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Risk management for recreational facilities.

There is no doubt that most managers at recreational facilities understand the basics of loss control and claims management. However, because many aren't full-time risk managers, it is difficult for them to keep pace with this sophisticated, evolving profession. Nevertheless, risk managers, as well as those who develop risk management programs for recreational facilities, are increasingly aware that they can make a difference in the cost and quality of their safety and insurance programs. Executives such as these realize that if they don't control potential hazards at their facilities, costs resulting from these problems will sky-rocket.

As is the case with the sporting activities that take place at many recreational facilities, a winning approach to risk management involves having a good team -- in this case, consisting of the risk manager, claims personnel, a loss control expert and the insurance agent, all working together to identify potential problems and their remedies. As an example of this team approach, a large amateur athletic association recently sent the chairpersons of both its finance and insurance committees, and an association representative, to meet with the author about their account team. These team members will discover that in the field of recreation, there are several key areas that need the application of risk management principles, including issues related to participant and spectator liability, security problems, and the use of waiver and release programs.

The risk manager will also have to create safety plans for the facilities' various risks, periodically update them, communicate their provisions to the appropriate employees, and set up policies for strictly enforcing them. The teamwork approach will also uncover several methods for dealing with potential hazards while ensuring that the facilities provide guests with a comfortable, safe environment.


Although the term "recreational facility" refers both to sites, including gymnasiums, swimming pools, golf courses and playgrounds, as well as special events or activities such as parades, golf tournaments and craft fairs, they all share an important characteristic: Each activity involves participants and spectators -- people doing something, and people watching it -- a distinction that affects some insurance purchasing decisions.

Recreational facilities can use this distinction to determine the limits of liability insurance they purchase. For example, at facilities such as a ball field, high limits of liability may be provided for spectator claims, whereas participant liability may be excluded altogether or purchased at lower limits. Of course, the difference between a spectator and participant isn't always absolutely clear -- for instance, is a person sitting in the bleachers who has been chosen at random to throw the first pitch at a baseball game a spectator or a participant? Nevertheless, the difference between them must be distinctly defined and included in the insurance contract itself.

Making the distinction between a spectator and participant is also useful in determining who qualifies for certain categories of coverage. For example, accident insurance is a type of medical insurance that covers someone who has been injured while participating in a recreational facility's activity, and is available only to participants. Because it provides medical benefits, accident insurance may also decrease the likelihood of a liability claim.

Another characteristic that distinguishes one recreational facility from another -- and has a direct impact on liability and insurance -- involves whether or not participants pay for the privilege of using the facility. At some facilities, people have to pay to participate, while others are free to anyone who wants to visit. At these fee-for-service facilities, often referred to as a pay-to-play arrangement, individuals expect that the recreation facility has adopted a more formal insurance program to guarantee their security and well-being. As a result, the program at these facilities should be structured to reflect the greater expectations of paying participants.

There are a few other issues in regard to liability that the risk manager must consider. For example, in most sports, people assume a certain amount of risk just by participating, and this risk assumption is recognized by the courts in most states. For instance, if someone decides to ice skate, he or she assumes the risks of falling, or of getting frostbite. However, if the rink isn't well supervised, and the skater is struck by a ruffian, the owner of the rink would likely be held responsible for the incident because the participant assumes only those risks he or she can control.

Risk managers must also be aware of another important point regarding liability: In most cases, the largest organization -- the so-called deep pocket -- will be held responsible for an incident, regardless of which party may or may not be more directly as fault. For example, the owner of a playground will probably be held responsible if a child from an uninsured day-care center injures him- or herself while on a field trip at the playground.


For risk managers at recreational facilities, security -- whether for spectators or participants, or whether they've paid for services or not -- is one of today's most pressing liability concerns. Facilities must therefore create a secure setting that is safe from both crime and bodily harm.

Traditionally, the courts have not held the owners or organizers of facilities liable for security; it was assumed that visitors to these facilities or attendees of events were aware of the possible risks, and chose to visit or attendees of events were aware of the possible risks, and chose to visit or attend anyway. Now, however, the courts are asking shades-of-grey questions that might shift liability. For example, if an accident occurred during a baseball game, the court may consider questions such as whether there were adequate security controls, and whether visitors were warned of the potential dangers.

Also, the courts now expect recreational facilities to keep abreast of crime statistics and security trends in neighboring areas. Providing proof that they did so will help a case that hinges on foreseeability because, from the court's perspective, owner liability is determined in great pary by whether or not the facility owner or manager could reasonably be expected to have anticipated, based on past experiences, the possibility of a same or similar incident occurring again. Therefore, any history of the same or similar tyoe of criminal activity on or near the premises increases the likelihood that an incident would be judged "foreseeable."

In addition to periodically checking crime statistics and upgrading security systems. risk managers should also keep a written lof of any incidents that occur. Logs should include details of events that occurred on the premises -- including witnesses' names, addresses and their statements -- as well as information about follow-up investigations and steps taken to rectify potential recurrences.

Of course, facilities must find a workable balance between supplying adequate security information and scaring away business; this can usually be accomplished by becoming aware of security problems that are unique to the facility, and ensuring that the security measures used are adequate for protecting visitors form these risks.

If a facility hores or maintains a private security force, it must be certain it consists of personnel who have the appropriate experience and are not encumbered with a background that might, if a problem arose, make them suspect of wrongdoing. Employees from seemingly unrelated departments, including doorpersons, front-desk staff and maintenance workers, should receive training in security issues. However, a one-time security training session is not sufficient; continual retraining is essential to ensure that employees have adequate knowledge about the facility's security procedures. Also, retaining photocopies of completion certificates from any re--training programs, especially for members of the facility's security force, makes for an excellent defense if a case ever goes to court.

Because so many recreational facilities involve children -- who are assumed by the courts to be less likely to take reasonable actions to avert a threat to their safety, and less successful at fending for themselves -- risk managers should be particularly vigilant about instituting child-oriented security measures. A ball field operator, for example, might educate the peo le who run children's teams abwut the procedures to be used to ensure that children are safely picked up by parents after games and practices.


At many recreational events, food is often served, which can make for a pleasurable experience for participants. However, events can turn sour if there is a food-related problem and the facility hasn't considered certain important insurance issues. For example, does the facility operate the restaurant/food service itself, or is the food service subcontracted out? This difference is important, because if the food is served by an outside company, the risk manager must ensure that the firm has sufficient liability coverage.

However, no matter whw is responsible for coverage, facility managers should take aggressive measures to prevent several important food-related problems, most notably food spoilage and contamination. Reasonable steps include keeping food at regulated temperatures, storing it away from chemical products such as pesticides and drain cleaners, and maintaing clean dish-washing equipment and work surfaces.

Facilities that serve alcohol must be aware that an alcohol-related incident could result in a serious liability problem. Because people who serve liquor to individuals who then injure others are held responsible for the drinker's behavior, recreational facilities should provide training programs for bartenders and servers that help them recognize and deal with inebriated individuals. As in the case of security issues, periodic re-training in liquor control methods is extremely beneficial.

Although some recreational facilities don't serve liquor, they may nevertheless need to institute procedures governing alcohol consumption. For example, if other individuals or groups serve liquor on the premises, the facility must supervise their activities because it could be held liable if an accident occurs. A good example of responsible supervision is the now-common practice of checking spectators' bags and parcels at major ball-parks. And although it might seem particularly important to check for alcohol at events that cater to minors, in many cases, inebriated adults are the ones who cause accidents.

Unfortunately, there are certain types of functions -- such as New Year's Eve parties -- where some attendees routinely dring more alcohol than they can handle. Even in these more demanding situations, facilities should enforce their liquor control procedures, such as having a clearly defined policy for cutting off service, or enforcing a policy of not serving more than one drink per person at a time.

Also random parking lot patrols can be used to apprehend intoxicated people before they get in their cars. But unless these individuals are trained security personnel, employee of recreational facilities -- as well as Good Samaritan "civilian" volunteers -- should quickly bow out, and refer potential problems to the on-site security force or the local police. This is because a volunteer who is trying to detain an intoxicated visitor could be harmed. Therefore, deferring liquor control to professionals should be part of a facility 's overall liquor control plan.


Recreational facilities are also responsible for maintaining equipment to state-of-the-art condition before people use it. If there are problems with any equipment the risk manager should remove the broken pieces from circulation. Doing so provides a good defense against a claim based on the premise that the equipment was defective. Therefore, maintaining well-functioning equipment and providing instructions for equipment use is of paramount importance.

Maintaining adequate signage that warns of the potential medical risks associated with certain activities is also important, as are making pamphlets or flyers available that relay this cautionary information to visitors. Facility managers should also work with designers to provide flooring that is compatible with the type of sporting activities to be held, such as non-skid floors for water-based sports, or rubber, tile or carpeted floors for other types of activities.

For recreational facilities that offer water-based recreation such as pools, lakes and spas, the most important consideration is providing appropriate safety precautions, such as lifeguards and depth markers. However, risk managers at these facilities must also ensure that the body of water has adequate clearances and is free of contamination and pollution. It is also important for risk managers to become informed about local regulations concerning warning signs; the size of a warning sign, for instance, was a key factor in a recent lawsuit.

However, even if a facility has appropriately posted rules -- such as a sign indicating that a pool closes at midnight -- it might still be held responsible for accidents or other incidents. For example, if management at a facility knew that a group of kids routinely used a pool after closing time and did nothing to prevent them, it could be held liable for any injuries that may occur. Therefore, risk managers should enccourage and train employees to report any infractions or unusual incidents.


Interestingly, among all the different types of recreational facilities, play-grounds are instituting a great number of fundamental changes in safety procedures. These changes are due to developments in ergonomics that have resulted in improved playground designs. Examples of these improvements include enhanced clearances in the front and back of swings, and the use of the appropriate type and amount of cushioning underneath play areas. And although some of the resulting changes involve applications of high-tech materials such as special foam mats to cushion falls, low-tech materials such as pine bark are often just as effective.

Supervision is also a crucial issue for playgrounds, especially at pay-to-play facilities. This heightened emphasis on supervision is necessary because unlike playgrounds where parents can play alongside their children, pay-for-play areas often limit access to parents. As a result, these faculties should maintain even greater levels of supervision, especially during peak usage hours.


At many recreational facilities, participants and employees need to be protected from an unexpected potential hazard: Exposure to lawn maintenance chemicals. Sometimes, the combination of different chemicals, such as chlorine and either fertilizers or herbicides, can pose a fire hazard.

Due to the possible combustibility of certain chemical combinations, some chemicals should be stored in either a separate facility, or be separated by a physical barrier. Unfortunately, some well-intentioned recreational facilities store chemicals at other on-site locations, which simply creates new risks and exposes other groups of people to the hazard. One example is a municipality that stores chemicals for maintaining its ice-skating rink in the basement of its municipal building. Risk mangers should also be aware that some individuals are sensitive or allergic to certain commonly used chemicals, so signs should be posted when these chemicals are stored or applied.

Risk managers should actively search our information on the possible sensitivity or combinability problems of chemicals used at their facilities, especially in cases where a new chemical is introduced at the facility. Loss control representives from insurance carriers are often an excellent source of information about chemical interactions and dangers. If chemiucals are one of the less well-known problems at recreational facilities, potential chemical hazards associated with water-based recreation are generally well understood. There are a number of excellent sources of information about chemical safety and industry standards, including The National Spa and Pool Institute.

A risk mangement plan should also be created to cover the procedures used for snow and ice removal. This plan should delineate specific individuals and their responsibilities, along with the details of snow removal procedures, use of sand or sald, and proper claims-handling procedures. Generally, it is best to hire a professional snow-removal company that has 24-hour and on-call capabilities. Risk managers should also be sure to check the adequacy of the snow removal contractor's insurance policy. Finally, if a snow-related claim arises, a written log of snow removal activities can establish that the facility was not negligent.

Snowy, icy weather can also create indoor puddles, which, if attended, can cause the same types of footing hazards theat exist in locker rooms and fitness facilities. In fact, because so many people at all different ability levels now exercise or work out regularly, the nuances of locker room liability should be given special attention.


Not surprisingly, liability isues are of great concern at facilities that offer organized sporting events. At such facilities, waiver and release programs are increasingly common, and are generally effective in about 40 states. With waiver and release programs, participants, prior to playing the sport, sign a form saying they understand the risks they are undertaking, thereby releasing the facility from liability. The rationale is that the participant acknowledges the risks involved in the activities and accepts responsibility for them.

Using waiver and release programs for children is more difficult because, as minors, children cannot be party to a contract and thus cannot waive their rights. However, children can sign a form to indicate they understand what they are doing, and their parents can waive their rights and agree to indemnify the carrier. If a facilty implements a waiver and release program, it should go over the details with the claims department so when a claim occurs, claims representatives know to ask for and use the waiver. In fact, risk managers generally should be vigilant about maintaining close communications with the carrier's underwriter or agent, as well as their claims representatives. All units of the insurance carrier need to know, for instance, the facility's general approach to claims.

Further, the risk manager should fit all procedural decisions regarding claims into an overall approach that is articulated clearly to claims adjusters. Management should feel confident that the claims department is savvy about local statues and regulations about risk assumption -- because of a wide variation among the states. Finally, the claims adjusters should recognize precedent-setting cases and feel they have an open channel to communicate vital information to the recreational facility.
COPYRIGHT 1993 Risk Management Society Publishing, Inc.
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Title Annotation:includes related article on recreational risk management in community and municipal groups
Author:Conway, Carroll; Jones, Robert
Publication:Risk Management
Date:Nov 1, 1993
Previous Article:Risk management for state-of-the-art technologies.
Next Article:Insuring the next frontier.

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