Camps Can Be Overnight Success For Experienced Insurers

By and large, camp insurance is following most commercial insurance in that it is more expensive,” according to Ron Norton, a sales executive with Indiana-based K&K Insurance.

While prices generally have been on the rise, it has not stopped K&K or other insurers who offer camp insurance for youths from making it a profitable line to sell.

For parents, sending their children off to a summer camp can be a blessing. For those who run the camps, securing the proper insurance can be as sticky an issue as the summer heat if they don’t know the right place to look.

It is expected that approximately 10 million campers will be doing everything from volleyball to making artwork this summer across the country at the nearly 12,000 camps that have been set up as both educational and fun experiences for the nation’s youth. Making sure those camps are properly insured has been a profitable business for a number of companies.

California-based Abram Interstate offers a program that is underwritten by Markel Insurance Co. Abram Interstate president Ron Abram notes that the summer camp program has been a winner for the insurer.

“This kind of underwriting has been profitable for us,” Abram said. “The reason they (Markel) are good at it is because they have tailored a policy to meet the specific needs of summer camps. They are the ‘Cadillac’ if you will of this industry policy. We predominantly offer the program in California, but also some in Colorado, Arizona and Nevada. Interestingly enough, the summer camp business is heavily concentrated on the East Coast. There are opportunities to write it here in California, but you see more day camps than overnight camps.”

Abram said that those individuals or companies running camps should not expect to get top-of-the-line programs without paying the appropriate amount of money for what the coverage is worth.

“The camp operators are looking for price, but to get adequate coverage, you don’t get cheap prices. It is just a reality,” Abram commented. “Because you have a policy tailored to meet the needs of a specific exposure, you get a few things that are included in there, driving the price up.”

For K&K, the company’s background in motor sport racing built a platform to enter a number of high-risk types of activities.

“We have exposure in all 50 states, but our concentration is in the Northeast,” Norton said. “I think the camps being in the Northeast is just a cultural thing—a way of life—back there.”

Typical things to cover at summer camps include kitchen exposures, sexual molestation and water exposures.

“One of the things you see a lot is playground exposures,” Abram added. “Particularly the covering on the ground that the equipment is on. There is a lot of engineering and risk management that Markel provides. They have a safety inspector who goes out and looks at the various insured locations to see what risks are involved. A lot of times, both medical and accident are written for the camp counselors themselves. The counselor will come to the camp and may not be in good condition. They get an injury and it drives the medical costs up.”

Norton notes you have “water activities from skiing to swimming to kayaking and canoeing. There are also fire exposures as a lot of the dining halls prepare their own meals. Most of the time, the properties are in Protection Class 9 and 10 with frame structures in a dense forest setting for the overall experience of camping.”

Abram points out it is also important to cover when the children are attending the camp, but leave the grounds for a period of time.

“The camp is absolutely responsible for them,” Abram said. “One of the big exposures is the driving to and from, and alcohol —those are huge exposures for counselors. Generally, in an overnight situation, the kids can’t leave the camp. And for the counselors, they’re very closely scrutinized so that there is not that exposure to drugs or alcohol.”

Kim Becker, account executive/manager of camp department for New York-based Sobel Affiliates Inc., is part of a staff that underwrites camp liability, property, accident, EPL, and other coverages. Sobel has insured camps for three-quarters of a century.

According to Becker, the company has doubled in size in camp accounts written the last few years.

“We can write in all 50 states, but we primarily concentrate in the Northeast,” Becker said. “Our top three states are Massachusetts, New Hampshire and Maine.”

Becker points out the exposures you have with an overnight camp are different than a day camp, and children being injured during participation in a camp can really impact costs.

“While property damage can pretty much be quantified, if a child is injured while on campgrounds you encounter medical and other expenses that can climb rather quickly,” Becker said.

According to Becker, Sobel actually manages a high-limit camp umbrella program and “when we first started with the program, we offered $25 million of coverage. For the last two years, we were offering $100 million and this year the program has the maximum option of only $20 million in coverage. I’d hope to see the capacity in the marketplace return to what it once was.” The company also unveiled a high-value, low-cost pollution program for camps two years ago.

It is not just those participating in the camp that are subjects of insurance, but also the buildings themselves that are a key component of the insurance process.

“On the property side, the most important thing we hear is to make sure the camp’s property is insured to value,” Becker commented. “That’s an important piece of the underwriting. A lot of these buildings were built in the early 1900’s or beyond and they’re not up to code. What the camps think they could replace them for and what ultimately happens after the loss that we’ve experienced, are unfortunately two different things.” Becker added the mold exclusion is working its way into the camp book of business, a trend that will likely continue.

“We haven’t been presented with a mold claim, but it is certainly habitational in nature and some of the cabins have air conditioning units, so there is an opportunity for that exposure to exist,” K&K’s Norton said.

While Sobel continues to write a large line of camp business, Becker notes that the economics for this year are different than in other time periods.

“The economics coming into the 2002 season are not as good as what the camps had experienced the past two years,” Becker remarked. “We were at a peak where everyone’s numbers were phenomenal and everybody was at maximum capacity.”

Andrea Zenner, vice president of underwriting for California-based Western Security Surplus Insurance Brokers, notes that “pricing has gone up a little bit, but not too much. Most of what we do is seasonal. The peak time of year is Memorial Day to Labor Day. I don’t expect any major changes in the next couple of years for this line of insurance. For us it has been profitable, we haven’t seen any major losses.”

According to Norton, it depends on where a camp has bought their coverage as to whether they’re having problems meeting their insurance needs financially in 2002.

“If they’re buying it from a regional insurance carrier that may not have all the bells and whistles, but have felt adequately covered, then they’re seeing a real pinch, because the regional, and even the national who don’t specialize in it, are bouncing those types of risks.”

Norton added, “underwritten properly and with the right guidelines, there’s an opportunity for a carrier to make some money. There’s feast and famine. We’ve experienced good success in California and throughout the country. There’s a healthy mix of competition out there.”

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