The widespread shortage and escalating cost of liability insurance has one industry skating on particularly thin ice. This time the chill is being felt by operators of local ice skating rinks who can't afford skyrocketing premiums or even find insurers.
As a result some Southern California rinks are operating without insurance or closing their doors--and indications are that the local situation is shared by ice rinks nationwide.
According to Justine Smith of the Ice Skating Institute of America, a rink in Baltimore had to close because of a lack of insurance. In Northern California, a rink owned by Peanuts creator Charles Schulz in Santa Rosa closed for a short time last November after the rink's liability coverage was canceled. The rink reopened, but with an annual liability insurance premium of $150,000, 10 times what it had cost the year before.
According to Mike Wakely, a Tustin insurance agent, three or four local rinks are currently operating without insurance. He declined to name them, stating, "They're nervous enough as it is." "Very clearly we have an insurance crisis and it is hurting the small businessman," said Bruce Bunner, California state insurance commissioner.
He said his office "is aware of the problem" ice rink operators are having with liability insurance, but said their situation is shared to some extent by all businesses.
Small, specialized businesses such as ice rinks are often passed over by the large underwriters, he said. "It's not a very large premium to the (large) companies. Quite often these kinds of risks are underwritten by speciality companies."
Because of widespread losses in the insurance industry (a record operating loss of $5.5 billion was reported in 1985), a number of small specialty companies have folded, he said, while those still in existence are careful about whom they insure. "Any one claim can outstrip all of the premiums," Bunner added.
The insurance hikes have come at a time when ice rink operators are especially vulnerable, said Michael Paikin, managing partner of Van Nuys Iceland and the Pasadena Ice Skating Center. "The ice skating industry runs on four-year cycles that run with the Olympics. We're in the low end of it."
(The Ice Skating Institute of America reports that nearly 30 million Americans are recreational ice skaters, a figure that has held steady in recent years.)
Paikin's Pasadena rink closed for a week in early December because the city, which owns the building, would not permit the rink to operate without insurance, he said. The Van Nuys location, faced with no such requirement, did not close but has been operating without insurance since Dec. 7.
Darius Mavjzoub, owner of the Norwalk Ice Arena, said his rink has been operating without insurance since Oct. 25, when his policy was canceled 10 days before it was due to expire. Paikin, who did find coverage for the Pasadena rink, said his annual premium increased from $7,500 to $43,000 while his coverage dropped from $1 million to $300,000. His deductible went from $250 to $1,000, he noted.
What's more, Paikin said every insurance company he talked to sought to lessen its liability for personal injury claims by insisting on one exemption from coverage--hockey leagues. "I can't afford to get rid of hockey," he said.
Mavjzoub, who paid $3,600 for $1 million of coverage in November, 1984, recently was quoted a premium of $38,800 for $300,000 coverage, he said. The policy excluded not only hockey players, but figure skaters, spectators and pollution that could be caused by the cooling system as well.
Mike Wakely, one of the few insurance agents in the state who continues to sell policies to ice skating rinks, said it has become increasingly difficult to find underwriters to carry such policies.
He said that most rink operators will not have to worry about losing their hockey leagues in the short term, because the leagues generally have their own insurance.
But there may be bad news for hockey leagues in the near future, the Tustin insurance agent said, predicting that they too will face insurance price hikes.
Part of the problem is that companies are worried about insuring rinks where people go expecting to trip and fall, Wakely said. Claims against ice skating rinks are generally not of the blockbuster variety, he said. "The largest I've seen was $12,000, which is not that bad."
Insurance Investments Blamed
Perhaps more significant, he said, is that insurance companies have redoubled their efforts to make an "underwriting profit." Only part of the insurance business involves collecting premiums and paying claims; investment of premiums is also a major part, he explained.
Such new realities have made insurance companies more cautious about what kinds of policies they write, Wakely said. "If it's in any way out of the ordinary, they often just don't want anything to do with it."