Transportation Tops Outdoor Program Risks; WildfiresAlso An Issue

Getting there may be half the fun, but itsalso a major part of the risk that needs to be managed by theoperators of outdoor adventure programs, according to insuranceexperts involved with such programs.

Risk managers and a managing general agent who places insurancefor this business each highlighted transportation safety on thenations roadways as a key issue for the operators of organizedadventure programs during recent interviews with NationalUnderwriter. Such programs can include activities likebackpacking, rock climbing, mountain biking, hiking, canoeing, andhunting.

A pair of warnings released by the National HighwayTransportation Safety Administration concerning the rolloverpropensity of 15-passenger vans in the last two years have created“quite a stir in our industry,” according to Drew Leiman, riskmanagement director for National Outdoor Leadership School inRiverton, Wyo.

Mr. Leiman said his organization, which trains instructors foroutdoor adventure programs operated by Outward Bound USA, the YMCA,universities and other organizations, has an “exemplary” safetyrecord and has always focused on transportation issues.

But recent media attention on 15-passenger vans is “something weneed to be cognizant of,” he said. “It is definitely influencingour strategies here,” he said, also citing the NHTSA warningsreleased in April 2001 and in April 2002, which said that therollover rate of 15-passenger vans carrying 10 or more occupantswas nearly three times the rate of lightly-loaded vans.

“We're modifying our use of those vans and strategizing aboutwhat to do in the long term,” Mr. Leiman said.

He said that options are to go larger, with buses, or to gosmaller and have more vehicles on the road.

“That begs the question, Do you have more risk with morevehicles on the road? That seems to make sense, but there is nodata to say one way or the other,” he said.

Lewis Glenn, vice president, safety and programs for OutwardBound U.S.A., said that his organization is continuing a focus onmaking 15-passenger vans safer or discontinuing their usealtogether.

“What's recommended by the National Highway TransportationSafety Administration is a small school bus,” he said.

The school buses, which he described as being “built like atruck,” are safer because they have a lower center of gravity andstronger frame, he said. Also recommended are the types of busesthat are sometimes used at airports to transport passengers frombaggage claim areas to remote rental car sites, he said.

Mr. Glenn noted that other concerned organizations are “beingmore conservative.” Because initiating changes takes money andtime, Mr. Glenn said the organization is looking at what it canimplement immediately.

Such immediate actions include: the removal of roof racks;driving partially-loaded instead of fully-loaded vehicles; havingfewer passengers riding towards the front of the vans; and usingadditional vehicles to haul extra people, cargo, packs andequipment.

Glenn Sudol, executive vice president and underwriting managerfor Gillingham & Associates in Westminster, Colo., a managinggeneral agent, claims that his agency has the largest program inthe United States for insuring transportation vehicles forwhitewater rafting programs.

Those vehicles are used for short day trips and therefore arenot overloaded with baggage, he said.

Underwriting guidelines specify that drivers under age 21 maynot transport people, he said. Motor vehicle reports are run onevery driver and every vehicle or bus over 15 years old requires aninspection, he said.

Turning directly to insurance matters, these experts said thatwhile most types of applicable insurance coverage are stillavailable for outdoor adventure programs, higher insurance ratesare affecting this specialty segment.

“For us, it's business as usual, but more expensive,” saidOutward Bounds Mr. Glenn.

Outward Bound, an outdoor adventure education program for adultsand youths headquartered in Garrison, N.Y., insures 41 base campsand their contents in the United States and one in Mexico, Mr.Glenn said. The organization, which has averaged about 30,000students a year for the past decade, provides insurance coveragefor its board members, volunteers, vehicles, buildings andproperty, he said.

Outward Bound was able to obtain all the coverages that had beenavailable in the past “except aviation insurance for charteringplanes under 30 passengers,” he said. “The cost was going to beprohibitive.”

The organization elected not to renew the coverage. “We will notfly, or offer that as part of our courses,” he said.

The organization's umbrella policy saw the highest priceincreases, he said. “Several years ago we locked in at a very lowrate for very high limits of coverage. We got a good deal, but thecontract ran out,” Mr. Glenn said.

Mr. Glenn said Outward Bound has a 25-year relationship with TheSt. Paul Companies, which he said provides “guidance, informationand training support.” In a separate interview, however, The St.Paul said it no longer accepts new business of this type. “Ourfocus now is on small commercial Mom and Pop business,” saidspokesperson Andrea Wood.

At Gillingham & Associates, which insures all lines exceptfor workers' compensation for destination resorts, guest ranches,and outfitters and guides, Mr. Sudol said “reinsurance drives themarket. So our rates have been affected like everybody else's,” hesaid.

He also said that recent wildfires have affected rates on“almost a case-by-case basis.” The wildfires affect his firmbecause it insures a large percentage of the guesthouses andresorts that are in the Colorado mountains, he said.

Because wildfires have caused the closing of national parks andstate forests, “it becomes a business interruption by civilauthority issue,” he said.

The biggest losses due to wildfires were last year in Wyoming–”aterrible year for forest fires,” he said. “There were a lot ofclaims out of that for loss of property, business interruption.

“They closed the forest. So a lot of our outfitters couldn'toperate in some of the parks,” he said.

Hunting guides who hold permits in designated areas and are toldthey can't operate in those areas can get “stuck with an insurancebill and no clients,” he said. “We've gone back to some clients andsaid, 'Send a note about what happened and we'll get some moneyback to you.'”

(This year, insurers will pay about $120 million to homeownersand businesses in Arizona alone for property losses from the recentRodeo-Chediski Complex wildfire, according to an estimate releasedby the Jersey City, N.J.-based Insurance Services Offices Inc. inJuly.)

Mr. Glenn said Outward Bound U.S.A. is affected by wildfiresevery year, but that the organization has not had to closelocations or cancel programs because of them so far this year.

Mr. Leiman said NOLS closely monitors wildfires and othersituations in parks where training exercises are scheduled.

“We're fortunate because we're established and have goodrelationships with the [park] agencies,” he said. “We can move fromone forest to another and they'll work with us.” Some smallerorganizations have more difficulty in this regard, he said.

In terms of other wilderness risks, Mr. Leiman said NOLSconstantly evaluates and analyzes risks, which include rockfalls,large rivers, oceans, weather and avalanches. “We state clearlythat we cannot ensure anyone's safety on a course,” he said.“Things can happen that are well beyond our control. But we managethe risks.”

Identifying risks is the organization's emphasis, he said.Potential leaders are taught to identify hazards and students areinformed of the inherent risks of the program.

“They're the real risk managers,” Mr. Leiman said. “They're theones out there, day to day, making decisions based on the weather,on the students' abilities and performance, on other environmentalfactors and the terrain.”

Mr. Leiman said NOLS has been able to renew coverages, butpremiums are higher. “I've heard of some underwriters not coveringthings like rock climbing, but that hasn't affected us yet,” hesaid.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 5, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.