Loop 034 printable

Volume 2, No. 10. June 14, 2002

Down underwriting
Except in the amusement industry, many trade and professional associations offer insurance programs for their members. Now, the Australian Amusement Leisure and Recreation Association has moved into the insurance realm as a reaction to what its leaders call a “public liability crisis.”

“The public liability climate in this country and its impact on the amusement industry is in a worse predicament than anywhere else in the world,” said Steve Peet, AALARA president and chief operating officer for Warner Village Theme Parks Group. The climate has grown increasingly uncomfortable for amusement venues and activities, including sports centers and even beaches, because of a highly litigious public and uneven government regulations that, in the event of the slightest violation, could land an operator and inspector in jail. “The way the government has been going they are more about prosecution than implementation,” Peet said. “You have trouble getting inspectors and engineers to sign off on rides and attractions because of possible prosecution.” Consequently, fewer underwriters are willing to provide liability insurance for amusement venues.

At its annual conference and trade show May 21, AALARA unveiled a reform of its own. AM-SAFE is a three-pronged product available for a fee through AALARA Risk Management that ultimately helps members and nonmembers obtain liability insurance.

The first step involves training. AALARA has engaged with a team of risk management experts to visit amusement venues and write their operations manuals and safety checklists based on the nationwide Australian standards, AS3533, governing amusement facility design and operations. The second step involves a certificate of accreditation, either for those venues AALARA has trained or for those who already have risk management systems in place. Accreditation of some sort is a prerequisite for most underwriters.

The third element is the insurance itself. AALARA Insurance is a combination of the association and IEA Brokers, the largest supplier of sports insurance in the country. “There will be a lot of people throughout the industry asking, ‘Why would you want to annex the association’s name to the insurance?’” Peet said. “We are providing a service for our members.” Furthermore, the company structure protects AALARA from damage claims, Peet said.

“Whilst we are very much involved with the whole loop, from the risk management product through to the insurance, the insurance coverage is conducted by the brokerage firm sourcing appropriate underwriters,” he said. “I think it’s absolutely a move that needs to be made.”

Initial response from AALARA members has been positive, Peet said, and he thinks peer pressure throughout the industry will entice more amusement industry operators to purchase AM-SAFE. AM-SAFE is also designed to assist operators in managing the associated risks on an ongoing basis as well as enabling them to get insurance.

In the meantime, the association continues to fight the public liability battle on the political front. Australia has no rider responsibility type of law. “This country has had a very, very poor system in regards to the laws of negligence,” Peet said. However, the regulations that govern occupational health and safety also applies to users of “high-risk plant,” which also refers to patrons riding on amusement devices and not just the owners and operators of these devices. Peet’s own Wet ‘n’ Wild has used this “very thin opportunity” to place responsibility for ride safety on the shoulders of patrons as well as the operator.

“It’s a bit of an abstract situation because ideally the act is written for heavy industrial equipment,” Peet said. The Queensland government, where the Warner Village Theme Parks are located, has supported the interpretation, but other provincial governments are less willing to embrace the concept. “Our association believes we do not have to lobby (for rider responsibility laws),” Peet said, “but we are lobbying from the point of view of getting governments behind the fact it’s already within their own regulations.”