Skico says no to skier insurance |

Skico says no to skier insurance

The early blast of winter throughout November has Aspen Skiing Co. officials breathing easier about their decision not to purchase “skier visit insurance” this season.

Even before the snow started flying on Halloween, Skico officials decided not to take out an insurance policy on poor business performance, according to Dave Bellack, Skico senior vice president of administration.

“We talked about it at a conceptual level and decided not to purchase it,” said Bellack. “We’re keeping our fingers crossed for a good season. Quite frankly, the odds of having skier visits dip for a third season to a point low enough [to make the insurance worthwhile] didn’t seem high.”

Skier visit insurance has become increasingly popular since it was offered via a Steamboat Springs insurance broker prior to the 1996-97 season. The interest peaked this preseason, according to Joe McNasdy, president of the Steamboat-based company, MDM Group Associates Inc.

“After two years of low snow it’s hitting home,” he said.

Last season, 18 ski area operators bought policies through his firm. This year, he’s been negotiating with 35 firms.

McNasdy estimated that 16 of the 18 companies that took out policies received payments last season when their paid skier visits fell. About $25 million was paid out in total to those resorts, he said.

MDM Group offers the insurance to ski areas throughout North America. Of those who didn’t go for the coverage last season, he estimated that 90 percent could have received some payout for losses.

Although good early-season snow may persuade some companies not to go to the expense of cov-

ering themselves this season, McNasdy countered that’s the wrong way to look at the special insurance.

“The wrong reason to do this is to sit back and guess whether you’re going to have a good snow year or not,” McNasdy said. “That’s more like gambling.”

He prefers to pitch his insurance as something that should be an annual expense that guarantees “income stabilization.” It might not prove necessary every season, but it can be a lifesaver when business drops because of low snow or some other reason.

“For a lot of ski resorts it’s going to become a regular part of their risk management program,” McNasdy said.

Vail alone received more than $9 million in payments, according to the publicly-held company’s quarterly earnings reports.

The Aspen Skiing Co. did not buy coverage last season. In addition to skipping skier visit insurance this season, the Skico also decided last Friday not to take out insurance on the World Cup course and the possibility that races on Nov. 24 and 25 will be canceled, according to Skico Chief Operating Officer John Norton. It would take a heat wave of unprecedented proportions to ruin the course for the two women’s ski races now.

Companies must make a decision on whether or not to purchase insurance for skier visits by the first week of December, according to McNasdy.

When they do, McNasdy’s firm negotiates a reasonable base figure for skier visits with resort operators. Resorts typically have a 10 percent deductible. In other words, if their paid skier visits drop by 10 percent or less, there is no payout.

When it is greater than a 10 percent loss, they are paid an amount based on the value per skier visit. The insurer calculates the value by looking at what a skier or rider typically pays for a lift ticket and other on-mountain services.

Ski area operators must decide how much to insure themselves for, choosing among several large dollar amounts. That obviously influences the size of their premium payment, which McNasdy said varies from resort to resort.

Lloyd’s of London has been a lead underwriter for the skier visit insurance. Other syndicates also participate.

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