An agency that operates nationwide with limits of $10 million for GL and $1 million for medical. Can offer bonds, D&O, equipment floater. AIG, Philadelphia, Everest and Cigna are the carriers. Gillingham & Associates, Inc. An MGA that is admitted in all 50 states and offers liability limits of $1 million with $5 million excess available. Target class is commercial outdoor recreation and hospitality, including guest ranches, guides/outfitters, resorts, fishing/hunting lodges, RV park/campgrounds, bed and breakfasts, hunting preserves, rod and gun clubs, equine exposures, and hunting lease. Can offer GL, property, excess liability, liquor liability, commercial auto, inland marine, crime, and business income. Arch Insurance Group is the A- rated carrier. Grand Prize Promotions An MGA operating in all states with limits of up to $1 million. Target classes are prize indemnity, weather, and event cancellation insurance. Carriers are Lloyd’s, Republic Underwriters (A-), and Republic-Vanguard (A-). Harry W. Gorst An MGA/E&S broker that operates in California with GL limits of up to $10 million. Target classes are amusement/family fun centers, batting cages, carriage rides, scenic trains, virtual reality centers, arcades and camps. Will not write bungee jumping, hot air balloon rides, mechanical bulls, water slides and inflatable amusement devices. Carriers are Scottsdale, Western Heritage and Colony. HCC Specialty Underwriters, Inc. An MGA that operates in all states with limits of $85 million. Target classes are fairgrounds and golf courses. Can write special event liability, weather insurance, and event cancellation. The A+ rated carriers are HCC, Lexington, Commerce and Industry, as well as A rated Lloyd’s. Hole In One International/Odds On Promotions A purchasing group and program administrator that operates in all states with limits of $1 million. Will consider all classes. Can offer prize indemnification and hole-in-one insurance. Praetorian is the A- rated carrier. Izzo Insurance Services, Inc. An MGA/wholesaler that operates in all states except AK and HI with limits of $1 million. Target classes are bowling alleys, campgrounds, and golf courses. Can offer monoline workers comp and EPLI. AIG, ACE and The Hartford are rated A+; Zenith and Technology Insurance are rated A-. J.P. Everhart & Company, Inc. An MGA/agency that operates in all states with limits of up to $1 million. Can offer weather insurance. Carriers are Lloyd’s, Republic Underwriters (A-) and Republic-Vanguard (A-). Leisure/Sports Specialists, LLC A general agency that operates in all states with limits of $10 million. Target class is participant and/or spectator liability exposures. Will not write carnivals. Can offer GL including EMT, fireworks, liquor, hired and non-owned auto, excess liability, and abuse/molestation. Century Surety and James River are the A- rated carriers. Metcom Excess An MGA/E&S broker operating in NJ, NY and PA with limits of $10 million. Target classes are arcades, miniature golf, and amusement rides. All carriers are A rated. Midlands Management Corp. An MGA that operates in AR, KS, OK and TX with limits of $1 million/$2 million. Will not write air rides/bounces. Can offer property. Carriers are rated A- or better. The Monroe Group, Inc., Division of Haylor, Freyer & Coon An agency that operates in all of the continental states with limits of $1 million/$2 million plus umbrella up to $10 million. Target classes are driving ranges, golf pro shops, miniature golf, and private/public golf courses. Can offer crime, accounts receivable, and workers comp. All carriers are rated A+. National Hole-In-One Association An MGA/agency that operates in all states with limits of up to $1 million. Can offer weather. Republic Underwriters, and Republic-Vanguard are the A rated carriers. Nationwide Insurance An insurer that operates in all 50 states plus U.S. territories with primary/excess, AD&D, and death & specific loss up to $50,000; medical expense with or without deductible ranges up to $250,000. Target classes are sports teams, specified hazard (including non-resident day care), and volunteer emergency/fire. (Please contact with specific case requirements). Can offer partici-pants, coaches/staff, and weekly accident income. Nationwide is an A+ rated carrier. NIF Group, Inc./NIF Pro An MGA/E&S broker that is admitted in all states, and nonadmitted in the eastern U.S. with limits of $1 million. Target markets are one-day shows and special events; can also offer excess and umbrella. All carriers are A rated or better. Preferred Club Program (Venture) A program administrator that operates in all states with primary limits of $1 million - $5 million, excess limits up to $50 million, and minimum premium of $20,000. Target classes are private golf and country clubs, semi-private and daily-fee golf courses, and golf management companies. Can offer property, GL, auto, umbrella, pollution, AD&D, D&O, EPL, and workers comp. Carriers are Chubb (A++), Hanover (A-), Hartford (A+), USLI (A++), RSUI (A) and ICW Group (A-). Prime Insurance Syndicate Inc./I.E.B.S. An MGA (IEBS)/insurer (Prime) that operates in all states except AK, AZ, CA, CO, LA, NH, NY, RI, TX and VA with all limits. Will consider all classes. Can offer monoline liquor, assault/battery, after 3 a.m. closing in the hospitality industry. Prime is a B rated carrier. Quaker Special Risk An E&S broker that operates in all states with GL limits of $1 million/$2 million. Target classes are inflatable amusement device rentals, amusement parks/rides, bowling centers, miniature golf, water parks, outdoor recreational facilities, paintball centers and skateboarding parks. Nautilus and National Fire and Marine are the carriers. Roush Insurance Services, Inc. An MGA operating in IL, IN and OH with GL limits of $1 million/$2 million (excess up to $20 million) and property limits of $1 million in-house with higher limits available. Target classes are bowling centers, campground owners, carnivals, children’s rides, festivals, golf courses, hole-in-one, horse/carriage rides (private trails only), miniature golf, outdoor recreational facilities, and tennis/racquetball centers. Will not write hot air balloon rides, rain insurance or water parks. Can offer auto, D&O, and excess/umbrella. Atlantic Casualty (A-), Century Surety (A-), Evanston (A), Essex (A), and Scottsdale (A+) are the carriers. Russell Bond & Co., Inc. An MGA that operates in NY state only with limits of up to $2 million/$3 million and higher. Target classes are kiddie rides, canoe trips, golf driving ranges, campground owners, horse/carriage rides, miniature golf, swim/tennis/racquetball centers, batting cages, canoe/paddle boat rents, dunk tanks, and simulator rides. Will not write inflatable amusement devices, adult amusement rides, bungee jumps, ATV rentals, paintball games, or go-karts. Can offer GL, liquor liability, excess liability, property, and inland marine. All carriers are rated A- or better. Sea to Sea Insurance Services, Inc. An agency that operates nationwide with primary limits of $1 million and excess limits of $5 million. Target classes are watercraft rentals, charter boats and bareboat charters. Parasailing, banana boats and water trampolines are not written. Can offer physical damage on watercraft, premises liability and property coverage on waterfront. Markel and Essex are the carriers. S.H. Smith & Co. An E&S broker that operates in all states with limits of $1 million and up. Target class is water parks. Can offer liquor liability and special events. All carriers are A rated. Southern Insurance Underwriters, Inc. An MGA/E&S broker that operates in AL, FL, GA, NC, SC and TN with limits of $1 million-plus. Target classes are miniature golf, amusement devices, weather insurance, campgrounds, and event cancellation. Will not write trail rides. Can offer GL, property and auto. All carriers are A rated. Symons International Group (Florida) Inc. An MGA/E&S broker operating in FL only with limits of $300,000/$500,000/$1 million. Target classes are bowling centers, golf courses, amusement parks, campgrounds, fairgrounds, and carriage rides. Will not write animal rides, miniature golf, amusement rides, weather, paintball centers, water parks, tennis centers, or trail rides. Burlington is the A- rated carrier. United Brokers Inc. An MGA/E&S broker operating in AL, AR, GA, IA, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, NC, NJ, NV, OH, SC, TN, VA and WI with limits of $1 million plus excess up to $5 million. Target classes are campground owners, outdoor recreation, golf courses, moon bounces, and bowling centers. Will not write amusement parks. Can offer GL property, and excess. All carriers are A- rated or better. Western World Insurance Co. An insurer that operates in all states with GL limits of $1 million/$2 million. Target class is smaller, lighter risks. Will not write water parks, trail rides or weather. Can offer GL, property, and floaters. Western World is rated A+ as is Tudor. Yates & Associates Insurance Services, Inc. An MGA operating in CA only with limits of $1 million/$2 million/$1 million (excess limits also available). Will consider all classes. Can offer inland marine. All admitted and nonadmitted carriers are A+ rated. * |
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