Guides question liability insuranceAug 26, 2012 By Mike Koshmr, The Associated Press
JACKSON -- A number of Grand Teton National Park concessionaires are raising red flags over rising liability insurance requirements for outfitters and guides.
In recent years, the National Park Service has begun requiring smaller companies involved in high-risk activities, such as rafting and climbing, to buy general liability coverage of up to $5 million.
That number is unreasonably high, says a group that includes Exum Mountain Guides, Grand Teton Mountain Guides and the American Outdoors Association.
Exum President Nat Partridge protested any increases in liability insurance requirements during an Aug. 2 hearing before the House Subcommittee on National Parks, Forests and Public Lands.
"It is reasonable to assume that increasing limits to $5 million will increase a concessionaire's premiums by at least 50 percent," Partridge said. "This increase will put us out of business."
Liability insurance requirements for concessionaire contracts, typically 10 years in length, are set on a case-by-case basis using consultants, said Kurt Rausch, the Park Service's contract management team lead.
There are no predetermined requirements for any type of contract, he said.
In the hearing, Peggy O'Dell, the Park Service's deputy director, countered critics by pointing out that competition for out?tter and guide contracts remains strong. That indicates that the $5 million requirement -- currently in place for a number of Grand Teton rafting companies -- still provides for a business opportunity, she said.
"In the case of the contracts issued in 2010 for Grand Teton National Park rafting companies . the PricewaterhouseCoopers Risk Management Division recommended per-occurance and aggregate liability coverage minimums of $5 million," O'Dell said. "These insurance minimums were provided in the draft contracts. The winning offerors agreed to the requirements as contract terms."
The same year, the Park Service conducted a financial analysis of four of the Grand Teton rafting companies using actual insurance rate data, O'Dell said.
"Results showed that the concessionaires' internal rates of return with the new insurance requirements were well above the industry benchmark," she said.
For small concessionaires with low risks, liability insurance requirements start around $1 million, O'Dell testi?ed. But for companies involved in backcountry operations, which are deemed to carry higher risk, "expert analysis typically results in insurance coverage requirements that are significantly higher," she said.
Partridge testified that a $5 million requirement would be overkill given the record of claims against his company.