Saving Pittsburgh’s Summer

With Rates Climbing and
Underwriting Tightening,
Outdoor Groups Try to Hang On

So often, the industry hears about issues from the side of its own insurance agents or underwriters. This is a tale from the perspective of insureds on how Pittsburgh’s summer might be affected by insurance decisions.

Willa Seldon knows the worlds of venture capital, corporate development and executive management. Her career includes stops at Williams-Sonoma, AirTouch Communications, Salomon Brothers, and her own venture capital firm. Her educational background is equally impressive: a Harvard MBA, a Yale law degree and an undergraduate degree in economics from Bryn Mawr.

Now, as executive director of Tides Center, Seldon is applying her skills in the non-profit sector and getting an informal degree in insurance in the process.

Tides Center provides infrastructure, financial, human resources, training and other support for non-profit projects across the country. Its clients range from the African American Environmental Justice Action Network to Youth Horizons.

The support Tides Center provides leaves the project principals free to concentrate on their missions, rather than on administration and accounting, which are handled for them by trained professionals. The projects pay a percentage of their revenues to Tide Center in exchange for the services. Projects generally have budgets from $100,000 to $1 million.

There are a handful of organizations that do what Tides Center does but with 250 projects to care for and a budget of about $500 million, Seldon’s is considered one of the largest. Based in San Francisco, Tides Center also has an office in Pittsburgh and serves a number of projects in the Pittsburgh region.

When Tides Center is considering adding a new project to its family, Seldon is accustomed to calling in the accountants and lawyers as part of the qualification process. Now she also calls in her insurance broker.

“We definitely review our groups and they are screened by our attorneys. Now we have to add another screen,” Seldon explains.

Seldon and Tides Center have learned the hard way that a non-profit can qualify for membership in the center only to be rejected by insurance underwriters and thus lose eligibility. So she now wants to know upfront whether a project is too risky for insurance. Tides Center will not accept projects that do not have insurance.

“It has a direct impact on our day-to-day business,” Seldon says of the cost and availability of property and liability insurance.

Switch in philosophy
Tides Center has for years happily worked with the large insurance broker, Willis Group, and its insurer, Philadelphia Insurance Co., to meet its property and liability insurance needs and it still does. Philadelphia Insurance Co. has for years written a blanket policy covering all of the projects that belong to Tides Center.

But a recent switch in the underwriting philosophy at Philadelphia Insurance Co. on this account has thrown a wrench into the operation. According to Seldon, Willis informed her last October that Philadelphia Insurance wanted to take a closer look at the individual projects covered under the policy before renewing.

“We sent the insurer a whole bunch of information on all of our projects including their missions, what they do, their square footage, everything,” recalls Seldon.

When she heard back, the news was that prices were going up, up a lot. Tides had been paying $300,000 for all of its insurance, including workers compensation. The new quote was for $800,000, with the bulk of the increase coming in the property and liability coverages, according to Seldon.

“It’s a lot of money,” she said.

Whereas the cost of the insurance had been evenly divided among all projects in the past, Tides Center has had to change that policy and now assesses certain groups more based on their individual insurance assessment.

Higher prices were somewhat expected but what really caught Tides Center off guard was that even with the higher premiums, Philadelphia was declining to write several projects that were involved in outdoor activities.

Seldon says this is a matter of new methodology by the insurer and not a reaction to bad claims experience. “We’ve had one claim and it ended up that we were not responsible,” she maintains.

Without criticizing the insurance partners with whom Tides has worked for years (they have done a “great job,” she says), Seldon is worried over the inability of several projects to obtain insurance. It could affect Tides Center’s ability to attract and retain members.

Venture Outdoors
One case is that of Venture Outdoors, a four-year old Pittsburgh group that sponsors horseback riding, rock climbing, back-packing, kayaking and similar outdoor activities. “We are all about introducing people to outdoor activities in the Pittsburgh area,” explains Mike Schiller, executive director. The organization sponsors about 800 activities a year, utilizing a staff of seven full-time employees and hundreds of volunteers.

Venture Outdoors went from paying about $6,000 a year for its property and liability insurance on the Tides Center policy to being denied any coverage at all and then, finally, being asked to pay $80,000 when assessed as an individual risk, according to Schiller.

With a member base of 1,500 and a total budget of about $650,000 paying that much for insurance would be “crazy,” Schiller said.

He maintained that a much larger organization, the Appalachian Mountain Club, has an $18 million budget with 9,500 members and pays $205,000 for insurance.

“Tides Center said they’d find something by March but were unable to, except for the quote of $80,000,” said Schiller. Another quote from a different carrier was even higher at $100,000, he added.

So Venture Outdoors faced two options: pay $80,000 or shut down. Schiller was forced to cancel all of his organization’s March activities. The group retained enough insurance to keep open its office, from which it set out on its own adventure to find insurance so that it could resume its outdoor fun.

That hunt turned up a solution, albeit a short-term one, in the person of insurance broker Ed Schirick in Rock Hill, N.Y. His firm, Schirick & Associates Insurance Brokers, specializes in coverages for camps and outdoor events. Schirick’s solution was a per person, per event approach. There would be a $2.25 per participant premium with a minimum per event of $300.

Rock climbing grounded
The deal was at least a temporary solution, Schiller decided, one, which would allow Venture Outdoors to restart activities for April. The group would ask all registrants to pay the extra $2.25 as a surcharge.

But there was still a hitch. Not all of Venture Outdoor events would be covered, as even Schirick’s market refused to underwrite horseback riding and rock climbing events. All of these type events that usually run throughout the spring, summer and fall have been cancelled until further notice.
“We are looking for a longer term solution,” admits Schiller.

Like Seldon at Tides Center, Schiller has found the whole experience an education; one he says has taught him the importance of having relationships with insurance people who know his business.

“It’s a struggle. Every year it’s a big question whether we’ll have insurance,” he said.

“Very, very few understand our business and understand what we do,” Schiller maintained, citing Schirick as one who does understand.

Even an organization as large as Tides Center has not been able to shield his organization from insurance market volatility.

Lesson in relationships
“We relied upon Tides Center but they didn’t come through. They couldn’t find insurance so we shut down. We found it using our own resources,” he noted, adding that the insurance is still passed through Tides Center so that Venture Outdoors can retain its membership.

Even though Venture Outdoors managed to come up with a solution of sorts, its resources did not include what Schiller now believes is a necessary ingredient to solving his insurance predicament.

“We had no relationship of our own with an insurance broker or carrier,” he said. He had relied upon Tides Center and that relationship kept him from getting to know his own insurance providers.

That is likely to change, even if it means leaving the Tides Center, he added.

Schiller acknowledges that some groups like his might decide to operate without protection, but he won’t do that. “For us, running without insurance isn’t an option.”

Farming for members
While Tides Center faces the prospect of losing members that can’t be insured, it is also finding that insurance restrictions can affect its recruitment of new projects.

Randa Shannon owns five acres of farmland near Pittsburgh where she has for years proudly grown organic foods. Shannon, a professional nurse, has spent years helping other urban gardeners learn about farming and building relationships among urban food growers. Last year she and a fellow nurse-farmer decided to form Grow Pittsburgh! to teach others in the ways of urban food production.

Grow Pittsburgh! applied for grants and won enough money to start operations this planting season. It immediately attracted five interns eager to learn about city farming.

The next step was to seek out the Tides Center for the support services. Much to their delight, Tides Center approved their application.

Then came the insurance application.

Tides Center’s insurer would not cover the new agricultural apprentice program. Grow Pittsburgh! is unable to join Tides Center and begin planting as long as there is no insurance.

Shannon is totally perplexed by this turn of events.”We are imminently insurable,” she insists, citing the fact her farmers use no motorized equipment and all interns are trained in all aspects of safety. Not to mention that both managers are nurses.

“Tides Center holds a lot of appeal for us,” she said, adding that she is hopeful she will obtain coverage so she doesn’t have to cancel Grow Pittsburgh! before the first seeds have even been planted.

Given Venture Outdoor’s success, Shannon said she will embark upon her own search for coverage.