Let’s talk skiing and insurance.
As we ring in the New Year most of us will head back to a busy office and try to finish up our January 1 renewals. Others of us will head off to a ski resort to enjoy the slopes and packed powder. Which brings us the Community’s New Years Topic about the dangers of the slopes and how to insure them.
I started skiing later in life so I still have the fear of being wiped out on the hill. I am not fearful of my own skiing, as I am a controlled non risk taking sort. It is all those crazy skiers, or often, snowboarders coming down the hills at an uncontrolled speed. There is no worse sound then a snow boarder skidding across ice behind you which gives you just enough time to turn your head and feel the impact of the collision. For those of you that have had this happen you know the next thing that happens is that the skier/snowboarder quickly gets up and speeds right by you. And that is why you never ski alone—you need someone fast on their skis to catch the assailant, find their parents (they always seem to be fun-loving young adults usually on winter break) and verify the liability limit on their Homeowners Policy. Or more, correctly stated, their parent’s Homeowners Policy. This is when we put the policy to its real test in terms of who is an “insured” and what the limits are on the policy.
While all sports have their risk of injury; according to data from the Consumer Product Safety Commission‘s (CPSC) National Electronic Injury Surveillance System (NEISS), in 2007-2008 alone there were 101,111 ski related injuries in the US. Statistically most ski accidents happen due to the carelessness of the skier themselves. Other accidents can be due to conditions on the mountain (even avalanche); breakdown of machinery/equipment on the hill such as lifts and equipment failure such as faulty skis. The insurance issues relating to skiing often involve unique legal issues and involve several different parties that could be responsible for loss and damages.
Many states have instituted a Ski Safety Act that defines, and in most cases, limits the responsibility of the ski resort operators themselves. The laws recognize that there are inherent risks in the sport of skiing/snowboarding, which should be understood by each skier and which are essentially impossible to eliminate by the ski area operator. It is the purpose of the Ski Safety Act to define those areas of responsibility and affirmative acts for which ski area operators shall be liable for loss, damage or injury and those risks which the skier or passenger expressly assumes and for which there can be no recovery. Examples of states with the act include Colorado; Michigan, Massachusetts; New Mexico, Washington; Alaska and North Carolina. With so many ski resorts in California there is no Ski Safety Law on the books. In fact in October 2010, California Gov. Arnold Schwarzenegger vetoed AB 1652 sponsored by the California Ski and Snowboard Safety Organization. This bill would have established California as a national leader in ski safety. The bill promoted safety by requiring better signage, accident and injury reporting and mandatory helmet use for children. The various laws are specific to the various states but do have a commonality is some of their language. What follows is an excerpt taken from Colorado Ski Safety At section 33-44-109. Some of the responsibilities listed include:
1. A skier’s responsibility for knowing the range of his own ability
2. Skier’s acceptance of the legal responsibility for any injury to person or property resulting from any inherent dangers and risks of skiing
3. The duty to maintain control of his speed and course at all times
4. The requirement that a skier stay clear of snow-grooming equipment, lift towers, etc
5. The responsibility for each skier to heed all posted information and warning and not go out-of-bounds.
FEBRUARY 22, 2010 Out of Bounds Skiers Are Threat to Others The new snow this weekend tempted two skiers at Aspen Highlands to duck a rope and head into out-of-bounds territory. They were spotted by a ski patroller who followed the pair. An avalanche was triggered by the skiers and partially buried the ski patroller. The patroller extricated himself from the slide Sunday and wasn’t hurt. The skiers left, and resort officials weren’t able to find them. Those that duck ropes and ignore ski area rules put others in harm’s way. http://www.skisafety-blog.com
6. Requirement that each ski or snowboard used while skiing to be equipped with a strap or other device able of stopping the ski or snowboard should the ski or snowboard become unattached from the skier One of the most important items, in my opinion, is the skier’s responsibility if they injure anyone on the hill. The Colorado statute states:
7. “No skier involved in a collision with another skier or person in which an injury results shall leave the vicinity of the collision before giving his or her name and current address to an employee of the ski area operator or a member of the ski patrol, except for the purpose of securing aid for a person injured in the collision; in which event the person so leaving the scene of the collision shall give his or her name and current address as required by this subsection (10) after securing such aid.” For a complete listing of Ski Safety Acts by state refer to http://www.skilaw.com/skistatelaw.html.
Clearly all of these laws attempt to hold an individual responsible and limit the liability of ski resorts and operators. There is still the absolute requirement that a ski resort carry liability limits that are adequate as well as an Umbrella Policy to provide protection for any claims for negligence resulting in Bodily Injury or Property Damage.
Then there are the more peculiar losses that a resort might sustain which are often the most difficult to insure and quantify. These are losses such as bad snow conditions resulting in too much snow; too little snow; or closures in the area due to weather curtailing traffic into the resort. All of these situations can result in a loss of business income to the resort in a business environment that cannot easily afford any additional financial loss. Standard Business Income policies do not respond to a loss of income due to snow conditions. In order for a typical Business Income Policy to respond there would have to be damage to property by a peril insured against and as a result the insured would have to demonstrate they were losing income. Clearly the test has not been met for “weather” or lack of “weather “as the causation of a loss of income.
The only solution to the issue of weather related income losses would be to approach a company specializing in Weather Risk products. Weather Risk products for lack of snowfall have existed for years now and, depending on the provider, the coverage may be offered as an insurance policy or a derivative. Cost may be a factor as weather derivatives can prove to be an expensive solution.. One company that provides weather insurance to a wide variety of weather sensitive businesses is Weatherbill. According to a press release in Business Wire November 15, 2010 “WeatherBill Becomes First Insurance Company Focused Exclusively on Protecting Businesses against Financial Impact of Climate Change” WeatherBill uses a technology-enhanced approach to automatically create customized weather insurance plans that reflect each policy holder’s unique needs to mitigate weather-related financial loss. Jeff Hamlin, Director of Product marketing for WeatherBill and a member of the Insurance Community Center shed some light on the challenges in providing Weather insurance for ski resorts.
Jeff stated: “It is difficult to write insurance for many of these resorts because we lack the necessary data to calculate the probabilities of a ‘low’ snowfall year. Most resorts want to guarantee that they will get a certain number of inches of snow in the weeks leading up to Christmas week or Presidents Day weekend (since these are the weeks that make or break the financial year for many ski resorts). But unfortunately snowfall is not measured by any independent third-party sources at these locations. We often have snowfall data for another location somewhere in the area, but ski resorts are located in the locations where they are located precisely because those locations tend to be snowier than the surrounding areas. So a snowfall report from a location that is 10 miles away from the resort with a 1,000 foot elevation change can have a very low correlation with what actually falls at the resort. Part of this problem could be solved by installing a new third-party weather station at the resort to monitor snowfall. That would at least allow us to know how much snow fell this year to allow us to settle claims. But it wouldn’t solve the rating problem. If we don’t have historical data about how much snow has fallen at that specific location in the past, we don’t know what the loss ratio might be and can’t rate the risk.
These problems are a bit easier to solve for some East Coast and Midwestern ski resorts that don’t rely on natural snow, but instead rely on snow making. These resorts just want a guarantee that they won’t have a stretch of warm weather leading into the Christmas or Presidents Day weeks. If the weather is cold enough, they can keep snow on the mountain and keep making more of it. But if temperatures get too warm, they have snow problems. There is reliable temperature data for most of these locations and can provide protection against unusual mild weather that comes at the wrong time and affects holiday ski revenues at these resorts. And some resorts in Minnesota, Wisconsin and Michigan actually look for the opposite. They want protection against the possibility that Christmas week or President’s Day week will overlap with a stretch of days when temperatures are too cold. They know that if the day time highs are below zero, many people will say it is too cold to go skiing and just stay home. So we also protect ski resorts against untimely bitter-cold weather that keeps skiers away from the resorts.“
So next time you pack up your skis to head to the slopes, I suggest you check the weather. Snow reports are available on several websites. If rain is your concern, for example when planning a golf outing to Ireland, WeatherBill now has a site at http://www.raincheck.com where you can purchase an insurance policy for vacation days that are ruined by too much rain. When all is said and done, maybe it’s safer to head back to the office and finish those January 1 renewals. At least you won’t be in harm’s way. All of us in the Community wish you a happy and healthy New Year.