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by Ed Schirick
Risk management planning can be done at any time. It is a dynamic, continuous
process. Traditionally, fall seems to be a favorite time of year for directors
and other business owners to reflect on the past, look forward to the new
year, and make plans for the road ahead. Following are some risk management
thoughts about ongoing issues and risk-control measures for consideration
in your planning process.
Insurance Marketplace — Availability and Affordability
In 2004, as the underwriting appetites of major underwriters continued
to change, camps that served the developmentally disabled, as well as adventure
travel programs and U.S.-based programs with operations outside the U.S.
and Canada had trouble finding insurance. Expect more of the same in 2005.
The cost of insurance moderated for some in 2004 after a couple of years
of double-digit increases in rates and premiums. Umbrella insurance in particular
continued to be quite expensive compared to historical average rate formulas.
Some directors found themselves without insurance this summer or with
holes in their insurance programs for the first time in many years. Most,
but probably not all, found some solutions in the insurance marketplace.
Generally, these solutions did not provide the same broad coverage the directors
were used to having, and of course, prices were up significantly.
Issue
- Relative instability of the camp insurance marketplace, with a limited
number of specialty underwriters.
Risk Control
Know where you stand with your insurance company.
- Know your loss history. Get a copy of your loss history every year.
Review it carefully and ask questions about any entries that don’t
seem familiar. Maintain a dialogue with your underwriter through your
insurance broker. Find out if there are any old concerns or new issues
you should know about before your policies renew. Start at least four
months in advance of your insurance policy anniversary date.
- Don’t start any new programs or purchase new equipment, other
than replacement equipment, without first running your plans by your underwriter.
Paintball wars may sound like a great activity, but may not be very palatable
to your underwriter. Investigate their risk appetite before committing
your dollars.
- If your insurance policies typically come due in the late spring or
summer, consider changing the dates to the fall, or winter to give yourself
more time to re-market your insurance if you have a problem with your
insurance for one reason or another.
Fifteen-Passenger Vans
The uncertainty surrounding the appropriate use of fifteen-passenger vans
to transport campers and staff continued in 2004. The major U.S. underwriters
of camp automobile insurance provided coverage in 2004, but their appetites
could change in 2005 if camps fail collectively to address the fifteen-passenger
van’s risk management concerns.
Issues
- The relative instability of the vehicle, a design issue with some models,
which is exacerbated by the addition of roof racks and trailers to carry
equipment;
- Driver experience and judgment amplified by the seasonal nature of
the camp business;
- The age of camp automobile fleets;
- Maintenance; and
- Use of seat belts.
Risk Control
Successful businesses anticipate change and make adjustments before they
are forced to do so. Embracing change is critically important when the change
is designed to increase the margin of safety.
What can camps do?
- Markel Insurance Company and other underwriters and risk managers recommend
limiting the weight in the vehicle to 75 percent of the manufacturer’s
recommended Gross Vehicle Weight (GVW). Keep the weight in front of the
rear axle if possible.
- Other guidelines call for prohibiting the use of roof racks and trailers
with fifteen-passenger vans and limiting speed to a maximum of 55 M.P.H.
regardless of any higher, posted speed limit.
- Other risk control actions include hiring experienced, mature van drivers
and offering specific van driver training through an independent contractor
or professional driver training organization.
- If you own older vans, consider replacing them with the newer models
that have been redesigned to improve stability. If you lease, take some
time now to find the dealers who can lease you these newer, improved models.
- Instead of fifteen passenger vans, consider using minivans that have
received high marks for safety in the crash-worthiness tests conducted
by the Insurance Institute for Highway Safety (www.hwysafety.org).
- Maintain your vehicles regularly according to the manufacturer’s
recommendations and keep detailed records. Become fanatical about checking
the readiness of vehicles daily, paying attention to details such as maintaining
proper tire pressure. Establish and maintain high standards like prohibiting
the use of any vehicle unless all key operating and safety equipment on
and in the vehicles has been checked and found to be satisfactory.
- We know seat belts save lives in accidents. But every year it seems
someone is injured more seriously or dies because they didn’t have
their seat belt on. Insist that everyone riding in camp vehicles wear
a seat belt at all times while the vehicle is in use. No exceptions! Period!
Crisis Readiness
A recent study done by a prominent Connecticut-based insurance company
found that many small and medium-sized businesses in the United States are
poorly prepared for a crisis.
Issues
- Many camps have developed Emergency Action Plans and Crisis Response
Plans and are probably better prepared in some instances than other businesses.
However, the blackout experienced by the East Coast toward the end of
the summer of 2003 lead many directors to conclude they were not as well
prepared as they thought.
- The emphasis on crisis management has been placed on situations involving
injury to campers. In addition, these plans tend to focus on immediate
short-term issues, leaving property damage and the longer-term business
continuation issues often underdeveloped.
Risk Control
Since risk management is a continuous process, it is never too late for
you to address issues that threaten the ongoing success of your business.
Risk identification, the first step in the risk management process, is ongoing.
As a result, new risks are uncovered, and sometimes, new aspects to previously
identified risks are also revealed.
How would your camp continue if something bad happened to the director
or owner and their leadership was lost for the summer or permanently? How
would camp stay open if the dining hall burned to the ground two weeks before
camp was scheduled to open?
- Take some time during the winter to brainstorm with your key staff
about the top five risks threatening the continuation of your camp business.
- Develop a plan that responds to each one of the scenarios. Don’t
forget to include your accountant, lawyer, and insurance advisors in this
process.
Criminal Background Checks and Controlling the Risks of
Sexual Misconduct
This is not a new issue. It is continually in the spotlight because the
risk is changing. Controlling this risk requires commitment, vigilance,
and imagination.
Issues
- It may be hard to believe, but I think there are still some camp directors
who have not yet established and committed themselves to a comprehensive
plan for screening staff, which includes the best available criminal background
check. This is quite nearsighted and puts their campers, program, and
business at great risk.
- Major underwriters of camp liability insurance will continue to focus
on criminal background checks to reduce the risk of sexual misconduct
between campers and staff. Those with a long-term perspective on this
issue recognize that background checks are not a panacea. They are an
important addition to an array of other tools, including comprehensive
applications for employment, which ask about an applicant’s criminal
history; personal reference checks; personal interviews; child abuse and
molestation awareness training for staff; procedures that protect campers
and their privacy; and informed, attentive, supervision. Directors will
not be able to buy insurance for this risk in the foreseeable future unless
criminal background checks are in their staff-screening tool kits.
- There is growing evidence of more sexual misconduct between campers.
Risk Control
Risk management is a continuous process; risks keep changing. In addition,
as risk managers study these risks, new methods are developed for managing
them. Under these circumstances it is important to keep an open mind and
stay focused on constantly improving your organization’s risk management
effectiveness.
- If you haven’t made a commitment to criminal background checks
yet, resolve to add them to your staff-screening process before next summer.
If you have been doing criminal background checks for some time, take
some time this winter to review and update your procedures and practices.
What is in your tool kit?
- Expand your risk management thought process to include the potential
for sexual misconduct between campers. Brainstorm this issue with your
key staff. Alert your staff to this issue during staff training. Develop
risk-control plans that are respectful of camper privacy but reduce the
opportunity for this behavior. Some of the same techniques already in
your risk management repertoire may apply to this developing trend.
Invest in yourself and in the long-term success of your business by taking
some time to review and update your risk management plan now. Consider these
issues and the ongoing and developing risks that you may identify through
your risk management process. Maintain your commitment. The risk management
discipline is needed now, more than ever.
Originally published in the 2004 September/October
issue of Camping Magazine.
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