Apartment and Condo Pools: Staying Afloat With Commercial Umbrella Insurance
- One of the more unfortunate components of our job is reviewing large, complex bodily injury claims, especially when it involves youths, and in particular when often these accidents, including swimming pool accidents, can be avoided. Residential swimming pools are more prevalent than commercial pools; there are more than 10.4 million residential pools in the U.S. compared to an estimated 309,000 maintained by commercial businesses. The exposures - and the claims - range from small to large.
Commercial pools that are frequently found in apartment and condo complexes are an important element in our clients’ books of business, and hence show up in our loss studies. A few statistics from public data on pool risks tell a grim story.
- Drowning is the leading cause of unintended injury death among children 1 to 4 years old, and swimming pools make up 76% of those injuries.1
- 84% of drowning deaths of under-15-year-olds were due to pools.2
- Public pools, including condo and apartment complex pools, account for 40% of deaths among children 5 to 14 years old.3
Many pool accidents find their way into reinsurance company claims experience. Gen Re’s most recent Commercial Umbrella loss study included 45 commercial umbrella losses over a 24-year period involving swimming pool accidents at commercial establishments. That is roughly 1.5 per year. These losses were spread across more than 20 states. The most common classes of business included hotels/resorts, apartments/property managers, and churches (camp programs). While infrequent, these losses tend to be severe.
Here are two of the many findings and observations made by the Gen Re Umbrella Team conducting the loss study:
- 55% of the total dollar amount of pool claims was paid by the Umbrella. If these insureds hadn't purchased the excess limits an Umbrella affords, they would have been covered for less than half of their total claim amount. It’s also possible that the limits pull was in effect here with the available limit pulling severity up. Still, many insured businesses would have been faced with an enormous financial hit and second-guessed their decision to reject umbrella quotes.
- 11% of losses paid out total policy limits. Most limits losses involved children. A few involved limits year over year. What impact will medical inflation have on damages in 5, 10 or 15 years?
What characteristics could be predictive of better or worse swimming pool risks? What are you collecting to help you understand your book profile, hazard level and existing exposure? How does your company employ loss control services and supplemental applications to ensure your risk selection and mitigation is optimal?
Fortunately, underwriting tools and industry data can help General Liability and Commercial Umbrella carriers servicing the habitational market. Most habitational/hotel classifications include codes with and without pools. The existence of a pool usually would be picked up via the application (via the class description and code). The loss costs would reflect the exposure and presumably the loss content of a pool exposure.
Perhaps the most important actions should be directed toward keeping the environment safe with the assistance of Loss Control expertise. Ultimately, everyone involved wants to avoid a tragedy.
If you would like to dive into a discussion with your Gen Re representative, just let us know.
1. http://www.poolsafely.gov/drowning-deaths-injuries/ and http://www.cdc.gov/mmwr/pdf/wk/mm6319.pdf.
3. http://www.cpsc.gov/Global/Research-and-Statistics/Injury-Statistics/Sports-and-Recreation /Pools/PoolSubmersions2013.pdf.
4. All three losses were discussed in Gen Re Casualty Matters, June 2011 and November 2015 editions, and initially reported in Lexis Nexis or other legal industry publications.