Well the other shoe just dropped. Our insurance bill, already staggering at $43,000 will become $97,000 in 2003. We are required by our landlord to carry $10 mil in liability. Any suggestions?

It's awfully hard to fundraise with a straight face without saying your donations will fund our insurance premium. Not very sexy!

wyld@sbcglobal.net

> Well the other shoe just dropped. Our
> insurance bill, already staggering at
> $43,000 will become $97,000 in 2003. We are
> required by our landlord to carry $10 mil in
> liability. Any suggestions?

Only $10,000,000?!! You're lucky. The railways here insist on $100,000,000.

As for the premium, do some shopping around for a new insurance company. If you can't find anything better you will likely have to go looking for sponsors to help pay the premium. You may end up having to put the "Golden Arches" on the side of the cab in return, but at least you can run. ;o)

As much as I hate to say it, you may have answered your own question. Insurance has gone up across the board and to be quite honest, from what I see going on with insurance and the situation with the stock market, things are going to get worse before they get better and I do expect that many operators will be forced to cease rail operations due to the increased rates. At best, we're probably looking at twelve months for the situation to settle down and that's only if the situation with the terrorists is immediately brought under control. Since that hasn't happened, my estimate is that we can expect a rocky ride for at least the next eighteen to twenty four months. We're now in a situation where the forces driving the economic activities are momentarily beyond our control and until these forces can be checked, it's going to be a situation of adapt to the economic realities or perish.

awalker2002@comcast.net

Our local antique farm machinery club had 3 rate hikes in 2002, and was cancelled for spurious reasons at the end of the year. (lets just say it was part of a NATIONWIDE problem) They were forced to explore other options, and eventually ended up with BETTER coverage AND a lower premium through an independent agent.

> Well the other shoe just dropped. Our
> insurance bill, already staggering at
> $43,000 will become $97,000 in 2003. We are
> required by our landlord to carry $10 mil in
> liability. Any suggestions?

I offer this as an alternative, I don't consider it a solution, simply because of the persistent impecunity of this community.

> One thing you might try is self-insuring a larger portion of the risk. You can do this with a larger deductible or "excess of loss" contract, if available. Of course the designated payee will insist that you make some escrow arrangements.

Because losses tend to be clustered around the low end of the exposure spectrum, that can have a relatively big effect. It also explains why doubling the liability limits doesn't double the premium. One of the most common problems of risk management-is the tendency to insure "small" losses that while painful, are bearable. You insure your car, but not your bicycle.

As an aside, this is affecting everybody. Here in Pennsylvania, doctors are departing in droves. There are economic factors at work, low interest rates being one and the fact that the late 90's run up in the market allowed insurers to make up some underwriting losses with investment gains and postpone the premium increases that were inevitable.

As for things getting better in a year, I'm not so sure. The legal system-especially as practiced by what Mr. McCabe refers to as the "dark side" and countenanced by we the people in jury boxes-has allowed the litigation lottery to become an instrument of plunder. Unfortunately, those barristers own an entire political party, heavily influence the other.

I saw Michael Oxley (R, Ohio) -of Sarbanes Oxley infamy address some bar association on CSPAN and yuk it up about how the so called accounting reforms in that act were really the security lawyers full employment act. That should tell you how things REALLY work.



superheater@beer.com

> Well the other shoe just dropped. Our
> insurance bill, already staggering at
> $43,000 will become $97,000 in 2003. We are
> required by our landlord to carry $10 mil in
> liability. Any suggestions?

> It's awfully hard to fundraise with a
> straight face without saying your donations
> will fund our insurance premium. Not very
> sexy!

You got off easy. IRM's bill FAR more than doubled, and--the real kicker--the coverage is far less. Now, the insurer has NO DUTY TO DEFEND, meaning that we'll have to eat all legal costs up to a self-insured retention (i.e., deductible) of $10,000 per accident, plus front the money for the rest of the defense until the case is settled or goes to judgment.

I'd say that given the typical 7-8 year cycle on insurance, don't look for much relief for at least two more years, if then. There apparently are only 3 insurers in the U.S. willing to write tourist/museum railroad coverage, and with such a small market, there's no great incentive to compete on premiums.


kevinmccabe@avenew.com

> You got off easy. IRM's bill FAR more than
> doubled, and--the real kicker--the coverage
> is far less. Now, the insurer has NO DUTY TO
> DEFEND, meaning that we'll have to eat all
> legal costs up to a self-insured retention
> (i.e., deductible) of $10,000 per accident,
> plus front the money for the rest of the
> defense until the case is settled or goes to
> judgment.

Doesn't this seem penny-wise and pound foolish?

My understanding has always been the duty to defend was enlightened self-interest on the part of the insurer. That is, by providing the defense-they control the competence and quality of the representation and controlling the exposure.



superheater@beer.com