Insurance

[Mattberg]

Just wondering if this bothers anyone but me...

I just finished reading over the newly published insurance rates along with the SCCA operating statement of departmental income and expenses. THe bottom line is this. Solo doesn't seem to be paying their fair share of the liability insurance.

Road racers are paying $31 per car plus a liability payment of $10-15 per car on top of that. Solo pays $4.50 per car and liability and all other insurance is included. How can that be? The expensive part of the insurance is the liability not a particpant event on track. You know, the doffus who trips on the trailer wire? How can 83,000 entries in spectator solo events pay only $377,000 for the year while Club Racing pays $1.37 million? With rising entry costs and decreasing participation due to the expense it seems that paying for Solo's liability insurance is a little out of line. Realistically I've been told that the minimum for Solo's liability would be roughly $10 per event. With 83,000 entries last year that would make them responsible for close to $1.2 million of the bill.

On a side note, check the operating statement out for payments to "Directors, Officers and Committees" as well as "Race Meetings". $1.2 million! THat's a lot of catering! Must have ordered one of them big sandwiches... :P

[tom_sprecher]

You would probably have a better chance of satisfying your curiosity if you pose your question to the insurer.

[Mattberg]

I have done that. Unfortunately, the insurance agent is not very cooperative. You see, Pete Lyon is not only the club's insurance agent and insurer, but also the club's risk management specialist and general counsel not to mention that he is appointed by a BoD that is elected by mostly non-road racers and solo drivers.

I've asked for the breakouts but have been told it's confidential. I've also asked if Solo has a liability policy or if they're taking a free ride on ours. Again, confidential.

[RSTPerformance]

Matt, I think you are on to something... Solo is far more dangerouse then Road Racing and they should not be taking a free 45second ride on us

Thanks for pointing that out;

Raymond "Some people would make a better cone" Blethen

[Eric Parham]

If road racing (RR) is covering the Solo liability insurance, it doesn't necessarily bother me. It does pique my curiosity that they're apparently trying to hide it from the membership at large, but I can imagine an excusable reason for that. Who (which company) actually underwrites the insurance these days? Is re-insurance involved?

Solo is not only the traditional entry point for many road racers, but it's also both good public relations and good for society in general. I started in Solo and know for a fact that my car-control skills improved dramatically during that time. The skills learned by the masses in Solo translate most directly to increased safety on public roads, IMHO. RR is more expensive, so while RR specific skills may also result in higher safety on public roads, there is not as much of a practical effect due to the reduced number of participants who gain those skills.

If the only reason for the difference in expenses between RR and Solo were the insurance, then I'd be 100% for Solo paying its fair share. However, I believe that the facts are different. RR typically requires a purpose-built machine, while Solo participants typically use their regular street cars. I think that's the main difference in cost that tends to put RR out of reach for many.

[BobsAuto]

I was very surprised when I read about the the liability being lower in Solo. Workers at solo events ARE moving pylons and in years past, I remember having had to dodge the bonzai driver going all haywire over the course. Interesting perspectives here.....and yes, quite unfair.

[Mattberg]

Well Raymond, not sure what you're saying there but it sounds to me like you're being somewhat facetious in putting road racing into a category of far more dangerous and therefore more expensive to insure. That's really not the case.

The real insurance cost as it has been explained to me has little to do with the level of "hazard" element. It's all about liability for the event and facilities for injuries sustained by those not overtly accepting the risk of participating in an "ultra-hazardous" activity as it is termed by law and the industry. In other words, by taking to the track, working or spectating you accept the burden of risk and virtually eliminate yourself from any potential claim regarding liability for injury. And liabililty is where the big bucks are. There is a great deal of case law related to this, mostly in equine law.

So the real danger of insurance company risk relates to incidents outside the realm or definition of the activity and "non-participants", i.e., the "trip and fall" and in most cases it's no greater at a road racing event than a Solo event or a grocery store for that matter, which is what makes me question the difference in rates. Many have tried to sue for activities related directly to the defined activity and all have failed. Even regarding spectators. A girl killed by a hockey puck, a man gored by a broken bat, a worker killed by a car off course, etc. They accepted the risk and it's printed on their ticket and/or waiver. Conversely, spectating or participating, slipping on a wet bathroom floor, potentially as the result of faulty plumbing, is a whole different story. Medical claims without liability are peanuts. Very calculatable risk. It's the lawsuits and personal injury claims arising out of those incidents where risk has not been acknowledged that the insurance companies fear and precedent is very complete in this area. When you get in a race car on a track or in a parking lot with or without other cars your chance of suing anyone for an incident is just about nil outside of gross or criminal negligence on the part of event management or facility.

I'm pretty much convinced that the reason there is such a difference in the insurance cost here is because the expensive insurance policy, general liability, is a single policy carried entirely by club racing for the entire club. The medical coverage is the cheap stuff and is capped. I'd also assume that the Solo medical is strategically broken out from road racing because while liability is probably close to the same for any event based on attendance and participation, road racing is obviously going to be more expensive just based on the potential severity of a participant medical claim(s) arising out of any incident, which BTW, are few and far between.

[Mattberg]

I was very surprised when I read about the the liability being lower in Solo. Workers at solo events ARE moving pylons and in years past, I remember having had to dodge the bonzai driver going all haywire over the course. Interesting perspectives here.....and yes, quite unfair.
[/b]

Trish, as far as I can tell, Solo doesn't pay anything for liability. It's included in their $4.50. They get the same medical we get and pay as much as ten times less in premiums. I have to believe that they're simply piggybacked on a single liability policy carried on the club racing department books. It's hard to believe they get event liability coverage of $5M and all of the medical we get for a payment of $90 minimum per event where our minimum is $4100 for the same coverage. WOW!

[RSTPerformance]

Trish & Matt-

The risks in Road Racing are far higher than in solo. I am not going to waste my time explaining why, most people feel the same. Because of this, I am OK with the rates that you quoted at this moment in my life with SCCA. If I ever (30-40yrs from now) have extra time to look into it a bit more maybe I will worry about it. I appreciate you at least looking into it and keeping us informed though, thanks Matt.

Raymond

[handfulz28]

Raymond, the risks for participants are different, but the "General Liability" that Matt is writing about has little or nothing to do with on-track risk. Say somebody trips over a jack handle and busts their head open. Equal chance of that happening at a Solo event or a RR event. That person or their family coming back and suing SCCA is the type of thing GL covers. Treating that injury would be covered by a seperate Medical Insurance policy, up to the limits of that policy.
There is no liability insurance for on-track stuff. We as participants (Solo and RR) are covered for medical, but we can't come back and sue anybody. I hope I explained that OK?

I for one am thankful for Matt's efforts to keep an eye on what's going on. Unfortunately, we're full of complacency and even if we did have a strategy for change, I think nobody cares enough to follow through.

Matt, when you say Club Racing is carrying the premium for the entire club, do you mean Solo, Rally, and Club Racing? Or are we covering any Pro stuff too?

Good luck, have fun,
Michael

[JeffYoung]

Guys, I just skimmed this thread, but one point that is being lost here......(and yes, I am a lawyer, ducking now)......."premises" or general type liability issues, the tripping over the jack, still have to involve some fault on the part of the SCCA. Yes, this is America, and yes we are incredibly litigious, but you can't sue the SCCA and/or the track simply because YOU fell on a jack.

I know that most of us don't have much faith in our Court system (and please don't post about the McDonald's coffee case, etc.), but I will tell you that if someone sued over falling on their own jack in a paddock area, 99 times out of 100 that case is GONE on a motion to dismiss.

So, again, I'm at a loss here. It seems to me that Matt's basic premise -- that Solo and Road Racing have the same "premises"/general liability type risk -- is correct, but what is faulty about his thinking is that he beleives it is that risk that is driving the rate calculation. I suspect it is not, given the above.

Premiums are calculated based on loss experience and lawsuits, and remember that insurance is a highly regulated industry in ALL states. Rates are generally approved by a Department of Insurance or its like, for the most part. In any event, I suspect that the loss experience and lawsuit frequency for road racing is much higher than Solo, and that is what is driving the difference in premium.

[RSTPerformance]

Look at a Road Racing padock vs a Solo padock. Most people tow thier cars vs. drive thier cars, In Road Racing we camp with 100's of people for multiple days, yes racing (seperate risk to some, but I am sure that it has to play with things) but also having workers on stations (that has to be a liability), and "social" events at night. In Solo people come for the day and leave after a brief trophy/award ceramony that doesn't involve drinking or food of any kind. Yes thier are acceptions with "special events" but in talking general liability lets look at things in a general event

Raymond "EVERYTHING but your cone is safer in a Solo than it is at a Road Racing event" Blethen

[ggnagy]

1. Solo events are not "High speed events", and so as far as personal insurance goes, is looked at in a much different light than Road Racing. Any bets the insurance underwriters look at it the same way from the other end?

2. Any time you get hurt and go to medical at a Road Race, you get a card detailing the SCCAs medical policy that will cover whatever your regular policy will not for the injury specified. Can't say I've ever been hurt at a Solo event, but I have never seen any official ready to hand out the same policy information.

3. Why bother. No matter what anyone points out, Matt is going to regurgitate the same pap over and over and over and over....

[charrbq]

I'm kinda curious as to why this is a news worthy item. As long as I can remember, club racing has always footed the bill for everything. That's where the club was founded. Even though the Solo 2 championships draw huge entries, they really don't pay thier way and never have. Consider it our loss leader. Road rally is really a sponge, which is why we don't do Pro any more, but it still recruits membership and interest. Where the vacuum of our funds goes is in SCCA Enterprises. Now there's a hole in the ground!

[JamesB]

Im lost, you want to dump enterprises that ran at a net loss of only 100k for 2005, but you have no problem with that fact that pro ran an a 500k loss for the same year? At least enterprises has a chance of breaking even at its current rate, I would like to see pro do the same.

[gran racing]

This is where things become a bit tough. One reason I became an SCCA member can be attributed to SCCA's World Challenge. People watch the racing and learn about SCCA, so there is value to it.

[lateapex911]

Advertising is expensive.

People bitch that Pro costs too much and they don't get the direct benefit from it.

But without Pro, I wonder if the Secret Car Club of America might cease to be visible at all, LOL.

(In other words, the direct benefit to us is the continual influx of peole to play in out sandbox...no new blood, no racing.)

That said, smartly done advertising is needed, and getting pro to be sharper with the expense accounts can't hurt. Not sure if they can do that or will....

[Mattberg]

I'm kinda curious as to why this is a news worthy item. As long as I can remember, club racing has always footed the bill for everything. That's where the club was founded. Even though the Solo 2 championships draw huge entries, they really don't pay thier way and never have. Consider it our loss leader. Road rally is really a sponge, which is why we don't do Pro any more, but it still recruits membership and interest. Where the vacuum of our funds goes is in SCCA Enterprises. Now there's a hole in the ground!
[/b]

Why do we need a loss leader? Have you looked at our books lately? Are you aware that we just paid Fran Am probably upwards of $6 million to settle a lawsuit of which a large portion was not covered by insurance? Are you aware we've just drawn to the max on a $600,000 LC incurring debt service yet we're leding $300,000 to Pro Racing at 4%? Sombody's got to put on the brakes here. What I'm seeing is a common problem when people without money get to play with other people's money. We need a loss leader like we need another lawsuit.

Solo as a recruiting base is a myth. The numbers are very clear on that. When it comes time to spend the money, very, very few can or will do it. If there were any significant crossover we'd see no worse than static rates on club racing entries but instead it's been in steady decline while entries for Solo have gone up. The math doesn't add up.

Let's say there was a crossover of 1%. Well, out of 83,000 Solo entries last year road racing would see an increase of over 800 entries to road racing. Let's say that 1% only does a third of the number of races versus solo events they did. That's an increase for road racing of 260 entries. Well, road racing was down somewhere around 200 for the umpteenth consecutive year so I have a hard time believing there is any crossover worth spending $830,000 on or do I see any reason for carrying a loss leader other than to throw away cash. Sorry folks. I'm sure some of you started in Solo and someone always uses themself as an example... yea, yea... Randy Pobst, yada, yada, yada, but it's the exception, not the rule.

And I'd rather see $100,000 going to Enterprises which supports over 1200 of our own. I'm also told that Enterprises will report a profit this year. I don't think the same can or will ever be said for Solo, Rally or Pro. So let's get our own insurance or at least a quote and get one without liability coverage for 83,000 Solo entries. Let's see if our bill is still $1.4 million. I strongly doubt it will be.

[JeffYoung]

And the risk to us, as members, if the house of cards (as you see it) comes tumbling down is what?

.........drum roll......NOTHING. Just that the SCCA goes away. For my $100/year or whatever it is, I am glad I am paying them to take care of this stuff. If SCCA goes away because they mismanged my $100, someone else who has a better model will spring up to take over.

I just don't get the reason for all the angst over where my dues go. I'm happy with what I get (a good mag, and road racing basically whenever I want it) for my money. I also, like Jake, beleive that World Challenge is a good investment. It's about the only time I ever see the words "SCCA" on TV or in the press.

[Z3_GoCar]

I'm kinda curious as to why this is a news worthy item. As long as I can remember, club racing has always footed the bill for everything. That's where the club was founded. Even though the Solo 2 championships draw huge entries, they really don't pay thier way and never have. Consider it our loss leader. Road rally is really a sponge, which is why we don't do Pro any more, but it still recruits membership and interest. Where the vacuum of our funds goes is in SCCA Enterprises. Now there's a hole in the ground!
[/b]

From the Prod-board,

Matt's angered because Pro-racing secured a loan from Club-Racing. In that thread a BOD member states that Solo is in fact the "Cash Cow" not Club-Racing. I can understand the issues, if you look at the votes that were recorded that opened these minutes to record and then the vote on the loan. However; why would solo be such a cash cow if it were actually paying its own way. Matt's hinting that subterfuge is involved to funnel club-racing monies into solo to make it look like it's really much more profitable than it is. It's really all chicken little stuff.

Let's just say, that the SCCA does become insolvant, what then?? Well, most of us live in area's that have a strong regional club. In fact why would the regions fall if the National club fails? As an example before the SCCA was a strong national club, the California Sports Car Club hosted races and sanctioned events. Really what would stop us from regional club racing, unless it was a real end-of-the-world event? Then I'd think we'd have more important things on our minds.

James