Riding the waves of a profitable niche

Rough Notes, May 2001 by O'Hare, Edward

Ski-Safe provides agents access to coverage for the booming personal watercraft market

When it comes to unique and exciting charitable fundraisers, it's hard to beat one sponsored by country music singers Kix Brooks and Ronnie Dunn for St. Jude Children's Research Hospital in Memphis, Tennessee, last September. Called the Churn and Burn Charity Ride, it involved the use of personal watercraft (PWCs)-those bullet-shaped jet skis that can zig and zag up to 60 miles an hour-in a 439-mile race from Nashville to Memphis. Taking a roundabout way, the Brooks & Dunn duo led two groups of six PWCs driven by close friends through a number of waterways and five states-ending with a 245mile leg down the Mississippi River to Memphis. With individual and corporate supporters pledging five cents to $10 per mile, the race raised more than $100,000 for St. Jude, the hospital made world famous through the charitable efforts of the late entertainer Danny Thomas.

The use of PWCs for the fundraiser comes as no surprise to Howard Reiff, executive vice president of Ski-Safe, the nation's largest insurance program specializing in personal watercraft. Despite the fact that personal watercraft account for a disproportionate number of injuries and fatalities, there are now more than 1.2 million of them in use, and they are a popular choice for the boating enthusiast looking to enjoy our nation's waterways. "PWCs are a thrill to drive," says Reiff, adding: "They cost less than conventional boats; they're easy to transport, and you can stick them in a garage when not in use."

As the boating season swings into high gear, Reiff reflects on the growing popularity of PWCs and the nationwide insurance niche carved out by Ski-Safe, which is administered by the Sullivan & Strauss Agency in Lake Success, New York. A specialist since its inception, the agency established its boating insurance credentials when it came to the rescue of the American Water Ski Association which was having trouble getting insurance from major carriers for its high-risk competitive events, such as speed, slalom and barefoot skiing and ski jumping. Working with Cigna (now ACE USA), Reiff says the agency developed Ski-Safe, which provided the protection for the association's athletes to compete both in national and international events. At the same time the program became established as the leading provider of insurance for the water skiing community, including recreational water skiers.

Not surprisingly, many of the water skiers were also into personal watercraft and were having trouble getting coverage for their PWCs. So Ski-Safe designed a special program for the PWCs and the rest is history. Today, Ski-Safe has a staff of 24 and this year expects to write more than $25 million in premiums-for PWCs, other recreational boats and yachts, as well as some commercial boating, mostly fishing charter and guide boats.

In tracing the popularity of PWCs, Reiff sees some parallels with the motorcycle craze, which many believe was launched by Marlon Brando in the movie "The Wild One" in the 1950s. For decades, bikers had a negative image built largely on the rowdy and rebellious behavior of the Hell's Angels and similar groups. In recent years, however, there's been a positive change in attitudes towards bikers, resulting largely from more responsible driving by thousands of middle-aged and middle- and upper-income people who have become bikers.

So too with PWCs, which initially attracted young, risktaking hot-rodders, who quickly created a negative impression among conventional boaters with their dare-devil antics: zigzagging around other boats, jumping wakes, creating huge waves near water skiers, and racing over tow lines, not to mention generating a rash of accidents. A common saying was, "The only good jet ski is the one at the bottom of the lake." That's largely changed now. Today, college-educated adults and upper-income families are the likely operators of PWCs. The crafts are versatile, carrying as many as four people and more than 100 pounds of food and equipment, making them ideal for camping trips, as well as touring and recreational cruising. "It's been a boon for the marketplace and made the sport much safer," says Reiff.

When it comes to insurance, Reiff says it's important for agents and their clients to realize that most homeowners policies exclude coverage for any watercraft that has over 50 horsepower-which excludes just about all of today's powerful PWCs. Many customers think they have automatic coverage in their homeowners or umbrella policy and aren't aware that they are excluded. In reviewing their clients' personal lines, agents need to find out if they have any jet skis so they can insure them. Chances are, says Reiff, their carriers won't write the coverage at all or will offer limits of liability that are less than the underlying limits requirement of their umbrella policy.

That's where Ski-Safe comes in. Reiff says that the program is available to agents and brokers anywhere in the country and with more and more people buying PWCs, it makes sense for them to be familiar with the program so they can provide the special coverage that their clients need. "In just one phone call," says Reiff, "the agent will get a premiere product, excellent coverage, great rates and a commission check." And he notes that this year, the policy has been broadened to include replacement cost coverage for new jet skis and liability limits up to $2 million. Along with "all-risk" protection for damage to the watercraft, the policy also offers premium discounts for lay-up periods when the watercraft is out of the water and for restricting use to fresh water.