How do Insurance companys come up with there rates for Scenic Train rides

[tree68]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by tree68

QUOTE: Originally posted by gabe
P.S. Something I always wondered, why can’t Class 1s have excursions without public passengers. I realize that isn’t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

$$$$$$$$$$$$ No revenue, no happen. I don't think "good will" is on the balance sheet anymore.

I don't know Larry. You may very well be right.

But, for the sake of argument, does UP really run that many revenue excursions with its steam any more? I think they keep it around as a means of public good will and for company morale.

Corporations routinely sponsor these kind of historical projects. Railroads are inextricably linked to the public. If Tide, Johnson & Johnson, Boeing, spend several millions on non-revenue projects designed to improve the public immage, why not railroads.

Can you imagine the good will created if each Class 1 would run a steam locomotive the month before Christmas on a toy drive and stop in towns on the system on the drive. Maybe even call it the Polar Express or something like that? The good will would be overwhelming.

That is not to say I completely disagree with your position though.

Gabe

I was taking the tack that's been taken by many others before - dollars determine action.

For those not familiar with accounting, there can be a line on the balance sheet called "good will," basically value that the business has in the form of loyal customers, etc. Of course, a significant part of that loyalty is tied to the brand name.

Despite the ill will engendered by the license issue, UP seems to have a sense of the need for "branding." They are protecting their trademark, and continue to run their steam program, which does add to the "good will" line on their balance sheet. Other railroads either haven't recognized the need, or just don't care. It's their loss.

Even if they aren't running their own program, allowing (indeed, actively sponsoring!) an excursion operator to use their track, even for a fee, would be something that would generate a positive image with the general populace.

For every mile of capacity-strained main, there is probably another mile of track that sees limited use and could accomodate "mainline" excursions. Many of those miles are eagerly sought by people who "collect" railroad mileage, never mind John Q and his family who just want an opportunity to ride behind a steam engine (or on any "vintage" train, as far as that goes).

As an example, the Montreal Secondary - around 150 miles between Syracuse and Massena, NY, has 4 "scheduled" through freights a day, plus some locals. Doing the math will show that a round-trip excursion, an all-day event, should provide minimal disruption. Indeed, just such a trip a few years ago went quite well. One meet required the excursion to take siding due to the length of the freight. It was probably valued added for the riders. The other biggest hassle for the railroad was that they spiked all of the switches, requiring two visits to each by somebody... There's those dollars at work again.

All said - it comes down to management and their philosophy. And we've discussed that here many times, too.

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by tree68

QUOTE: Originally posted by gabe
P.S. Something I always wondered, why can#8217;t Class 1s have excursions without public passengers. I realize that isn#8217;t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

$$$$$$$$$$$$ No revenue, no happen. I don't think "good will" is on the balance sheet anymore.

I don't know Larry. You may very well be right.

But, for the sake of argument, does UP really run that many revenue excursions with its steam any more? I think they keep it around as a means of public good will and for company morale.

Corporations routinely sponsor these kind of historical projects. Railroads are inextricably linked to the public. If Tide, Johnson & Johnson, Boeing, spend several millions on non-revenue projects designed to improve the public immage, why not railroads.

Can you imagine the good will created if each Class 1 would run a steam locomotive the month before Christmas on a toy drive and stop in towns on the system on the drive. Maybe even call it the Polar Express or something like that? The good will would be overwhelming.

That is not to say I completely disagree with your position though.

Gabe

CP does that with its Chistmas Food bank train

[mudchicken]

Junction:

(1) Go back and read Gabe's reply carefully.

(2) Explain how a tourist operator would handle a situation like what happened to MetroLink in Glendale, CA (Not their fault and they are still getting raked over the coals and shaken down for $$$ by every lowlife out there)

(3) Your second assertion: Do you ever read about current US events, the last year? (won't go any further because we don't need anothewr round of political flaming here)

[Junctionfan]

QUOTE: Originally posted by gabe

First,

Junctionfan, I try so hard to not be too hard on you. But, if you are going to make such bombastic statements, try to make your subject agree with your verb.

I will be the first to admit, I have a grammatical mistake every now and then, because I do not have enough time to properly edit my post.

But, if I am going to say an X billion-dollar industry and the voting populous of a nation have it all wrong, I think I should at least make sure my subject agrees with my verb while I am doing so.

Secondly, and on point, Larry has a valid argument about John Q. Public's desire to sue. Even as a lawyer, I will readily admit litigation/lawsuit recovery is more expensive than it needs to be in this country in order to serve the goal of making the victims of negligence “whole.”

However, lest not forget, accidents really do cost money. If a train carrying 200-300 passengers goes in the bayou, there are going to be 600 people who sustain a REAL economic loss. There are real/legitimate losses that are dealt with in such lawsuits, and if such a tragedy should happen, there will be victims in need of medical—which is more expensive than ever—and lost wage compensation.

If you were NS, why would you undertake this risk without having your bases covered? You are in the business to make a profit, not to play Russian roulette with your stockholders.

If we really want regular Class I rail excursions (assuming there is capacity for them) in America, nothing short of a Congressional creation of contractual limitation of liability or indemnification will bring them back. If such an even should occur, I think we will see them back in force.

Gabe

P.S. Something I always wondered, why can’t Class 1s have excursions without public passengers. I realize that isn’t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

I don't see what is wrong with what I was saying.

Secondly, litigation laws and the whole rights to sue need to be reformed to weed out frivalous lawsuits that tie up the courts trying to hear legitimate complaints.

[gabe]

QUOTE: Originally posted by tree68

QUOTE: Originally posted by gabe
P.S. Something I always wondered, why can’t Class 1s have excursions without public passengers. I realize that isn’t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

$$$$$$$$$$$$ No revenue, no happen. I don't think "good will" is on the balance sheet anymore.

I don't know Larry. You may very well be right.

But, for the sake of argument, does UP really run that many revenue excursions with its steam any more? I think they keep it around as a means of public good will and for company morale.

Corporations routinely sponsor these kind of historical projects. Railroads are inextricably linked to the public. If Tide, Johnson & Johnson, Boeing, spend several millions on non-revenue projects designed to improve the public immage, why not railroads.

Can you imagine the good will created if each Class 1 would run a steam locomotive the month before Christmas on a toy drive and stop in towns on the system on the drive. Maybe even call it the Polar Express or something like that? The good will would be overwhelming.

That is not to say I completely disagree with your position though.

Gabe

[tree68]

QUOTE: Originally posted by gabe
P.S. Something I always wondered, why can’t Class 1s have excursions without public passengers. I realize that isn’t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

$$$$$$$$$$$$ No revenue, no happen. I don't think "good will" is on the balance sheet anymore.

[gabe]

First,

Junctionfan, I try so hard to not be too hard on you. But, if you are going to make such bombastic statements, try to make your subject agree with your verb.

I will be the first to admit, I have a grammatical mistake every now and then, because I do not have enough time to properly edit my post.

But, if I am going to say an X billion-dollar industry and the voting populous of a nation have it all wrong, I think I should at least make sure my subject agrees with my verb while I am doing so.

Secondly, and on point, Larry has a valid argument about John Q. Public's desire to sue. Even as a lawyer, I will readily admit litigation/lawsuit recovery is more expensive than it needs to be in this country in order to serve the goal of making the victims of negligence “whole.”

However, lest not forget, accidents really do cost money. If a train carrying 200-300 passengers goes in the bayou, there are going to be 600 people who sustain a REAL economic loss. There are real/legitimate losses that are dealt with in such lawsuits, and if such a tragedy should happen, there will be victims in need of medical—which is more expensive than ever—and lost wage compensation.

If you were NS, why would you undertake this risk without having your bases covered? You are in the business to make a profit, not to play Russian roulette with your stockholders.

If we really want regular Class I rail excursions (assuming there is capacity for them) in America, nothing short of a Congressional creation of contractual limitation of liability or indemnification will bring them back. If such an even should occur, I think we will see them back in force.

Gabe

P.S. Something I always wondered, why can’t Class 1s have excursions without public passengers. I realize that isn’t as profitable. But, people still come out to see them and it creates a positive image for the railroad.

[jchnhtfd]

Peterson6868 -- many larger firms or organizations, such as MARC or the big railroads, self-insure: that is, they figure they have enough funds to cover most settlements. Further, they generally have salaried legal staff at hand to repel boarders. This just isn't true of tourist and scenic operations -- no way can they self insure.

By the way, if you think train insurance rates are silly, you should try running a horse-boarding and training facility...

[Anonymous]

A million dollers per incedent is what most insurance companies need these days....not just for scenic trains rides but for anything. 150 people for a train or 150 people at a large party or 150 boy scouts on a hiking trip

[tree68]

QUOTE: Originally posted by Peterson6868

So who assumes the risk when you have a agency like MARC who runs commuter trains. I asume the state commuter agency because they have bottomless pockets.

Two factors come to mind:
1. The folks that are running the trains are presumably experienced pros (I know, I know) vs the amateur (I know, I know) staff that may be running a tourist operation.

2. The folks riding on the commuter trains are presumably experienced train riders, vs the amateurs riding a tourist/excursion operation. If you ride MARC, etc, every day, you know that there will be random, unexpected movement of the train and remain prepared for it.

The bulk of the commuter/light rail operations are probably quasi-public operations, so the deep pockets of governments would be a second tier of insurance. Not that they wouldn't be named in a suit.

[Mookie]

QUOTE: Originally posted by Peterson6868

So who assumes the risk when you have a agency like MARC who runs commuter trains. I asume the state commuter agency because they have bottomless pockets.

...(You just had GMAC Insurance say 20% of those currently behind the wheel of motor vehicles should not be there, they cannot pass a driver's license rule exam and have not learned from experience)...

Perhaps they should be on public transportation.

They won't ride public transportation - it isn't "convenient" enough! So they die with the cold, hard steering wheel clutched in their hands!

[Anonymous]

So who assumes the risk when you have a agency like MARC who runs commuter trains. I asume the state commuter agency because they have bottomless pockets.

...(You just had GMAC Insurance say 20% of those currently behind the wheel of motor vehicles should not be there, they cannot pass a driver's license rule exam and have not learned from experience)...

Perhaps they should be on public transportation.

[jchnhtfd]

The question actually has two parts: first, how do the insurance companies and the insureds come up with the level of coverage required and second, how do the insurance companies come up with the premium required to cover that level of coverage?

The first question is pretty simple, really, and Larry and dd nailed it. The insurance company takes a look at the operation involved, figures how many law suits could reasonably be expected and for what amount, and requires that level of coverage. I am somewhat surprised that it is as low as the figure quoted, actually. Be happy about something.

The second question is much more complex, as it depends a good deal on the nature of the risk. Some risks, such as having an accident with a car, are quite easy to quantify (although the general public does not always like the answers). With these, setting rates is not hard (until the government regulators get into the act): divide the likely exposure by the number of insureds, add a bit to cover the cost of money and maybe a little profit, and there you are. Other risks, though, are much more difficult to assess, and one of these is the probability of a claim arising from a scenic railroad operation. The folks writing this type of insurance do a good bit of crystal ball gazing, since there isn't much in the way of history. They also tend to be rather conservative cynics when it comes to the US legal environment, and as a result the premiums tend to be a bit higher. For what little it's worth, it is not uncommon for risks with this kind of difficulty in assessment to be assigned to organisations such as Lloyd's, where, believe it or not, you are actually dealing with only one or a relatively few individuals who are literally betting their cash on your insurance.

[tree68]

The insurance companies put firemen's field days out of business years ago. The few you can still find have insurance as probably their biggest single expense.

If you want to find out why the insurance rates are so high, all you need to do is (figuratively) look in a mirror. John Q. Public is willing and eager to sue if his hot dog has too much mustard. Heaven forbid there be a little slack action while he is (against the instructions printed on his ticket) walking around the train while it's in motion. "I'll sue, you hear me! I'll sue!" I'm not minimizing the very real possibility of an incident, but people don't know trains anymore. They expect a nice, smooth ride, like they'd get in their car. Sometimes that just doesn't happen...

[dldance]

QUOTE: Originally posted by Peterson6868

If there ever was a monopoly this would be it...150 million dollers in covarage needed by NS before they can get on train on there tracks. Who the heck comes up with this number?

The math seems quite simple to me -- 150 passengers and each passenger will file a $1 million lawsuit if there is a problem = $150 million in coverage. The insurance companies actuaries and risk analysis people really impact the price that will be charged for the coverage - not the coverage requirements.

ps - some of my clients require me to have $1 million in liability coverage - even if I never set foot in their facility. Most of my work is done remotely.

dd

[Anonymous]

Oh, boy, here we go again...

It's a CONSPIRACY!! Hasn't anyone told you guys, railroads hate railfans SOOOOOO much that they got together with their evil lawyers and those money grubbing insurance guys and formed a great invisible conspiracy to stop railfan trips and just generally make themselves a BIG pain....sheeeesh. The Brain Trust around here never ceases to amaze me.

I'm heading back to my grill and I'm gonna enjoy my day off...no more trains today...

LC

[Junctionfan]

Insurance rates in general is not logical. There is a great stink up in Canada about how insurance companies seem roll the dice for rates and raise them on a whim.

I am not sure how insurance in the U.S works but here it is begging for regulation.

Back to the direct topic at hand, it doesn't make too much sense to have expensive rates as I have never heard of a scenic railroads getting into liability issues so there is no precidents for such a high rate. Although like anything involving tourist and such activities involving other people, it is very wise for the company to have a excellent coverage with millions of dollars in accidental death coverage but as far as rates per year, it should be reasonable as sceanic railroads are not like any other railroad entity such as Amtrak which has a record of accidents plus the unfortunate liability agreement with the railroads.

[DPD1]

QUOTE: Originally posted by Peterson6868

If there ever was a monopoly this would be it...150 million dollers in covarage needed by NS before they can get on train on there tracks. Who the heck comes up with this number?

Actually, I'm surprised it's not more... That number could easily be exceeded in liabilities from an accident. In my business, we are required to have 1 million a day, just to film in somebody's house. That number goes up as the risk goes up. When you start including stunts and such, it grows exponentially. We once had a guy take legal action against us, because he claimed his hillside deck with pool had started pulling away form the house, because we had too many people on it. Anybody with half a brain could tell it had probably been slipping away for years. But unfortunately, nobody got any photos of it before we got there. I guess he figured we were a good way to get his deck fixed for free. It's really the frivolous legal actions that create the atmosphere.

Dave
-DPD Productions - Featuring the NEW TrainTenna LP Directional RR Radio Monitoring Antenna-
http://eje.railfan.net/dpdp/

[SealBook27]

There is an old principle in business: "Whatever the market will bear". So, how much can the insurance industry convince the railroads to pay? And how high can they hike the rates until they price themselves out of the market?

[Anonymous]

If I went to race for money and died for it, my insurance wont pay.

[Anonymous]

QUOTE: Originally posted by mudchicken



How many of you folks realize that your insurance company will NOT cover you (or your car) the instant you enter railroad right-of-way?
[banghead][banghead][banghead]

I wasn't aware that the stupid were exempt from accidents...

So, you are saying if some idiot gets crushed ar a grade crossing, his accidental death policy does not pay?

[mudchicken]

You clearly do NOT understand the assessment of risk associated with railroad protective policy. Insurers assess rates by risk. They historically have been terrified by the costs associated with railroad accidents.

How many of you folks realize that your insurance company will NOT cover you (or your car) the instant you enter railroad right-of-way? We call it the "stupid zone" concept, most non-railroaders are prone to do something really stupid the moment they get close to the property, taking chances that they otherwise would not. The general public is getting dumber around railroads, not smarter ...(You just had GMAC Insurance say 20% of those currently behind the wheel of motor vehicles should not be there, they cannot pass a driver's license rule exam and have not learned from experience[}:)])

[banghead][banghead][banghead]

[Anonymous]

How much does it take to put 150 million liability on the track?

[bobwilcox]

Their lawers respondsible for fighting personal injury claims have a lot to do with coming up with this number. The do not want to underestimate the number.

[BNSFGP38]

A group of insurance men sit in a room and say whats the best way and how much should we *** them.

[Anonymous]

If there ever was a monopoly this would be it...150 million dollers in covarage needed by NS before they can get on train on there tracks. Who the heck comes up with this number?