ADVG 2040
Class #8
Insurance
THOMPSON RIVERS UNIVERSITY | JANUARY 2019
HOUSEKEEPING
Every class, we’ll start by checking in and having a quick discussion
CURRENT EVENTS
AGENDA
FUTURE
What’s happening
right now?
What are we doing
today?
What’s next?
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•
Payroll Information
added to Moodle
• Long weekend?
• 2 Classes left!
•
Insurance
• Work Period
• Resources
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
Business Plan
• Readings
• Homework
2
INSURANCE: What is insurance?
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Insurance is sharing the LOSS of a few amongst MANY
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The principle of Insurance is
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INSURANCE: Defined
An undertaking by one party to indemnify another person against
loss.
*EXAM*
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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INSURANCE: Insurance Contract
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WHO:
Insured > the First Party
Insurer > The Second Party
Third Party > Party that makes a claim against the the First or
Second.
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WHAT:
Contract of Insurance is when the INSURER agrees in return for a
Consideration (remember, this is $ AKA the Premium) to INDEMNIFY
the INSURED against loss, damage or liability.
INDEMNIFY = is a principle of insurance in which the insured's are
compensated for the loss and is based on the principle
that
their compensation will not provide them with a
gain or a loss.
•
****EXAM***
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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INSURANCE:
*SPECIAL NOTE*
The Two Most Important Elements of an Insurance Contract
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NUMBER 1
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The event insured against must be a FUTURE event
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NUMBER 2
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The future event must be accidental, and not involve, will,
cooperation, design or intent
HUGE IMPLICATIONS > Design (Trampolines and Gymnastics)
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
5
INSURANCE:
Types of Insurable Risk
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PERSONAL RISKS
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Bodily injury, loss of life, loss of income etc.
Causes > death, disability (accident/sickness/travel), unemployment
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PROPERTY RISKS
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Destruction or damage of property
Causes > Two Types
1) Direct losses = stolen property, car collision
2) Indirect losses = a fire in your rental suite causes a direct loss, but
also causes you the loss of income. Or you own a rafting business
and the theft of your bus causes you to lose clients. These are often
tied to loss of income or earning potential
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LIABILITY RISKS
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Typically based on NEGLIGENCE
Causes > Conduct, operation of a vehicle, ownership of a property,
manufacture of products, professional
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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KEY TERMS
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CGL: Commercial General Liability
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COI: Certificate of Insurance
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PREMIUM: What you will pay for the insurance policy.
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MINIMUM RETAINED PREMIUM: The amount you will pay regardless of any
changes to your policy.
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REIMBURSEMENT CLAUSE: If your premium is paid based on an
Estimated Per Client Rate, it will typically be coupled to an MRP, if you do not
reach your Premium, this clause will ensure you are refunded for the
difference.
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PER CLIENT RATE: How much you will pay per client
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ADDITIONALLY INSURED: Adding someone as a party to your policy
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POLICY: The contract which you are bound to
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ENDORSEMENTS: Additional coverage that extended to the normal
insurance
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EXCLUSIONS: Items that are not accepted as risks on your policy, these are
the boundaries in which your policy are defined by
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COVER PAGE: Where you find all your information
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LIMITS OF LIABILITY: The maximum amount of coverage offered to you.
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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• Insurance Policies (your contract),
are fundamentally built on
EXCLUSIONS, which are those items
to which you are not offered coverage.
“Downhill Definition” Story
“Inverted Aerial Maneuvers”
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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• How does insurance work??
Video
INSURANCE PROCESS
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YOU > INSURANCE BROKER > INSURER (UNDERWRITER) > LLOYD’S
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Don’t lie to your broker…
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Why Insure your company?
Reason:
It might be legally required
Risk management > It’s like a helmet, the last
point of contact!
Remove uncertainty of costs
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Some Key Types of Insurance

General Liability
Insurance

Business Premises
Insurance

Business Use Vehicle
Insurance

Business Interruption or
Loss-of-Income Insurance
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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Some Key Types of Insurance


Disability or Accident and
Sickness Insurance

Partnership Insurance

Workers’ Compensation
Key Person Insurance
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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Insurance Premiums
• Historically, adventure business
liability insurance premiums have
been based on:
– # of participants
– Types of exposure
– Gross Revenue of Company
• Note that we are in the softest
insurance market in 30 years
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Insurance Premiums
Today, premiums can be set based upon more
sophisticated risk assessments.
What might this assessment look like?
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Insurance Premium Examples
 Snowmobiling 6,500 clients = $22,500
 Sea kayaking 1,000 tours & 300 lessons = $6,000
 Sea kayaking 250 day trips = $2,500
 Heli-skiing 500 clients = $16,500
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Insurance Premium Examples
Canoeing and Kayaking
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$2,000,000 CGL
$1,000.00 Reimbursement Clause
Rate per person
Grade 1 = $4.00
Grade 2 = $6.00
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$5,000,000 CGL
$1,000.00 Reimbursement Clause
Rate per person
Grade 1 = $6.00
Grade 2 = $9.00
• Minimum Premium:
• $2 million limit - $1,500.00
• $5 million limit - $2,250.00
THOMPSON RIVERS UNIVERSITY | JANUARY 2015
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Insurance Premium Examples
Whitewater Rafting/Kayaking
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$2,000,000 CGL, $5,000 Reimbursement Clause
Rate/Person
Grade 3 = $10.00
Grade 4 = $15.00
Grade 5 = $25.00
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$5,000,000 CGL, $5,000 Reimbursement Clause
Rate/Person
Grade 3 = $15.00
Grade 4 = $22.50
Grade 5 = $37.40
• Minimum Premium: $3,500 on Water Grade 3
• ($2 million limit)
$5,000 on Water Grades 4 & 5
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HOW TO GET INSURANCE
1. Find a Broker:
LCIS
Special Risk Insurance // All Sport
JLT / MARSH
Lifestyle
World Nomads
Gougeon
ACMG/Trade Associations (Helicat, BCBLA, CASI/CSIA)
1. Application and History
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Knowledge, Skills and Experience
Claims History
Gross Sales / Net Sales / Assets
Risk Management System
Probability + Severity x Exposure
Size of potential loss
Relationship with Broker!!!!!!
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Helicopter Access/Egress
CGL, PAP, AD&D, KEY PERSONS, etc.
2. Common Types of Coverage for Adventure Sports
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HOW TO GET INSURANCE
IN-CLASS ASSIGNMENT
In anticipation of your business plan, take the next 15-20 minutes to research
where and how much you can expect to pay for insurance for your type of
business?
ASSIGNMENT:
Write on a piece of paper and hand-in to me the following:
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STUDENT NAME + ID NUMBER
The type of insurance you need for your business/product/service
CGL, AD&D, PAP, or Business Interruption etc…
The name of at least 3 BROKERS, their phone number/email and their
firm/company. Make sure they can actually handle your business.
The amount you expect to pay (*hint* this will be really hard to find in 15
minutes)
if you can’t find an approximate amount, simply write down how much you
think you will pay for a YEARLY policy.
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FINISHED
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The rest of the class is a work period!!!
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Work on your Business Plan IN CLASS!!!!
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