How does personal accident insurance work, and is it changing the risk and liability game at resorts? Ever since the emergence of lift-serviced skiing about a century ago, a pervasive principle has been a guiding force: ski at your own risk. It’s a principle that has been posted on lift towers and printed on lift tickets. It hums like a subliminal mantra in the back of the minds of all skiers and riders as they launch down slopes of varying difficulties and on snow of varying textures. Another principle of modern life: whenever the word “risk” enters the conversation, “insurance” is sure to follow. What might be surprising, then, is how long it has taken for the introduction of personal insurance to cover the medical expenses of skiers and riders in the case of an accident. Several insurance providers are now offering optional policies that ticket purchasers can buy for financial protection in case of an accident. Typically, these are offered as an add-on to day passes and/or season passes. The main purpose of the policies is “to fill the gap for out-of-pocket” medical expenses, says Tim Barnhorst, senior vice president at MountainGuard, especially for people with high-deductible health insurance plans. As a result, claims payouts are capped relatively low, in the $20,000 to $25,000 range. Insurance providers first made personal accident insurance available to the ski resort industry about four years ago. The companies offering it are Spot, Buddy, MountainGuard, and Pattern. While the concept for all four is essentially the same—covering initial out-of-pocket medical expenses—the details vary from one company to the next, especially when it comes to pricing, what’s covered, and a resort’s role within the arrangement. Why Now? The concept of add-on insurance might be relatively new to the ski industry, but the companies offering it have models to go by. Grant Baker, head of U.S. sales and partnerships for Pattern, points to online travel agencies like Expedia that have been offering travel insurance for decades. Nabil Rahman, Spot’s chief strategy officer, agrees: “Airline travel insurance was definitely the inspiration for this product and the most effective way to educate” potential resort clients on how these policies work. Buddy has been offering a general liability insurance program for participants in a variety of sporting activities, such as rock climbing (through the American Alpine Club) and paddlesports (created for American Canoe Association members), for a while, according to company co-founder Jay Paul. MountainGuard, which is also in the business of selling property and casualty insurance to ski resorts, added personal accident insurance to its product line-up as “one more layer of risk management that we can offer in the form of risk transfer,” says Barnhorst. Tech-enabled. This kind of insurance product has been largely enabled by the technological shift toward electronic ticketing in the last three years. When purchasing a day or season pass online, all the buyer need do is click on a box to accept the insurance option, and its fee is added to the total price. While this sort of add-on might have been possible when paper tickets were the order of the day, the sales and documentation process would have been cumbersome and time-consuming. Imagine, on a busy weekend at the ticket window, salespeople having to explain the insurance option to each customer and then execute the necessary paperwork. How it Works Rahman says there was some initial apprehension among resort managers when Spot first rolled out its variation on personal injury protection in 2020. Perhaps the main stumbling block, he notes, was “workload”—resorts worried it was just one more thing to gum up their administrative gears. These policies, however, are conceived within the framework of a direct relationship between insurance provider and resort guest, in theory relegating a ski area to the background in a secondary role. Ski areas, of course, are involved on the sales end, given that the policies are ticket add-ons. Resorts are also in the picture in the claims process, in providing accident documentation and any potential fraud investigation. (Rahman notes that what Spot offers isn’t technically personal insurance, but a component of a group insurance policy offered through the resort.) That said, the sales component is essentially a pass-through directly to the purchaser once the insurance policy is set up as an option within the ticketing system. While the set-up—the integration with a resort’s ticketing software—might seem potentially nettlesome, JP Goulet, marketing director of Powder Mountain, Utah, a Spot partner, says it was “seamless,” a word echoed by insurance company reps. On the claims side, filing accident reports is already standard operating procedure at all resorts in complying with liability insurance requirements. So, there isn’t much additional workload needed to forward accident information on to insurance companies. “It’s pretty hands-off for us,” says Goulet—Powder has been selling personal accident insurance through Spot for three years. According to Paul, Buddy sends an email to the customer on what to do in case of a claim in order to limit the interaction between resort and claimant. “It’s not the ski resort’s job to manage claims,” he says. Revenue generating? These policies could conceivably be revenue producers for resorts, depending on the specific arrangement between resort and insurance company. Baker says due to how they’re regulated, accident policies are the only insurance product that cannot be offered to resorts on a commission basis versus other products, like travel and pass protection. The most common arrangement, therefore, is for providers to offer accident policies to resorts in a price-per-policy deal—say, $4 for a day pass and $50 for a season pass. After that, a resort can add on whatever “administrative” or “marketing” fee it deems necessary. Regardless, the main benefit to a resort in offering accident insurance is not as a revenue generator but as an incentive in selling passes. “It’s a great value added,” says Goulet. » continued Coverage and Pricing Both Spot and MountainGuard limit coverage to in-bounds, on-mountain accidents. Rahman says Spot’s decision to confine coverage to on-mountain activities was a means to keeping the premium price low. Buddy, on the other hand, provides coverage for the policy period for which it was purchased, regardless of where the insured is located, covering everything from on-mountain accidents, slip-and-fall injuries, even injuries incurred at the airport or in a car accident on the way to the ski area. Pattern’s coverage extends to the customer for the entire day at the area, not just their time on the hill. Variables at play. It is probably fair to say that the situation is fluid. Because these policies are so young, they are still evolving. What’s offered, and how it’s priced, is inevitably based on risk assessment, and insurance company representatives agree that current coverage and premium pricing are yet to be backed by reliable data. According to Rahman, it typically takes “three years of a representative population” to begin to develop reliable risk data. As insurance providers develop more precise risk analyses over time, coverage terms and perhaps premium pricing are likely to change. In addition, he points out that there are many variables in play—not all mountains are created equal, and not all snow and weather conditions are linked to the same levels of risk. There are also variations in clientele from one resort to another. That’s why, says Rahman, Spot’s approach to personal accident insurance is customization. The main question Spot asks, Rahman says, is “What does each mountain need?” It then tailors its policies and pricing accordingly. Liability. How personal accident insurance impacts a resort’s overall liability picture is also a question that remains to be answered until a larger database has been established. “I believe it is the next chapter in risk transfer for the ski industry to help guests transfer their risk,” says MountainGuard program manager Tim Hendrickson. Pattern’s Baker also sees the product’s “potential to reduce some of the resort’s risk liability.” If personal accident insurance reduces the frequency with which guests come to resorts for claims, it would be a fair assumption to think that stress would be relieved on a resort’s overall liability exposure. While premiums may not see an immediate impact, the frequency reduction in claims would be considered in the overall risk profile of the ski area. Thus, adoption of this new coverage could result in savings by keeping deductibles in the pockets of the ski areas. “There is the possibility of lower liability” premiums, suggests Paul, especially if personal accident insurance helps reduce the number of “nuisance claims.” But data comes into play in the calculation of premiums, too. Data on risk history is used to determine a profitable balance between premium price and potential claims. And with the data for skiing-related personal accident protection still incomplete, pricing and coverage are still moving targets. A Growing Market Given the ease with which electronic ticketing makes add-on options possible, personal accident insurance might be just the first entree in a menu of other products. Baker envisions a whole “suite” of possible add-on insurance products, covering everything from lodging to travel to snow conditions. Many resorts that now offer personal accident insurance in the winter also offer similar coverage for summer mountain biking, though at a slightly higher price since the latter has a higher injury rate, according to Rahman. If electronic ticketing has opened the floodgates, however, it doesn’t mean that smaller ski areas that still rely on ticket-window sales need be left on the sidelines. Rahman says signage, printed materials at the ticket window, and QR codes are all in play in making add-on insurance a possibility where on-line ticketing isn’t the principal sales medium. Demand. According to Rahman, interest among ski resorts in personal accident insurance is growing rapidly. “We had a really good year one,” he says—Spot now has 20 resort partners on board, from giants like Alterra to independents like Powder Mountain. And with four companies now aggressively pursuing ski resort business, it’s likely that the buy-in rate will climb. While the opt-in rate varies from resort to resort, says Rahman, at “established resorts we see conversion north of 10 percent.” The technology might be new, but it’s the same old game: skiers (and riders) will continue to ski at their own risk. Now, however, there appears to be a way to mitigate a ski area’s financial and legal responsibilities when risk morphs into injury.