The amusement park industry is expected to generate nearly $30 billion in revenue in 2024, fueled by the ever-present demand for excitement and exhilaration. Other types of entertainment, ranging from arcades and bowling alleys, to extreme adventures like zip lining and bungee jumping, add billions more.
Each type of amusement presents its own unique risk exposures, and each state has its own regulations that can impact an amusement operator or manufacturer’s liability, which is why it is important for insurance brokers to work with experts in assessing risk in the amusement industry.
When we underwrite liability coverage for an amusement operator, we want to make sure we’re providing sustainable long-term coverage that accurately reflects their risk exposure, and sets them up for success.
Here are some of the main areas we look at when conducting risk assessments:
- Experience: How experienced are the owners, managers, and operators?
- Equipment: Was it built to industry standards, and has it been modified in any way? How old is the equipment, and is there any degradation?
- Maintenance and Inspections: What are the maintenance and inspection procedures, and how thorough are the maintenance and inspection logs and other documentation
- Safety and Training: How much training do employees receive, and what safety procedures are in place? Are rules and warnings displayed prominently, and are speeches regarding safety given consistently?
- Risk Transfers to Customers: Does the amusement require signed waivers, or use any other liability-related language, and how well will this protect an owner from liability in the state of operation?
- Post-Loss Risk Mitigation: After a claim is filed or an injury occurs, what process is in place to review the incident, and make or recommend changes to procedures or equipment to prevent future losses?
Additional Challenges in the Amusement Industry
Risk exposure in the amusement industry can vary greatly, depending on the type of amusement. Here are some additional details, and unique challenges that are faced by the amusement industry, which may affect their risk exposure and liability:
- New Ventures
- New Attractions
- Seasonal Workers and Inexperienced Staff
- Enforceability of Waivers
- Traveling Amusements
- Marketplace Fluctuations & Franchises
- Separating a Facility’s High- and Low-Risk Attractions
- Franchise-Level Underwriting
New Ventures
As with any new business there are growing pains and learning curves for new amusement operators. But due to the nature of the amusement industry, these learning curves can add serious risks. Unsafe construction or design of amusements, inadequate training of employees, improper implementation or enforcement of rules, and misuse of equipment by the customers in ways the operator could not have imagined all have the potential to cause serious bodily injury.
New Attractions
Amusement operators are constantly looking to one-up their competition and bring even more thrilling experiences to their customers. New attractions can carry higher risks, which means it is important to ensure all safety standards are met, employees are thoroughly trained on new attractions, and insurance policies are regularly reviewed for changes in risk exposure based on new offerings.
Seasonal Workers and Inexperienced Staff
Particularly with water parks and other amusements that are only open seasonally, much of the staff tends to be young and inexperienced. This makes it especially important that operators are trained properly, that there is constant retraining, and that managers are constantly supervising to ensure procedures are being followed, and rules are being seriously enforced
Enforceability of Waivers
While some types of amusements such as trampoline parks or indoor skydiving facilities typically make customers sign a waiver before participating, others, such as general amusement parks, may have language regarding liability printed on the back of the ticket, but do not require a waiver. The enforceability of these waivers can vary by state, particularly when a parent is signing on behalf of a child, so both the language in the waiver and the state regulations are important in determining how well the waiver protects the business from certain liability exposures. In general, however, signed liability waivers offer greater protection than mere warning. However, the varied enforceability of waivers means they cannot be wholly relied upon.
Traveling Amusements
Amusements that are designed to be moved from location to location–such as inflatable bouncy houses and traveling carnivals–present a unique set of risks. Each time the equipment is broken down, moved, and set up again, there is an added level of risk posed by human error, unfamiliar terrain, and increased stress on the equipment. It is important that they have adequate maintenance, inspection, and equipment repair procedures in place. By moving around they also subject themselves to different jurisdictions and have to be aware of the different regulatory and legal environments.
Marketplace Fluctuations & Franchises
As amusements are inherently dangerous to their customers, in a more immediate way than many other small businesses they require higher GL premiums than similarly sized business in other industries. Due to this they are often attractive to competing insurance carriers who see the premium dollars first who rush into the amusement space only to retreat due to the increased loss development. This process creates more instability for operators’ insurance buying experience. Admiral strives to be a consistent partner in this space pricing appropriately to stay in the game.
Separating a Facility’s High- and Low-Risk Attractions
Some amusement operators make substantial revenue from selling merchandise and concessions. Depending on how a facility is set up, it may be possible to lower insurance premiums by writing separate policies for the merchandise/concession and amusement parts of the business.
Franchise-Level Underwriting
In the case of amusement chains that are franchised, the parent corporation will sometimes seek to place all their franchisees with one carrier or set of carriers. This allows their franchisees to accurately estimate insurance costs and can reduce premiums. The downside is that a poorly managed franchise, or one that has higher hazard attractions, or one in a tougher venue, may end up increasing the risk exposure and make the program unsustainable for everyone. This can also occur for industry groups seeking insurance together.
Work with Amusement Industry Experts
Our dedicated national underwriting team at Admiral has exceptional expertise in the unique risk exposures associated with the wide variety of offerings within the amusement industry, along with the varying state regulations and other challenges of providing liability coverage in an exciting, but sometimes daunting industry. This enables us to provide our brokers and their clients with insights into their risk exposure, and custom, long-term, sustainable coverage solutions.
If you are a retail agent or broker, locate an Admiral wholesale partner. If you are a wholesaler, contact us about becoming a premier partner.
