Transportation Tops Outdoor Program Risks; Wildfires Also An Issue

Getting there may be half the fun, but its also a major part of the risk that needs to be managed by the operators of outdoor adventure programs, according to insurance experts involved with such programs.

Risk managers and a managing general agent who places insurance for this business each highlighted transportation safety on the nations roadways as a key issue for the operators of organized adventure programs during recent interviews with National Underwriter. Such programs can include activities like backpacking, rock climbing, mountain biking, hiking, canoeing, and hunting.

A pair of warnings released by the National Highway Transportation Safety Administration concerning the rollover propensity of 15-passenger vans in the last two years have created “quite a stir in our industry,” according to Drew Leiman, risk management director for National Outdoor Leadership School in Riverton, Wyo.

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

But recent media attention on 15-passenger vans is “something we need to be cognizant of,” he said. “It is definitely influencing our strategies here,” he said, also citing the NHTSA warnings released in April 2001 and in April 2002, which said that the rollover rate of 15-passenger vans carrying 10 or more occupants was nearly three times the rate of lightly-loaded vans.

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

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

“That begs the question, Do you have more risk with more vehicles on the road? That seems to make sense, but there is no data to say one way or the other,” he said.

Lewis Glenn, vice president, safety and programs for Outward Bound U.S.A., said that his organization is continuing a focus on making 15-passenger vans safer or discontinuing their use altogether.

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

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

Mr. Glenn noted that other concerned organizations are “being more conservative.” Because initiating changes takes money and time, Mr. Glenn said the organization is looking at what it can implement immediately.

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

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

Those vehicles are used for short day trips and therefore are not overloaded with baggage, he said.

Underwriting guidelines specify that drivers under age 21 may not transport people, he said. Motor vehicle reports are run on every driver and every vehicle or bus over 15 years old requires an inspection, he said.

Turning directly to insurance matters, these experts said that while most types of applicable insurance coverage are still available for outdoor adventure programs, higher insurance rates are affecting this specialty segment.

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

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

Outward Bound was able to obtain all the coverages that had been available in the past “except aviation insurance for chartering planes under 30 passengers,” he said. “The cost was going to be prohibitive.”

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

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

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

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

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

Because wildfires have caused the closing of national parks and state forests, “it becomes a business interruption by civil authority issue,” he said.

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

“They closed the forest. So a lot of our outfitters couldn't operate in some of the parks,” he said.

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

(This year, insurers will pay about $120 million to homeowners and businesses in Arizona alone for property losses from the recent Rodeo-Chediski Complex wildfire, according to an estimate released by the Jersey City, N.J.-based Insurance Services Offices Inc. in July.)

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

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

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

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

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

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

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

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

Special Reports /

Transportation Tops Outdoor Program Risks; Wildfires Also An Issue

Related Stories

Recommended For You