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BOSTON-Nothing can ruin a day for airport managers quite like massive snowstorms.
Yet there were at least partial smiles on the faces of the risk management staff last week at the Massachusetts Port Authority, which operates Logan International Airport in Boston.
The reason: snow insurance.
Last year, Massport bought a policy that pays $50,000 for every inch of snow that falls above 44 inches, up to 84 inches, or $2 million.
Total snowfall at Logan since the policy took effect Dec. 15, 1995, was 51.8 inches last week. So Massport, which paid $300,000 for the policy, already stands to collect $400,000 after its $100,000 deductible. That money and any more it becomes eligible for ultimately will go to bolster Logan's $1.7 million snow removal budget.
"And ultimately, (snow removal costs) will all be channeled back to the airlines in the form of increased landing fees," said a Massport spokesman.
Removing the 15 inches of snow that fell in the winter of 1994 cost only $750,000. But a year earlier the tab was about $3.5 million to remove 90 inches, and the area is on pace to top that total this year.
The snow policy was sold by the Frederick Penn Insurance Agency of Needham, Mass., and Admiral Insurance Agency of Lynn, Mass., on behalf of Customized Worldwide Weather Insurance Agency Inc., a Manhasset, N.Y.-based managing general agency that writes on behalf of Meadowbrook Insurance Group of Southfield, Mich.
The coverage period is one winter, and the authority has the option to renew for two more at similar terms. Any payout is to be made in a lump sum June 1.
Richard Penn, president of the Needham agency, said the policy is effectively leveling out costs for the airport, but actually may be better suited to private than public entities. "Cities can actually go back to the states after expending their snow budgets and get repaid. It's the one line item they can do it on, no questions asked."
Snow coverage for public entities or for promotional purposes (see related story) is triggered by inches of snowfall, not number of storms, like it was when it was introduced two or three years ago.
"You needed five or six storms, each with about four inches of snow to count. Five storms was your deductible. That didn't seem very good," said Mr. Penn. "A year from now, after this winter, I'll be shocked if the market isn't much bigger."
The Port Authority of New York and New Jersey had ruled out the coverage for the three New York area airports as too expensive, said Barry Glick, manager-risk financing. "If you had bought it last year, you would have had to have swallowed very hard because you would not have got a cent back; if you bought it this year you would be a hero."
Another storm-related claim, this one for $4,000, has been filed with Worldwide Weather by Charlottesville Albermarle Foundation for Encouragement of the Arts. More than four inches of snow fell in Charlottesville, Va., between 7 a.m. and 7 p.m. on Jan. 7, forcing the theater to cancel a showing of "Will Rogers Follies."
Gavin Souter contributed to this report.