https://vimeo.com/151473811

Mark Forbes writes:

First off, suppose that there is a rash of accidents and claims
all at the same time. That's fairly unlikely. We have had several cases pending
at the same time occasionally, but the wheels of the justice system turn slowly
and it's not a problem. Typically there will be a local attorney involved, as
well as somebody on the insurance company's (or RRG, in future) end. Litigating
these claims takes months-to-years, with scheduling of events sometimes months
apart. From a workload perspective, it's not a problem.

A rash of claims would certainly raise our defense costs, and a bunch of truly
legitimate claims for damages would impose a significant expense in any given
year. For any given incident, the RRG insures the first $250K of the claim, and
a reinsurance contract covers the excess beyond that, up to the policy limit.
Most claims come in well under that amount. It's difficult to do large amounts
of property damage with a hang glider or paraglider; the aircraft is slow and
light, and the energy content is low. Denting cars is a significant past
exposure, and we'll be pushing on site managers to do a better job of separating
vehicles, spectators and pilots to avoid those kinds of accidents. If we did
have a batch of $250K-worthy claims, that would, as they say, "leave a mark".

We do have some control, however. Within our own organization, we have the
ability to change practices and recommended operating limits, suspend or revoke
pilot and instructor ratings, or even require that some activities be subject to
higher scrutiny, additional training or an outright ban and exclusion from our
insurance coverage. I'm not saying we are going to do any such thing, but we do
have the ability should it become necessary. In other words, we have a degree of
control over the risk we're willing to assume and insure for. That has always
been the case; we have some clauses in our existing insurance which are there
because of risks that we choose not to insure. One example is libel/slander
coverage for chapters and members. We changed that after a club published a
notice banning an instructor at a site, and he sued the club for slander. We
defended that case, but thereafter excluded such coverage because USHPA has no
direct control over what clubs might publish in their newsletter or online
forum. USHPA still retains that coverage for the association, because we have
control over what we publish in the magazine and post on our website. If some
aspect of our operations proves to be too risky, we can either change how it's
done to reduce the risk, or exclude it from coverage if there's no way to do it
safely. So far, there's no one aspect of our sport that stands out as an
unreasonable risk. If there was, we'd already have done something about it!

The insurance game is one of odds; gambling on the accidents of life. Based on
our past history, we think that the probability is good that we can succeed and
the RRG will be profitable. Those profits will eventually return to us (the
owners) in the form of lower insurance premiums and reduced costs to the
association, and in turn lower dues rates to fund the association's operations.
If we do a good job of reducing our accident rate and managing what claims do
happen, we'll be ok. If we choose instead to fly unsafely, take big risks and
allow our fellow pilots to engage in dangerous flying that puts spectators and
property in peril, then we'll fail. It's incumbent on ALL OF US to stay vigilant
and protect our flying.

If spectators are getting close to launch or landing areas, move them to a safe
distance away. Set the spot landing target out in the middle of the field, not
up near where the cars are parked. Don't let some visiting pilot launch in high
winds with a power line right behind the launch, even if he says he can pull it
off. Control the number of pilots in the air at a crowded ridge soaring site so
that everyone has a turn and isn't at risk of collision. If someone is flying
dangerously, call them on it. If they won't listen or won't comply with local
safety rules, we have a system for reporting and investigating that, and
sanctions for pilots who won't follow the rules. When flying, be aware of
spectators and don't launch or land where they're within range of being hit by
you. If someone is scratching close to the trees, have a word with them about
maintaining more terrain clearance. Follow the recommended USHPA operating
limits for wind speed, direction and site characteristics.

None of this is complicated or really difficult. I'm hopeful that our members
will realize that it's OUR money we're spending when there's an accident or an
insurance claim, and OUR savings when we avoid such things.

The RRG is funded and analyzed on the basis of having two worst-case years in a
row, based on our 40-year history. Even then we would remain solvent, but we'd
probably have to raise the insurance premium that is charged to USHPA and the
schools. The money that we're raising now to fund the RRG capital base is not
money we intend to spend on defense of claims. It's a requirement by Vermont
that we have it as a backstop to guarantee our policies, so that *if* everything
goes completely sideways for a long time, we still can pay off the promises
we've made. What pays the annual expenses is the insurance premium charged to
each policy holder. We pay that to our insurers now, and we'll pay that to the
RRG in the future. The difference is that a group of investors are the insurers
right now, and we're the owners of the RRG in the future…so we're paying
OURSELVES instead of outside investors.