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Although accidents such as the recent one at Six Flags Kentucky Kingdom grab headlines and spur public concern about ride safety, amusement parks are generally enjoying a favorable market for liability coverage.
While high-profile incidents still occur, such as the June 21 accident at the Louisville, Ky., amusement park that severed the feet of a 13-year-old girl, improved safety and loss control and growing competition for amusement park risks have driven rates down, observers say.
"Pricing overall is a bit softer than a few years ago," said wholesale broker Gerald Whitt, vp at Strickland General Agency of Florida Inc. "It's a reflection of the insurance industry across the board."
The increase in the number of amusement parks and family recreational centers--usually featuring go-karts and water rides--has led more insurers to offer coverage in this line, said Michele Kroczewski, senior marketing manager of Northeast Insurance Center in Enfield, Conn., which insures two small amusement parks in Florida.
"For many years, there were only a couple main carriers in the market," said Ms. Kroczewski. "We've noticed that we definitely have competition now, which is good for the industry, because for many years they were being charged definitely too much."
Rick D'Aprile, president of Allied Specialty Insurance in Treasure Island, Fla., said he has also seen the amusement park line grow in popularity, with up to 30 insurers now competing for business. Allied Specialty is an affiliate agency of amusement park insurer T.H.E. Insurance Co.
"All types of companies have entered the field to try to grab some premium dollars," Mr. D'Aprile said. "Over the years, we've seen a lot of companies get in it and get out of it. We expect that to happen again."
The market is a combination of surplus lines and admitted lines insurers, he said, noting that his company is admitted in 49 states.
The common perception is that coverage is available only through the nonadmitted market, because of amusement parks' higher risk of liability, said Ryan Wilkerson, president of Haas & Wilkerson Insurance in Shawnee Mission, Kan. But "there's definitely a capacity in the admitted marketplace," he said.
Better risk management
One key factor helping to boost capacity and lower rates is better safety and loss control among parks, said Mr. Wilkerson, who added there has always been an emphasis on rider safety.
"Safety practices are always improving. It's a perpetual process." There's an increased scrutiny of ride operators, and states are more involved in regulation, he said.
Jim Bourland, a specialty broker for amusement ride manufacturers at Clearwater, Fla.-based Bouchard Insurance, noted that rates for one client, a New York amusement park, will decrease up to 8% this year because of its risk control measures.
"They're such a professional organization running a clean, well-managed facility that the insurance company really likes them," Mr. Bourland said.
"I believe the industry as a whole is maturing," said Matt Sackett, president of Leisure Sports Specialists L.L.C., an insurance provider in Fort Wayne, Ind. Much of that is due to consolidation and park officials' aggressively managing their exposures "in an effort to keep the government from doing that for them."
As the former risk manager for Six Flags Houston, Randy King focused both on training and implementation of risk management practices. His team observed the actions of ride operators to catch pitfalls.
"We have all these great instructions and manuals on how to run and operate rides," Mr. King said. "We wanted to measure the difference between what was written vs. what the (employee) behavior was." He is now the owner of Theme Park Safety Consulting in Conroe, Texas.
Industry groups, including the International Assn. of Amusement Parks & Attractions, distribute information on safety, operations and training to members.
"We urge our insureds to join those associations so they can get all that information," said Ms. Kroczewski of Northeast Insurance Center.
The amusement park industry has averaged about two rider fatalities per year in the past two decades, according to IAAPA. A spokesman noted that more than 300 million visitors took more than 1.8 billion rides at U.S. amusement parks last year.
"Statistically, you're more likely to be injured going to the park in your vehicle," said Mr. King. "Theme parks overall, by and large, are relatively safe."
Despite the sterling safety scorecard, "it doesn't take much of a hiccup for (park injuries) to make the news," Mr. King said.
Mr. Sackett of Leisure Sports Specialists said while a few incidents are due to mechanical failures, most arise from human error by either park employees or rule-breaking visitors.
Mr. Wilkerson said that rides' safety equipment has become more sophisticated, making "catastrophic incidents" rarer.
Preliminary investigations of last month's Kentucky accident showed a broken cable on Superman Tower of Power ride was to blame for the injury to the teen, who was in stable condition last week, according to media reports.
How that accident will affect the theme park chain's insurance costs remains to be seen, said wholesale broker Mr. Whitt. An investigation is ongoing, and it could take "several years" for a settlement to be reached, he noted.
Representatives of Six Flags could not be reached.
But individual accidents aren't likely to affect the whole industry's rates, Mr. Whitt said.