When spring rolls around next year and the country begins to shake off the doldrums of winter, insurance agents have an opportunity to celebrate by seeking out some fun new accounts – because that’s when the burgeoning outfitters and guides sector starts to seek out coverage, says Lita Mello, senior vice president over recreation with K&K Insurance.
Though no firm statistics tell the story of the tremendous growth in this industry, Mello says the nation’s increased focus on fitness has given rise to more whitewater rafting, rock climbing, hiking, fishing and camping across the country.
“We see thousands of submissions every year,” she said. “As the proliferation of social media and travel shows on television grows, more people are becoming interested in heading outdoors.”
Though the activities vary, the necessary coverage is fairly similar. Most accounts require general liability and commercial auto, while limits depend heavily on the activity and risk management practices put in place by the operation’s owners.
Whitewater rafting and rock climbing typically require higher liability limits, as do the increasing number of operations catered to Baby Boomers and other aging populations.
While some agents may be hesitant to break into the space due to a perceived high degree of risk, there are several ways they can screen for the best applicants. The most important tool is legal release form, says Mello.
“A waiver or release is very important. Agents should get a copy, review it with an attorney, and provide it to the underwriting staff to make sure it covers all the necessary exposures,” she said. “It’s our first line of defense.”
A guide’s level of experience is another important clue. K&K requires its insureds to have been in business for at least one year or to have three years of equivalent experience in order to qualify for its outfitters and guides program. This ensures the account is a good risk and reduces exposure to claims.
It’s also important to remember that many of these programs are heavily regulated through local and state statutes, restricting how, when and why you can sue outfitters for injury.
“Even though you can feasibly have very serious injuries and even deaths on some of these expeditions, these statutes and company waivers ensure the participants take that risk into consideration when they set out,” she said. “It’s not actually something we see a lot of claims on.”
Of course, agents can – and should – also do a physical examination of the area and activities involved. While there may not be true premises coverage, a visit to the river and an inspection of canoes, for example, will further inform both the agent and underwriter and ensure appropriately priced coverage.
Due to cash flow, Mello says the best time to approach these accounts is right before they open for business – usually in the spring, between March and May.