Michael, thankyou. This information is helpful in understanding what USMS was facing and the timeconstraints involved. It is clear that the insurance company is part of theproblem. Maybe with a year to shop around USMS can get better coverage for2014. Maybe with more time USMS might come to the conclusion that theorganization can't safely sanction/insure some OW swims.
What USMS is dealing with now is a huge PR SNAFU. If they were up front withthe reasons for the changes and what they had to deal with, people in the OWcommunity might have been more understanding.
This statement is a little twisted. I think may OW events wanted to stick withUSMS, but the last minute changes in the rules made it impossible to seeksanctioning through USMS. In fact several OW events that had received sanctionsfrom USMS for 2013 subsequently had those sanctions revoked!
Evan, I called Rob Copeland back in January, to offer input. We discussed the insurance, safety, etc. and asked him to refer me to any place that would be able to offer our support boaters the insurance required by USMS. He listened to my concerns, and I felt he had a good understanding of the challenges that some race directors will now face. I let him know that the Tampa Bay Marathon Swim will do whatever it takes to stay USMS sanctioned, but there is just no way to get insurance certs on 20+ power boaters. So, at least I feel like I had some input, but it was after their 12/31/12 letter that initially broke the news re: sanctioning OW events.
Ron, as far as I know (I've now tried 3 different brokers) the $1,000,000 insurance that USMS requests from hired boaters is only available to commercial operators.... so one of my issues is that USMS doesn't seem to have researched the availability before imposing this limit. At least now we know that the BOD is reading this thread.... so I will again invite anyone to provide a link to a company willing to provide such a policy.
I have read this thread with no little interest. Mostly, I have seen how misplaced anger and lack (or ignorance?) of accurate information turns into a free-for-all with no new or useful information generated. Since no one higher up has offered to enlighten any of you, I guess I will try.
The board knew in late October that because of recent claims history, our former insurance carrier had raised our premium about 700%. With a lot of scrambling, phone calls and negotiating, our ED was able to find one insurer that could write a policy for USMS that included open water events. And did not cost all of our reserves for a one year premium. It did have a bunch of strings attached, such as propeller guards.
The OW sanctioning task force had little time and was under considerable pressure to pull together guidelines that were essentially dictated to USMS by the insurer. Passing on part of the insurance premium that is exclusively OW dedicated is just a business decision. Remember, OW does not pay any extra to hold OW practices or clinics, those are covered under another part of the insurance policy. Only sanctioned events have the $1800 special premium, of which USMS eats $800 and passes on $1000 to the sanctioning LMSCs.
None of you posting to this thread can appreciate just how close USMS came to being a virtual organization at the beginning of 2013, with no insurance to cover any of our operations, sanctions or members. It would have been very easy to cut OW loose and save USMS $135,000. But USMS has had a very keen interest in building OW for the last 4 years, and did not ever consider shutting down that branch of the business. The gratitude shown for this hard work and dedication are an exodus of sanctioned events.
I actually think there has been a good amount of information shared on this thread in between the emotional. No... it wasn't always the most civil, but no one has run home crying.
Since I received the first notice in December about the pending changes to the USMS OW sanctioning process, I have spent hundreds of hours dealing with this situation. My first actions were attempts to comply with the new regulations without any regard to additional costs. Only after it became obvious to me that there is absolutely no way that 8 Bridges could comply did I look for an alternative insurance situation. I imagine many of my friends here have also put in a lot of hard work with that same objective. This thread was started by a swimmer frustrated by the fact that a perennial favorite OW event was cancelled. On the Alcatraz thread, Mermaid also grieves over the inability to work with the addition fees. You do me and my fellow event directors a disservice by suggesting this "exodus" is simply a matter of convenience.
I think we all appreciate the work USMS has done to make OW safe starting with hosting the OW Safety Conference in March of 2011.
USMS took a measured approach.
links to USA Swimming and USMS safety docs for comparison:
www.usaswimming.org/.../Open Water Review Commission Recommendations.pdfwww.usms.org/.../owgto_safety_objectives.pdf
Insurance companies are in business to make money for their stockholders. They do this by charging premiums that exceed their expected payouts and by setting restrictions on what types of activities are covered by the insurance to minimize what they perceive cause the risks of occurrence.
This is in incomplete analysis of capitalism. Insurance companies also make money by growing their customer base by offering better policies than other companies are offering. A more sophisticated analysis of risk is one way they do this.
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Sometimes all it takes is one claim to raise a red flag, causing an underwriter do a reassessment. If no one has ever been injured by a power boat in 25 years of OW events, the risk would be considered low and the premium would reflect that. However, once you have an injury the underwriter may decide it was a risk he failed to identifiy and it was mere chance that it hadn't happened sooner. (An accident waiting to happen?) Once an underwriter makes that paradigm shift it can take a long time before they are ready to adjust down the nature and extent of the risk.
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Thanks for posting all this info. Unfortunately it makes for depressing reading, because I am not sure that USMS will be able to negotiate something significantly better than they have now. I hope I'm wrong. A new budget might be able to help LMSCs financially but the other requirements (prop guards, etc) dictated by the insurance companies may stay put no matter how many great ideas are generated by chaos' other thread and elsewhere.
This is in incomplete analysis of capitalism. Insurance companies also make money by growing their customer base by offering better policies than other companies are offering. A more sophisticated analysis of risk is one way they do this.
Actually from inside the company (at the top) putting aside the return they receive from their investment capital, there are basically 2 mechanisms at play. There is the money coming in and there is the money going out. The money coming in is based on premium dollars. This is determined by rates and policy sales. Rates are determined by the underwriters. Bad underwriting can ruin an insurance company, and it has done so in the past. The number of policies sold is related to marketing and your sales force. This is the "good" side of the business. For most individuals and businesses the coverage is almost identical. There are standard policies in the industry, and once one company decides it needs to add an exclusion, every other company does the same. So selling policies is like selling any other widget where the consumer has a limited number of suppliers to choose from.
Of course when you involve an activity or other liability risk which is out of the ordinary, underwriters have a harder time doing their analysis and have learned to error on the side of a higher premium. Keep in mind the number of policies are very low or limited to one and there is not an untapped market for their product. In a case like USMS, the underwriters will base it on the history of USMS and similar organizations. However, when the activity is expanded through growth in numbers of participants or events, or the addition of something different like an OW event utilizing power boats, underwriting has to undergo a reassessment of the risk. Sometimes all it takes is one claim to raise a red flag, causing an underwriter do a reassessment. If no one has ever been injured by a power boat in 25 years of OW events, the risk would be considered low and the premium would reflect that. However, once you have an injury the underwriter may decide it was a risk he failed to identifiy and it was mere chance that it hadn't happened sooner. (An accident waiting to happen?) Once an underwriter makes that paradigm shift it can take a long time before they are ready to adjust down the nature and extent of the risk.
The "bad" side is the claims department. The basic philosophy is that the claims department is the one giving away the company's money, and this can be reduced through tough claims handling practices. In fact there are times the claims department gets the heat for paying out too much money when really it was an underwriting mistake. Since people don't really buy a policy based on how a company handles a claim, companies aren't compelled to make that a priority. And if you are dissatisfied with the way a company handles your claim what can you do? Do you really think other companies will fight for your business now that you have a history of claims?
If we think of this as a pendulum, prior to the Maui incident USMS may have granted sanctions to easily. Race directors might have looked at it as cheap insurance so why not get there race sanctioned. The insurance underwriter likely did a poor risk analysis. The pendulum was too far to the left. Now it's too far too the right, I'm guessing to a certain extent the Insurance firm may have priced for USMS to go away or eliminate these races with one size fits take it or leave it proposition, that again doesn't truly assess the risks. Insurance companies are in business to make money for their stockholders. They do this by charging premiums that exceed their expected payouts and by setting restrictions on what types of activities are covered by the insurance to minimize what they perceive cause the risks of occurrence. After many years of extremely low claims and payouts, the pendulum has swung and Masters Swimming is faced with significantly higher premiums and new restrictions.
Those representing USMS on this board haven't even proposed researching new solutions for the 2014 season and beyond.I believe I understand the sentiment, but in fact I think the opposite is true. The board, USMS leadership and staff are very much engaged in finding ways to make our sport safer and to push the pendulum back towards the center in 2014 and beyond.
Many ideas have been floated in this forum including OW swimmers carrying supplemental insurance like the DAN network for Scuba Divers. For categories 2 events there could be web based certification courses created for motorized boat pilots for what there roles are, swimmer awareness possibly a requirement for an safety observer in the boat in lieu of the expensive prop guards and additional insurance etc. Will USMS at least try?The Open Water Committee is working towards training and certification courses for event directors, safety directors and referees; we’ve talked about boater safety training as well, but we wanted to tackle the big 3 first. And I encourage any interested members to provide feedback on the currently available Open Water Manual,
Open Water Safety Objectives, Open Water Safety Workshop Notes and Open Water Clinic Manual which can be found at www.usms.org/.../
Thanks for posting all this info. Unfortunately it makes for depressing reading, because I am not sure that USMS will be able to negotiate something significantly better than they have now. I hope I'm wrong. A new budget might be able to help LMSCs financially but the other requirements (prop guards, etc) dictated by the insurance companies may stay put no matter how many great ideas are generated by chaos' other thread and elsewhere.
Don't give up hope. If the premium increase was a result a claim arising from a particular type of risk, and that risk can be reduced or eliminated, then it can be reassessed. I haven't had the time to review the new policy, but what it effectively does is insert a new exclusion from coverage for injuries arising from the failure to have propeller guards (among other things). If a boat doesn't have one, and a person gets injured because there wasn't one on the boat, then that would not be covered under the policy. I don't know how the negotiations took place, but I suspect USMS received the premium notice of increase, and negotiated a reduced premium by putting certain safety safeguards in place. Those safeguards reduced the risk for the insurer because the safeguards supposedly would prevent those injuries which created the exposure for the insurer in the first place. By not complying with those safeguards the activity is taken out of the scope of coverage. Of course they still raised their rates because they probably took a closer look at the different kinds of OW events and determined there was an additional element of uncertainty in the risk they were assuming.
II don't believe you will find this in any insurance company's mission statement as it is quite obviously a conflict of interest.
Companies that profit by providing less service should not be in business.
Mission Statement
Utica First is a profitable regional insurance company specializing in unique commercial and personal lines products delivered with extraordinary service.
Also, many companies do profit by providing less service. Just look at discount sector of any industry (WalMart, Honda, Insurance4Less, …)
And while some sectors of the insurance industry spread the cost of claims over a broad subscribership (home, auto, life), specialty policies such as liability insurance for sport national governing bodies do not have a real large base to spread costs.
And I completely agree, that it is time to move on. Dave, thanks for starting the new thread OW sanctions beyond 2013! Any real and sustentative progress will be made by the actions we will take and not by dwelling too much on past decisions.
So how does USMS move forward? do they want to move forward? Those representing USMS on this board haven't even proposed researching new solutions for the 2014 season and beyond. At the very least and as a USMS member what I'd like a hear from my organization is a formal apology, especially to those groups that really did work hard but lost there sanction. An acknowledgment that as it stands now is unacceptable for USMS open water swimming and finally that work is now in progress to bring smarter, safer (not imagined liability) and affordable solutions for the future.
Why does USMS owe you a formal apology? I understand that the viewpoint of people like Dave and Evan, but if USMS found out about the rate increases late last year(nov-dec) and have worked and are working towards improving the situation for next several years, I don't think they owe you or anyone else an apology.
There are times events are beyond the control of a business. If USMS has done the best they can, given the events that have transpired, then they shouldn't apologize to you. Now, in 2014 and beyond, if they haven't improved the situation with more time to explore alternatives and continue to use the same guidelines, then they should apologize to all open water swimmers lack of improvement in the open water policy.
