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Specialty Lines markets Leisure risks/pay for play Category runs the gamut from traditional risks such as golf courses to newer risks like inflatable By Larry G. France You pay your money and you participate in the activity. In other words you are part of the action, not sitting in the bleachers. Because of your active participation, you also increase the chances that injuries may occur. Of course, the degree of exposure varies with the activity. Bowling centers present a lower degree than amusement rides. The types of risks that fall under this category range from amusement rides to golf courses, paintball centers to trail rides. Let’s take a look at a couple of examples—one that has been around for some time and the other, a relatively new type of entertainment. According to David Hatlem, executive vice president of Club Programs at Bollinger, Inc., “There are approximately 16,000 golf clubs/courses in the United States. It is estimated that about 5,000 are considered private clubs. The remaining clubs are semi-private (limited number of annual memberships), and daily fee courses. While there are currently a significant number of carriers that will insure clubs, the coverage provided can vary as wildly as the typical amateur golfer’s driving capability off the first tee. “The range of clients and exposures in this sector also varies dramatically,” says Hatlem. “A highly prestigious private club with a limited membership requires a completely different level of coverage from a municipally owned daily fee course or driving range operation. Some insurers will treat the club as a simple property risk and standard liability exposure. “Others have broadened definitions that are tailor made for the club’s liability and property exposures,” he continues. “Understanding the exposures and club needs in order to fully insure its assets are critical when placing the insurance.” Hatlem explains that clubs “are striving to compete in the ever-increasing segment of family hospitality and entertainment. Due to this, a wider range of exposures is now becoming part of the club’s environment. Many private and semi-private clubs are enhancing their entertainment options and services. The traditional club exposures of golf, swimming and tennis will be prevalent in all private and some semi-private clubs. “However, the expansion into less traditional activities can include health club exposures including weight lifting/training, spa services and day camps for children,” he continues. “Childcare and the subsequent exposures also increase the need for the correct risk management procedures. In order to make a club a year-round experience in locations where the traditional activities are curtailed due to weather, there are additions such as cross-country skiing, sledding, skatig and hunting that may be provided and increase exposures.” An insurer will typically need to understand controls put in place for valet parking, liquor service, pesticide/herbicide application and storage, pollution exposure, and commercial auto. D&O and fiduciary liability as well as workers comp are also exposures that many clubs must address. Additional insureds under the policy should include employees, club members, volunteer workers, golf and tennis professionals, Hatlem suggests. “Property coverage and corresponding extensions will apply to buildings and personal property. The limits available will also vary widely based upon the insurer. ‘Tee to Green’ coverage is an extension and provided on a special perils basis. This coverage defines the limits that are applicable to the tees, driving range, cut fairways, greens, cut and maintained roughs and other maintained surfaces found on a golf course. The availability of wind and hail coverage and deductibles will vary based on the location of the club. Other unique coverages for a club could include ‘errant golf ball’ and hole-in-one reimbursement expense,” offers Hatlem. One of the newer forms of leisure risks is inflatable play structures. What was mostly an attention getter for one-day promotions and children’s birthday parties now is utilized in several ways to provide participating entertainment. Placing of coverage was very difficult in the beginning as there was no history to base underwriting or rates upon. For many underwriters, that simply meant that when asked if they would cover the risk, the answer was “No.” Dan Meyer, national program underwriting director at Fireman’s Fund, says: “The inflatable structure industry is a fast growing business segment that gives individuals an opportunity to start a business with a modest investment of capital and labor. It is also an attractive business for larger enterprises catering to the broad field of entertainment. “Up until recently, fixed location amusement parks or traveling carnivals offered the only alternatives for children and young adults to experience the thrill of amusement rides. Today they are brought to the backyard, schoolyard, and community park for an afternoon or a few days. Inflatable play structures make this possible and the industry is growing rapidly. Outdoor rental companies, indoor entertainment centers and event companies are the largest purchasers of inflatable play structures,” Meyer adds. “Underwriting the exposures associated with this industry has presented some challenges for the insurance industry,” Meyer continues. “There is not an industry-specific pool of data about the number and type of incidents and claims, exposure base to capture units of exposure, or actual usage of the product. There is limited regulation by states or other officials concerned with the safe operation of play structures. “Setting rates or prices and making sure operators comply with prevailing safe standards in an ever-changing industry makes underwriting this business segment a challenge. For this reason most business is written in the nonadmitted market,” he says. “Progress towards a more traditional insurance underwriting approach is underway,” Meyer says. “An initial standard for the manufacturing, operation and use of inflatable play structures was introduced in 2004 by ASTM International (formerly known as American Society for Testing & Materials) as standard F 2374-04 (www.astm.org). “This standard has been updated twice and a number of states have introduced mandatory safety inspections for all or some of the products and businesses. Most inspection criteria include ASTM standards. Underwriting guides now incorporate all or some of these standards along with basic risk management requirements. “In 2006, the Inflatable Industry Purchasing Group, Inc., was formed and it provides a central collection for industry data, beginning with its members. This will help solve the data issue,” Meyer concludes. “Fireman’s Fund developed a customized program to work with this industry group. This affinity program not only provides product solutions for customers in this industry but also peace of mind.” Manufacturers have adopted ASTM and many best practice standards into their product design and process. They reinforce safe and sound business practices with their customers. According to Meyer, important steps businesses can take to manage their risk include: • “Select products from manufacturers that are committed to following ASTM standards as their base line. • “Make sure all manufacturer instructions for each product are clearly communicated and understood by anyone setting up, operating or supervising the amusement ride. • “Regularly inspect and maintain all products and components in accordance with manufacturer’s recommendations and ASTM standards. • “Post notices on units and in rental agreements or contracts concerning the hazards associated with the unit. Include liability waivers, indemnification and hold harmless provisions in contracts, as appropriate. • “Always have contracts signed and initial each page. • “Keep all records for a period at least equal to the expiration of the statute of limitations. In many states, statutes of limitations begin to run when a person reaches the age of maturity. “Good products in the hands of safe operators will keep accidents and injuries to a minimum,” Meyer concludes. “Good record keeping will help companies defend themselves when claims do arise.” Upcoming Specialty Lines articles will include Professional Liability in October, Health-Care-related risks in November and a 2008 Specialty Market preview for December. The following have indicated that they are a market for risk that is included in this segment: Agency Marketing Services, Inc. An E&S broker that operates in FL and GA with primary GL limits of $1 million/$2 million/$1 million and excess limits of $5 million. Target classes are bowling centers, miniature golf, golf courses, amusement rides, animal rides (sweeps or hand-led), tennis/racquet clubs, campgrounds, bounce houses (inside 96% controlled). Will not consider trail rides, outfitters, or rafting. Can offer commercial umbrella at $5 million. All carriers are A rated. All Risks, Ltd. and All Risks of CA Insurance Services, LLC An MGA/E&S broker that operates in all states with all limits. Will consider all classes. Can offer GL, workers comp, umbrella/excess, auto, property and crime. All carriers are rated A or better. Arlington/Roe & Co., Inc. An MGA/E&S broker that operates in IL, IN, KY, MI, OH and TN with property limits up to $100 million. Capitol (A), Nautilus (A+), Western World (A+), and Fireman’s Fund (A) are the carriers. ARS Bollinger, Inc. A program administrator that operates nationwide. Target classes are private golf and country clubs, city clubs, tennis clubs and semi-private golf clubs. Will not consider daily fee golf courses and health clubs. Can offer GL, umbrellas, excess, D&O, commercial auto, property and workers comp. AIG is the carrier. Capitol Insurance Companies An insurer that operates in various states (contact for availability) with limits of $1 million/$2 million. Target classes are golf courses, amusement centers, and recreational facilities. Will not write water parks. Can offer GL, property, inland marine, and umbrella. Capitol Indemnity and Capitol Specialty are both A rated companies. Century Surety Group An insurer that operates in all states except MA and RI with limits of $1 million/$2 million. Target classes are bowling centers, campground owners, golf courses, miniature golf, and paintball centers. Century is rated A-. Continental Bloodstock Agency, Ltd. An agency that operates in all states with limits that depend on the class. Will consider all classes. All carriers are A rated. Continental/Marmorstein & Malone An E&S broker that operates in CT, DE, NJ, NY and PA with primary limits of $1 million/$2 million (higher limits available depending on the risk); excess limits also available, including umbrella. Will consider all classes, including but not limited to amusement centers, athletic programs, batting cages, children’s play centers, golf/country clubs, exercise clubs, fireworks/sponsors, golf driving ranges, guides/outfitters, play centers, swimming clubs/pools, and youth recreation programs. Can offer special events and liquor liability. Essex, USLI/Mt. Vernon, Nautilus, Western World, Chubb Custom, Colony, American Empire, Liberty International Underwriters, and Admiral are the carriers. Evolution Insurance Brokers An E&S broker that operates in all states except AK, CA, CT, NH, NJ, NY, RI and WV with all limits. Will consider all classes. Can offer inflatables, outfitters/guides, watercraft rentals, and ski resorts. Prime Insurance and Prime Insurance Syndicate are the B+ rated carriers. Francis L. Dean & Assoc., Inc. An MGU that operates in all states with limits of $1 million/$2 million-plus and up to $5 million excess. Target classes are outdoor recreational facilities, campground owners, miniature golf, and other family fun centers. Will not write horse and carriage rides or other saddle animal exposures. Can offer roller skating, laser tag and sports/entertainment facilities. The A rated carriers are W.R. Berkley, Capitol, and QBE Insurance. Gagliardi Insurance Services, Inc. A broker that operates in all 50 states. Philadelphia and AIG are the carriers. Gillingham & Associates, Inc. An MGA that operates in all 50 states with liability limits of $1 million—$5 million excess available. Target classes are animal rides, campground owners, canoe trips/river rafting, horse and carriage rides, outdoor recreational facilities, and trail rides. Can write miniature golf, golf courses, limited amusement rides and paintball centers if an incidental part of the overall operation.Will not consider amusement parks, fairgrounds, bowling centers or weather insurance. Harry W. Gorst An MGA/E&S broker operating in CA only with limits of $100,000/$300,000/$500,000/$1 million, depending on the risk. Target classes are batting cages, children’s indoor play centers, penny arcades, and public/private golf courses including country clubs, ranges, and indoor/outdoor facilities. Will not consider inflatable devices or hired/non-owned auto. Can offer inland marine and property. Carriers are SIC, Western Heritage and Colony. Haylor, Freyer & Coon, Inc. An agency that operates in all states with limits of $1 million/$2 million (increased limits available). Target classes are driving ranges, miniature golf courses, and public/private golf courses. Will not write Protection class 10. Can offer crime, workers comp, business auto, and umbrella. Carriers are Travelers, Selective, Fireman’s Fund, and CNA. Hole In One International/Odds On Promotions A purchasing group/program administrator that operates in all states with limits of $1 million. Will consider all classes. Praetorian is the A- rated carrier. James River Insurance Company An insurer that operates in all states except NH and OH with limits of up to $5 million. Will consider most classes of sports and entertainment. James River is rated A-. Jimcor Agencies An MGA/wholesaler that operates in MA, MD, NJ, NY, OH, PA, RI and WV with limits of $1 million; excess up to $10 million. Target classes are tennis, recreation centers, pay for play, arcades, petting zoos, party centers, concerts (indoor and outdoor), rodeos, sporting events, circuses, carnivals and craft fairs. Can offer coverage for sponsored fireworks, moonwalks, boat rides and animal rides. Various A rated or better admitted and nonadmitted carriers are used. K&K Insurance Group, Inc. An MGU that operates in all states with in-house authority/capacity that varies by program or class of business. Target markets include camps, tennis/racquetball centers, health/fitness club and centers, canoe trips/whitewater rafting, outfitters/guides, carriage rides, zoos/aquariums, dance schools, gymnastics clubs, martial arts studios, special events, and sports complexes. Will not write parasailing, watercraft rental, ski resorts, amusement parks, family fun centers, campgrounds, and inflatable/bounce devices. Can offer full commercial package for most risks, including GL, liquor liability, vendor coverage, contingent ride liability, fireworks liability, property, business income, commercial auto, inland marine, crime, excess liability, and participant accident. All carriers are rated A or better (may vary based on class of business). M.J. Hall & Company, Inc. An MGA/E&S broker that operates in AK, AZ, CA and NV with primary limits of up to $3 million. Target classes are public/private golf courses, tennis/recreational centers, private swimming/racquetball clubs, miniature golf/driving ranges, and amusement rides/games/devices. Will not write surety. Can offer blanket additional insured endorsement, med pay coverage ($5,000 limits included), hired/non-owned auto, liquor liability, and sports participant liability. All carriers are A rated. M.J. Kelly Co. Inc. An MGA that operates in AR, FL, GA, IA, KS, LA, MO, MS, NE, OK, TN, TX and UT with limits of $1 million/$2 million. Target classes are tennis/racquetball centers and swimming facilities. Western World is the A+ rated carrier. Metcom Excess An MGA/wholesaler that operates in NJ, NY and PA with limits of $25 million. Target classes are amusement parks and bowling centers. All carriers are A rated. NIF Group, Inc./NIF Pro An MGA/E&S broker offering coverage on an admitted basis in all states and nonadmitted in 30 states with limits of $1 million/$2 million. Target classes are special events, water parks, and amuse-ments. Can offer umbrella, excess, and property. All carriers are A rated. Philadelphia Insurance Companies An insurer that operates in all states except LA. Target classes are amusement parks, golf courses, and tennis/recreational centers. Will not write water parks. Can offer packages. Prime Insurance An insurer that operates in all states except AK, CA, CT, NH, NJ, NY, RI and WV with all limits. Will consider all classes. Prime is rated B+. Quaker Special Risk An E&S broker that operates with GL limits of $1 million/$2 million (excess/umbrella $10 million). Target classes are amusement parks, water parks, inflatable amusement devices, go-kart tracks, climbing walls, tennis centers, and tennis/racquetball centers. Several carriers are used to place coverage. Roush Insurance Services, Inc. An MGA/E&S broker that operates in IL, IN and OH with GL limits of $1 million/$2 million aggregate with excess up to $20 million, and property limits of $1 million in-house with higher limits available. Target classes are hole-in-one, moonwalks, carnivals and children’s rides. Will not write trail rides, water parks, hot air balloon rides or rain insurance. Can offer D&O, auto 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 CT, MA, NJ, NY, PA, VA and VT with limits of up to $2 million/$3 million and higher. Target classes are laser tag, arcade machines, go-karts, pony rides, climbing walls, kiddie rides, canoe trips, golf driving ranges, campground owners, horse/carriage rides, miniature golf, swim/tennis/racquetball centers, batting cages, canoe/paddle boat rentals, dunk tanks, and simulator rides. Will not write inflatable amusement devices, adult amusement rides, bungee jumps, ATV rentals, paintball games or trampolines. Can offer GL, liquor liability, excess liability, property, and inland marine. All carriers are rated A- or better. Specialty Risk Associates, Inc. An E&S broker that operates in AL, AR, LA, MS, OK and TX with limits of $1 million/$2 million. Target classes are amusement devices, moonwalks, golf courses, and tennis/recreational centers. Scottsdale, Colony, National Fire & Marine, and Capitol Specialty are the carriers. USG Insurance Services, Inc. An MGA/E&S broker that operates in all states except AK and HI with limits of $1 million/$2 million/$2 million (virtually unlimited excess capacity). Target classes are amusement parks, water parks, golf courses, tennis/recreational centers, paintball, laser tag, confidence courses, ropes courses, family fun centers, and arcades. Can offer property, casualty, professional, hole-in-one, and prize indemnity. Various admitted and nonadmitted carriers are used to place coverage. W.H. Greene & Associates An MGA/E&S broker that operates in NY and PA with limits of up to $1 million/$2 million/$1 million/$1 million. Target classes are batting cages, golf driving ranges, discovery zones, tennis, miniature golf, laser tag, family fun centers, sports complexes, video games/arcades, kiddie parks/rides, bumper boats, hole-in-one, go-kart tracks, and paintball. Will not write bounce houses, moonwalks, or trampolines. Can offer property, inland marine, and umbrella. All carriers are A rated. 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 consider water parks, trail rides, or weather insurance. Can offer GL, property, and floaters. Western World is rated A+ as is Tudor. Yates & Associates Insurance Services, Inc. An MGA that operates in CA only with limits of $1 million/$2million/$1 million (excess/umbrella also available). Will consider all classes. Can offer E&O and professional. All admitted and nonadmitted carriers are rated A+. * Correction Costanza Insurance An E&S broker/MGA that operates nationwide with limits of $5 million. Target classes are security/alarm installers and monitoring/investigators. Can offer liability and workers comp. Zurich is the A rated carrier. |
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