Catering to these enthusiasts is an industry of guides, outfitters and renters who supply rafts, kayaks and canoes for those nature lovers. For a few months a year, professional guides and outfitters provide the equipment and apply their unique knowledge to give vacationers memorable adventures along the rivers. It is the knowledge of guides and outfittersand risk management practicesthat keep these activities safe for most participants.

However, like other small businesses, those in the paddler industry are faced with insurance challenges. What makes this exposure unique is that it is a seasonal business with what are perceived to be tremendous risks in some activities that make many insurers wary.

“This is an industry that does a lot toward risk management,” said Jim Sattler, an owner of Sattler Insurance Agency, an independent agency in Lewiston, Idaho. “They are highly professional.”

While his agency deals in all lines of insurance, Mr. Sattler is one of only a few agentsless than a dozen throughout the countrywith the experience and expertise in writing recreational risks, including whitewater rafting trips.

Back in 1979, when he became involved in recreational risk to provide coverage locally for whitewater outfitters, guides and jet boats, there were not a lot of players in the market. Sattler Insurance developed a relationship with Albany Insurance Company for about 13 years and provided programs for whitewater outfitters and guides.

The program today is national but no longer with Albany, which was purchased by another carrier in 1997 that did not want the riska familiar story for this line.

That same year, the agency introduced “River-Pak,” a broad general liability program allowing outfitters to put inland marine risks onto the plan to cover equipment. The program was with Frontier Insurance.

“It was a very good program,” noted Mr. Sattler. “It was the lead in the industry for a couple of years, as far as the coverages.”

While his agency dominated the recreational market west of the Mississippi, in the East the main agency was BGS&Gwhich eventually was acquired by CBIZ Insurance Services, which continues with a presence in the market today.

In 2000, Frontier went into rehabilitation, and again the recreation industry Mr. Sattler represented had to look for a new carrier. This time, his agency ended up working with K&K Insurance, a managing general underwriter based in Fort Wayne, Ind.

The saga of changing carriers and limited markets has not changed. During the soft market of the 1990s, there were 17 markets available for all recreational classes, said Mr. Sattler. Today, there are possibly sevenand only three of those markets handle the big river, whitewater risks, he noted.

Mike Fetchero, senior vice president with CBIZ Insurance Services in Cumberland, Md., said that although the general commercial insurance market is softening, recreation accounts with decent loss history are still seeing increases from 5-to-8 percent. Capacity is not an issue, with such carriers as Lexington Insurance (a unit of American International Group), Tudor (a member of Western World Insurance Group in Franklin Lakes, N.J.), and even access to Lloyd's available, he noted.

“It's a little harder than the rest of the market,” he said.

Since it is a small class, any serious loss activity can affect the business, and some of the loss experience “has not been so great.”

“A lot can happen on a trip dealing with nature,” said Mr. Fetchero. “A river, by itself, can be unpredictable. There are also concerns with individuals health. You only have to have a handful of serious injuries to use up the premium.”

Lita Mello, business unit leader with K&K, said that from an underwriting standpoint, risks are written on a case-by-case basis. An outfitter may do more than just rent watercraft or provide a guide. Some have retail businesses, camping excursions and restaurants to round out their business, but it is the water classification that drives the risk.

Whitewater is classified in classes from “1″ to “5,” with “Class 1″ for the calmest rivers and “Class 5″ for the roughest rapids. In some casesrarelycan the classification go up to “6,” which could be considered treacherous or most challenging to paddlers.

To control the exposures, there are two important steps outfitters take from a risk management perspective, according to Ms. Mello. One is training and knowledge of the river, she noted. There is often some form of training for the vacationing paddlers before entering the water to ensure they have an understanding of what they are getting into.

“The larger outfitters are more sensitive to risk management,” she said. “They work to lower the possibility of a claim. They have to be cognizant of the risk they have.”

The other important aspect of risk management is the waiver/release agreement that paddlers sign before going onto the river. “[This] is an important part of this program,” she said. “In this class of business, there is always the possibility of accidental injuries, particularly when there are exposures to Class 4 and 5 rapids.”

“There are some fantastic professionals out there, but fatalities can occur,” warned Mr. Sattler. “The shock-loss reverberates through the entire industry.”

Ms. Mello noted that premiums today range from a minimum of $2,000 on general liability, with average premiums of around $7,000. Coverage is written on a surplus lines basis through Lexington.

Deductibles can range from zero to $5,000, per claim, noted Mr. Sattler. Limits vary from risk to risk.

However, auto and property is available in the admitted market, said Mr. Fetchero, at least in the East.

One of the few others in this line is Gillingham & Associates Inc., based in Westminister, Colo. Glenn Sudol, president of the managing general agency, runs a national program that covers guides, outfitters, lodges for hunting and fishing, and campgroundsbut it limits the exposure.

“Our market is not thrill seeking,” he said. Their river risks cover the scenic float tripsno higher than Class 3 rapids. They will go as far as to cover fishing excursions that require portage over rivers, but not if the trip involves rapids.

Even with this limited risk-taking, the firm recently had to find a new carrier after Gulf Insurance (a unit of St. Paul Travelers) pulled out. The program is now with Arch Insurance Group.

“We have a good product and competitive pricing for what we do,” according to Mr. Sudol. “Our knowledge of these accounts fortifies our position and helps with stability” in the market.

Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 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.