What’s the Risk?
Insurance is regularly looked at as a necessary evil. It’s not
the sexiest thing you can buy in the ski industry, but it
does come in handy, a lot. In its simplest form, insurance
is considered a transfer of risk. In exchange for premium
dollars paid by the insured (ski resort), the insurer (car-rier)
offers to take on the risk associated with the exposure
at a resort.
Deductibles can vary from $2,500 upwards of $500,000.
Quite often, the size of the deductible relates to the size of
the ski area. The exception to this rule is when a ski area has
a robust risk management program in place and they assume
greater liability by way of a higher deductible. In exchange
for a higher deductible, the ski resort might see a reduction
in premiums because of what they self-insure or the amount
of “skin in the game” as industry calls it. The more a resort’s
employees know about what is at stake, the more likely
they are to take ownership and make an impact in a risk
management program specific to their department.
The goal of insurance is to make the insured whole after
a loss. If a lodge burns down in a fire, rebuilding the lodge is
critical to the business and working with a claims adjuster,
broker and carrier are all part of the process. Preventing the
lodge from burning down is equally important. All losses are
not preventable, but buying insurance transfers the risk away
from the resort. Try to focus on the high frequency and low
severity losses, and how your team can reduce the number of
these nuisance claims. You can’t always prevent catastrophic
losses that are high in severity and low in frequency, but it is
for these types of claims that insurance is most valuable.
The balance-sheet risk taken by the carrier is crucial
for paying covered claims and defending ski areas against
lawsuits. To make this class of business more palatable,
Enhancing a ski area’s risk
management program could
improve the bottom line
By Tim Barnhorst, MountainGuard Insurance
snowopsmag.com | SnowOps 51