Volume 3, No. 4. February 28, 2003
Ensuring
insurance
A
surefire way to get mild-mannered park operators cursing is to utter one word:
“insurance.” An article in the upcoming March issue of Amusement
Today delves into the current state of the insurance industry, which has
plagued many small park operators with the fact of rising rates and the specter
of shrinking suppliers.
Ironically, the smallest of amusement operators are relatively incubated from
such woes, thanks in part to the group insurance program run by the International
Association for the Leisure and Entertainment Industry (IALEI). Of IALEI’s
510 facility operator members, 337 participate in the program, which provides
liability, property and umbrella coverage through broker Sterling & Sterling,
Inc.
“I don’t think there’s any insurance group out there that hasn’t
been affected by the sweeping changes across the insurance marketplace,”
said Ed Pearson, general manager of Castle Park in Riverside, California, who
serves as IALEI treasurer and co-chair of the Insurance Committee. “Have
we fared better than most? I think we have in that prior to the (rate) increases
we were sitting in pretty good shape for the way our rates were being assessed.”
The program has seen a rate increase in the 35 percent range, said Ray Sjolander,
IALEI director of finance, which is considerably lower than the 50 percent increases
reported elsewhere. Furthermore, because IALEI’s is a group insurance program,
member operators are seeing lower premiums compared to what they would see if
they bought insurance as individual operators.
The biggest boon for those members, however, is that they have access to insurance,
period. The number of members purchasing IALEI’s insurance has grown 56
percent the past two years. “We attribute that not only to the merits of
the program but the state of the industry and operators not being able to find
coverage on their own,” Pearson said.
IALEI launched its insurance program in 1997. It has now matured to the point
that Sterling & Sterling have enough representative actuarial data to try
to keep its coverage terms and prices competitive. “It appears to me the
program is very successful,” said Wayne Pierce, an adventure industry lawyer
in Baltimore, Maryland, and co-chair of the IALEI Insurance Committee. “The
ultimate proof is that there is a viable carrier to play ball. A lot of folks
can’t get insurance, and those that do have bone-jarring rate increases.”
When IALEI, formerly the International Association of Family Entertainment Centers,
formed, one of the organization’s major emphasis was to create group-buying
programs for its members. “We thought the insurance program was the logical
way to go,” Pearson said. Other associations have tried similar programs,
and the World Waterpark Association originally formed explicitly for the purpose
of group insurance. Last year, the Australian Amusement Leisure and Recreation
Association formed a group insurance program predicated on its members earning
a certification through prescribed training (THE
LOOP, June 14, 2002).
Except for AALARA’s fledgling program and IALEI’s mature one, the
rest have faltered. One reason IALEI’s has lasted is its standards for
participation. “A couple of elements we as the administrator wanted to
shy away from because of experience ratings,” Pearson said. “The two
major ones were hard ride parks and water attractions.” The former is defined
as any park with a roller coaster (other than kiddie coasters), the latter refers
to water slides and pools. These standards negate IALEI’s chief benefit
to a segment of the industry the association is trying to recruit, namely amusement
parks with annual attendance of up to 400,000. Many of those have coasters.
But many also are studying IALEI’s potential and, in particular, its insurance
program, Sjolander said. “The roller coaster will prevent them from participating
in the insurance program,” he said. “At least for now.”
THE LOOP is written and produced by Eric Minton, Minton Enterprises, LLC. To see more examples of Eric Minton's work and Minton Enterprises services, visit www.ericminton.com.
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