One of my cycling buddies I was chatting with in the peloton the other day mentioned that he has finally amassed what he deemed a sufficient collection of various firearms.
As you likely know, the threat of greater gun control, the hysteria created by the Sandy Hook (and other) mass shootings, and just media releases by gun control/rights zealots, has created a "hard market" for firearms and ammunition.
A lot of people who are afraid guns might be difficult to acquire in the future have created a sharp demand for these articles. And of course guns are made to be fired, so shooting ranges are also seeing boom times along with big increases in ammunition sales.
According to the Federal Bureau of Investigation, more than 16.8 million background checks for gun purchases were recorded in 2012, the highest number since the agency began publishing the data in 1998. According to the National Shooting Sports Foundation, firearm retailers have been reporting a 20% to 25% increase in sales in the past few years, driving up utilization of both indoor and outdoor shooting ranges.
Isaac Newton's third law of physics is applicable to workers' compensation. To paraphrase - for every economic action, there is an equal and opposite workers' compensation reaction.
So it seems that in the gun world, the current boom in sales is being countered with a shortage in available workers' compensation coverage.
Specialists in firearm business coverage note that political pressure and anxiety surrounding gun-related accidents are a big part of the reason carriers are not eager to write comp for shooting-sports establishments despite the fact that the industry has excellent loss experience because they are typically manned by highly skilled professionals and have very low incident rates.
“My book of business now is less than a half-percent loss ratio on my work comp on my shooting ranges – a half percent. There is not a work comp company out there that will not die to have a half-percent loss ratio on their book of business. That is a profit margin that everybody would want to have,” Scott Wilson, president of Chesterfield, Mo.-based Best Shot Insurance, a division of Charles L. Crane Agency, told WorkCompCentral.
A few days ago I posted some questions and comments about the role of brokers and commissions in workers' compensation. One of the roles is just finding insurance; understanding the industry and business risk, pitching the acceptability of that risk to a carrier, and creating programs to service the industry in order to maintain risks within acceptable parameters to the carrier.
The current gun fad demonstrates this broker role in the system.
Chuck Holdren, president and chief executive officer of Holdren Group,whose Oregon-based agency places workers’ comp for indoor and outdoor gun ranges, sporting clays, skeet and trap fields, archery clubs, public or private ranges and clubs, as well as stand-alone retail gun stores and upland bird-hunting operations, started his agency in 2010 because he saw a market opportunity.
Holdren found that it took a lot of education on the part of carriers to understand and accept the misunderstood risk of covering gun related businesses.
According to Holdren, more than 90% of shooting sports operations are insured for workers’ compensation by state funds or assigned risk pools.
Other forces beyond not understanding the risk are at work too - such as reinsurance treaties that bar primary carriers from insuring shooting-sports operations.
In our workers' compensation professional lives, we focus so much on claims (aka losses) because that's where the action is. Losses define risks, and insurance is about spreading the risk to minimize impact on a single insured.
The many nuances of workers' compensation reflect the broad, diverse economy of this nation. I'm always amazed at how uniquely this industry responds to the needs of the economy.