The weekend of excursion trips to be run out of Park Falls, WI, for the Park Falls "Flambeau Rama", by the Locomotive & Tower Preservation Fund, Ltd's Soo Line Pacific #2719, have been cancelled due to word that insurance costs would be 300% HIGHER than their initial quotes. The 2719 will run this weekend instead, on the Wisconsin Great Northern Rwy, in Spooner, WI, where she has been a guest engine, running all five weekends in July, 2002.See the enclosed link for more details.

Mark Braun

http://www.2719.com/pages/soo2719.html#status

mkbraun@hutchtel.net

After reading about this unfortunate incident, I have to ask a few questions.
(1) What triggered the increase all of a sudden...don't they have to give 30-45 days notice on increases?

(2) What is the one main thing that is triggering these increases basically? Is it the fact a steam engine is pulling an excursion train of passengers, or is it the fact passengers are being hauled PERIOD!

(3) I am wondering if this effects only mainline STEAM, and not diesel operations, nor tourist railroads. I haven't heard of any tourist steam lines shutting down yet!

If in fact the main concern is STEAM hauling PASSENGERS on the MAINLINES, then perhaps some creative thinking needs to be put into effect.

What I mean by that is, couldn't the trip be hauled by a diesel pulling the passengers, and the steam train operate behind it with a freight train for example, so that folks could still see it operate. Say you dropped folks off 2-4 places en route to the destination then had 2719 operate runbys for all to see, then at the destination have it on display before making the return trip.
In this scenario nobody is riding behind the steam train, yet folks get to enjoy it, and support it, and still get their ride. The downside is the cost of the diesel, and getting another crew!
Food for thought, as I await more official reasons.
Cheers,
Greg Scholl

Friends Fundraiser Videos
sales@gregschollvideo.com

>Greg, while I have no knowledge with regard to this particular situation-there's a couple of things going on with regard to propery/liability insurance in the U.S., generally.

1.) As you are no doubt aware there is a continuing expansion of liability by the legal system for losses that in years would've tossed out as ridiculous.

I recently heard that a bar was held liable for the usual medical, pain & suffering, emotional distress etc for a woman who slipped on a drink she threw on the floor five minutes before in a fit of rage during a fight with her boyfriend.

No doubt the underwriters think about the exposure that would exist if some awe-struck railfan stepped in front of a loco and was killed. There was a video I saw a couple years ago with a guy stepping in the guage in front of the UP 3985 as it blasted out of a tunnel.

2.) Property/casualty companies are building in the threat of terrorism into their rates-thinking Osama might like to kill a few unsuspecting infidels in odd places. They want higher reserves for such situations, especially on "all-perils" coverage. Its questionable if the current situation would limit liability on the usual war exclusion.

3.) The stock market has tanked and fixed income instuments pay nothing. This leaves the insurers with damn few alternatives-since they are constrained by state insurance departments as to what is an "admissable asset". When things are going good, insurers typically LOSE money on underwriting, paying out slightly more than they collect in net premiums and make up for it with investment earnings. Obviously, when t-Bills are paying 2.something and exchange traded stocks are tanking.. hard to do.

We'll see more of this until things turn around and (if ever) we smack down the terrorists.



superheater@beer.com

Thanks for the response, but I know all that general stuff. What I am wanting to know is if the insurance companies are stating exactly what it is they are afraid of on these train trips. Is it the STEAM engine, the passenger train in General, or as you say, just general increases with no regard for steam or diesel!
Greg

Friends Fundraiser Videos
sales@gregschollvideo.com

The host railroads generally tell the excursion operator what level of coverage they require before operating any trips. It isn't up to the excursion operator or to the insurance provider to make that determination. Market forces determine the cost of the coverage. I would expect that given the natural procilvity of people rather than goods to engender liability suits, the carriage of people would require a much higher level of coverage than freight. From the host line's perspective, the more people are on the property the higher the chance of liability whether real or invented by attorneys. The legal system doesn't distinguish between the two.

Bear in mind that it isn't only riders but lineside crowds that are potential liabilities as well. It is concievable that any "victims" of an auto accident caused by some idiot foamer trying to drive while filming could name the railroad in a suit as a provider of an "attractive nuisance".

The wonder to me is that any excursions are running at all.

Dave

irondave@bellsouth.net

It was our experience (in the past) that freight insurance was much, much higher than people insurance. Between hazmat, cargo costs etc. it was almost impossible to afford freight insurance which is why freight insurance is either pooled or self-insured.

http://mercurio.iet.unipi.it/pix/cz%2Bsk/steam/477/477sl01.jpg
lamontdc@adelphia.net

> Thanks for the response, but I know all that
> general stuff. What I am wanting to know is
> if the insurance companies are stating
> exactly what it is they are afraid of on
> these train trips. Is it the STEAM engine,
> the passenger train in General, or as you
> say, just general increases with no regard
> for steam or diesel!

I've heard similar tremendous increases in stuff like carnivals, etc.

superheater@beer.com

From my own, humble publication... it's not just railroads. In addition, we've reported on medical liability insurance increases of $53k to $350k.

Jim

Tuesday, July 23, 2002
Section: METRO
Edition: ONE-THREE
Page: 1B
DaNICA COTO, STAFF WRITER - STAFF WRITER RICH RUBIN CONTRIBUTED.
Insurance costs for the region's counties, cities and schools have skyrocketed since Sept. 11, with some local governments paying up to three times as much as in previous years.

Consider:

In Mecklenburg County, the cost of insuring the Charlotte Coliseum went up 115 percent, from about $370,000 to almost $800,000 this year.
The main property insurance rate for Charlotte and Mecklenburg County also increased by 33 percent. As a result, the governments are paying $554,000 in premiums to cover $1.2 billion in buildings, parks and buses, said Linda Liles, insurance manager for the Charlotte-Mecklenburg risk management department.

In Gaston County, premiums for county-owned property went from about $100,000 to $300,000. The city of Gastonia's overall insurance costs increased from $450,000 to more than $750,000.

Union County saw a 10 percent increase this year in insurance premiums.

Cities, counties and schools expected higher premiums to take effect with the new fiscal year July 1, but many were stunned at just how high that turned out to be.

Some, like Gastonia, were forced to scramble to close deals with new companies when their long-time insurers backed out at the last minute.

The higher premiums didn't necessarily lead to tax increases, but left governments searching for extra money in an exceptionally tight budget year.

After Sept. 11, insurance companies consider public entities riskier to insure than private businesses - especially high-profile cities and facilities, says Richard Moxley, account executive with Arthur J. Gallagher & Co., an insurance brokering company in Illinois.

In Mecklenburg County, for example, the Charlotte Coliseum costs more to insure because crowds represent "a larger risk," said Liles.

But these days, insurance companies seem to consider everyone risky business, said Mark Watson, Union County personnel director.

"We keep having to remind insurance companies that Monroe, N.C., is not New York City, and that Osama bin Laden doesn't know where we are," he said.

Union County's 10 percent increase was the first hike in about five years, said Mike Buick, the county's risk manager. He blames the insurance companies.

"I don't believe they're up because of 9/11," he said. "It's simply an excuse."

Indeed, Moxley said that insurance companies also are trying to make up for losses in their shriveling investments in stock and bond markets.

Sept. 11 did affect premiums, but not as much as insurance companies are suggesting, said Steve Bird, assistant vice president of McNeary Insurance Consulting Inc. in Charlotte.

Hiking rates because of Sept. 11 "makes sense to the average Joe," he said. "That's easier to say ... than, `We were under-reserved for years,' or, `We're not making enough money in the equity market.' "

He said insurance companies also are paying higher claims, with property insurance hit especially hard.

Government officials around the Charlotte region were surprised at the size of the premium increases.

In February, for instance, Gaston County learned its property insurance would go up 50 percent, said County Manager Jan Winters.

"When we actually went out for formal quotes, they came in double," he said. "Many companies are saying, `We'll not write the policy,' or `We'll charge more for it.' "

Insurance rates for both public and private entities had increased 15 to 20 percent last year because of a slumping economy, but went up another 15 percent after Sept. 11, Moxley said.

Preparing for higher premiums didn't necessarily insulate governments from last-minute insurance problems.

When Gastonia's insurer backed out two days before the policy was to be renewed, the city had to dig into its insurance reserve fund to pay another insurer's higher rates, said human resources director Dave Henderson.

Hilton L'Orange, deputy superintendent of Gaston County Schools, said liability and property insurance premiums went from $100,000 to $150,000.

"But don't be misled," he said. "It's not just the premium going up. It's that the coverage is declining at the same time."

Unable to get property insurance from a private insurer, the school district had to go to the N.C. Department of Public Schools, which reimburses losses based on property value rather than replacement cost, said Kris Spivey, director of operations for Gaston County Schools.

That difference can be especially costly when it comes to older buildings, which are valued at a fraction of what it would cost to replace them, she said.

It's unclear what next year will bring, Moxley said, but he expects premiums to go up 10 percent to 15 percent.

The exceptionally large premium increases this year "might have been a knee-jerk reaction," he said. "The dust might settle."

*



http://nctrans.org
Wrinnbo@aol.com

The fact it is freight or passenger, steam or diesel, makes no difference. The insurance companies are blaming everything on September 11th as a blanket reason to raise ALL INSURANCE for EVERYONE. Do I read this right!

I know I had heard this was an issue for buildings but I didn't figure they would go this nuts on things like transportation. Guess they really are trying to make the most out of everyone's bad situation....or so it seems! Kinda like the knee-jerk reaction that our government needs to put a stop to don't you think!
Greg

sales@gregschollvideo.com

> The fact it is freight or passenger, steam
> or diesel, makes no difference. The
> insurance companies are blaming everything
> on September 11th as a blanket reason to
> raise ALL INSURANCE for EVERYONE. Do I read
> this right!

> I know I had heard this was an issue for
> buildings but I didn't figure they would go
> this nuts on things like transportation.
> Guess they really are trying to make the
> most out of everyone's bad situation....or
> so it seems! Kinda like the knee-jerk
> reaction that our government needs to put a
> stop to don't you think!
> Greg
I agree with Greg above and our court system needs to get out of bed with litigators and giving blanket settlements of millions of dollars
to people who act stupid. However, I'm dreaming of course. In a country controlled and run by lawyers, what can you say.

One trolley museum has already shut down due to skyrocketing insurance, which indicates that the problem is with carrying passengers and not steam. The Appleton Trolley Museum & Railway in Wisconsin ceased operation in June (I think). ATM&R is more susceptible to rising insurance than most museums - only one operable car and, more importantly, location in a very small population center which means little money coming in - but in that respect they're simply the "low-hanging fruit." It isn't clear whether or not they will be able to restart operations. If not, permanent damage has already been done to the preservation community. The plight of ATM&R may not be as interesting to as many people as that of the 1522, but the two are linked.

Frank Hicks

Appleton Trolley Museum & Railway
fullparallel@wideopenwest.com

> Greg, Sept 11 is causing companies to rethink the level of exposure to be sure, but the greater problem is the ongoing expansion of liability both in magnitude and in culpability by the courts and the market crash.

Before you think 9-11 is just an excuse, remember insurance is a market product-companies that underprice go broke-those that overprice lose business.

Let me give you a little insight into what insurers face. In the mid 80's I worked for a state insurance department as a field examiner-which gave me quite an education.

Anyway, part of the job was to review claim files-
There was one company we went to that had issued a fire insurance policy on a mobile home. There was every indication that the heating oil tank had been breached so the oil would be ready fuel, the couple was in the midst of a real public fight, the wife was heard to be yelling "I'll burn it down before I let you get it you %$#%^-$%$&". The file of depositions and statements and records was 2 inches thick. Bottom line, absent a conviction for arson-they were on the hook for the loss. They spent thousands investigating this and still were on the hook for something like 30 grand, as I remember. This goes on all the time.

In a more related note, look what happened with the 1995 incident at Steamtown. After being completely exhonerated by the jury, the federal judge (there's some great books out there on the out of control federal judiciary) still awarded a half a million dollars.

THIS is what is at issue. At the risk of being political, as long as courts are used as lotteries, we'll see more of this. Its no accident Peter Angelos an asbestos liability lawyer had hundreds of millions of dollars to buy the Baltimore Orioles. I know alot of good lawyers but the trial bar is IMHO vampires sucking the life out of the country and negating a lot of good things-like steam excursions.

Remember Property/liability isn't like life insurance where we pretty much know what the losses will be because death rates are fairly predictable and the amount of the payment is known in advance. Property casualty underwriting is as much an art as a science and different underwiters are going to make different decisions-right now they are jittery and not looking to lose their jobs for taking on a bad risk in this economy.

Another contributing issue is that one of the conditions that must be satisfied for insurability is that there must be a pool of similar risks so that insurers can develop expectations of the loss rate.

The less excursions that are run, the more that condition is violated, the more insurers will vacate the market and that will have upward pressure because the remaining companies will employ more experienced underwriting, set more restrictive conditions, reinsure more risks as well as the normal supply and demand stuff.



superheater@beer.com

> Before you think 9-11 is just an excuse,
> remember insurance is a market
> product-companies that underprice go
> broke-those that overprice lose business.

> Let me give you a little insight into what
> insurers face. In the mid 80's I worked for
> a state insurance department as a field
> examiner-which gave me quite an education.

> Anyway, part of the job was to review claim
> files-
> There was one company we went to that had
> issued a fire insurance policy on a mobile
> home. There was every indication that the
> heating oil tank had been breached so the
> oil would be ready fuel, the couple was in
> the midst of a real public fight, the wife
> was heard to be yelling "I'll burn it
> down before I let you get it you
> %$#%^-$%$&". The file of
> depositions and statements and records was 2
> inches thick. Bottom line, absent a
> conviction for arson-they were on the hook
> for the loss. They spent thousands
> investigating this and still were on the
> hook for something like 30 grand, as I
> remember. This goes on all the time.

> In a more related note, look what happened
> with the 1995 incident at Steamtown. After
> being completely exhonerated by the jury,
> the federal judge (there's some great books
> out there on the out of control federal
> judiciary) still awarded a half a million
> dollars.

> THIS is what is at issue. At the risk of
> being political, as long as courts are used
> as lotteries, we'll see more of this. Its no
> accident Peter Angelos an asbestos liability
> lawyer had hundreds of millions of dollars
> to buy the Baltimore Orioles. I know alot of
> good lawyers but the trial bar is IMHO
> vampires sucking the life out of the country
> and negating a lot of good things-like steam
> excursions.

> Remember Property/liability isn't like life
> insurance where we pretty much know what the
> losses will be because death rates are
> fairly predictable and the amount of the
> payment is known in advance. Property
> casualty underwriting is as much an art as a
> science and different underwiters are going
> to make different decisions-right now they
> are jittery and not looking to lose their
> jobs for taking on a bad risk in this
> economy.

> Another contributing issue is that one of
> the conditions that must be satisfied for
> insurability is that there must be a pool of
> similar risks so that insurers can develop
> expectations of the loss rate.

> The less excursions that are run, the more
> that condition is violated, the more
> insurers will vacate the market and that
> will have upward pressure because the
> remaining companies will employ more
> experienced underwriting, set more
> restrictive conditions, reinsure more risks
> as well as the normal supply and demand
> stuff.

Based on your theory if everyone boycotted(or was priced out of the market) the insurance wouldn't the Insurance Company have nobody to sell to!!???

I get what you are saying about having more inspectors if there are less people to inspect, but at some point there are NO CUSTOMERS, if they price themselves out of the market...Then what.

Health insurance is another crime, and we middle of the road customers are footing the bill for ourselves, the guys who sue the medical profession, the people who have no insurance, and the mis-managed medical folks who overprice cause they know we have insurance, so they do it!

There is no justification of some of these rate increases within the insurance industry. It is becoming an epidimic.

What ever happened to the piggyback deal with Amtrak insurance? Isn't that what 3751 is using for the trip to Arizona?

Oh well, I guess I should let this go, as I am sure the big mainline steam operators have checked into every possible source, or they would be running more! Hope the winds of change occur before the fires are too cold!
Greg


sales@gregschollvideo.com

First time I heard that. What happened? I'm guessing someone did something dumb and took it to court. We need liability laws like in Germany, you do something dumb and get hurt or killed its your own fault. No multimillion dollar payouts for spilling hot coffee on yourself.

> First time I heard that. What happened? I'm
> guessing someone did something dumb and took
> it to court. We need liability laws like in
> Germany, you do something dumb and get hurt
> or killed its your own fault. No
> multimillion dollar payouts for spilling hot
> coffee on yourself.

It some countries the law states that if you lose the case, you pay for the court costs and more. These keeps down the gold-diggers and hot-coffee at McDonald's types, who spill it on purpose! When will the U.S. Wise-up?
Greg

sales@gregschollvideo.com