PADI getting sued over Insurance Program

[Darcy Kieran]

Does PADI require that instructors/DM's and instructor shops acquire coverage only through their program?

No... UNLESS you want to add the "National Geographic Dive Center" sticker to your collection. Then, your dive store must take the PADI insurances.

 

[Wookie]

I received this in an e-mail this morning from my insurance broker. I've used Peter Meyer for about 15 years. I was with Peter long before he ran the TDI/SDI sponsored program, and hope to be with him forever. (He's a bit choosy when it comes to picking his customers)

November 9, 2010



Brian Carney
ITI Holdings Inc.
18 Elm Street
Topsham, ME
04086

Dear Brian,

Re: The SDI / TDI / ERDI Dive Insurance Program.

Please consider the following an open letter to you, your Staff and Members to help clarify our position and your members insurance coverage.

The Class Action Suit filed against PADI et al in October 2010 has caused a great deal of speculation regarding the various insurance products available to dive professionals. We would like to confirm the following for all interested parties:


1. We take pride in our mandate to provide transparency and full disclosure in all of our insurance offerings.
2. We have managed the SDI / TDI / ERDI sponsored program (see: Willis Recreational Scuba Diving Insurance) since 1999, providing dive professionals, retailers, manufacturers and dive vessel operators with secure, legitimate coverage.
3. Every individual insured has always received a full Policy, with all wordings attached. It may be more paper than you want, but it is the real policy with all of the attachments, every time.
4. There are no “shared” deductibles.
5. There are no “shared” per event limits.
6. There are no “shared” aggregate (yearly) limits.
7. Each policy specifically lists the limits of coverage for that specific individual policy, and the applicable deductibles.
8. All premium amounts are clearly identified on our quotes and on the policy declarations themselves. Taxes, fees and commissions are clearly stated as well.
9. All premium is paid to the insurer to protect the insured. No premium is diverted to any other entity(s) whatsoever.
10. Excess & Surplus lines taxes and filings are made by Willis in every State of domicile for each and every individual insured as required by law.


If you or any of your members have any questions at all about coverage under the SDI / TDI / ERDI program call us at 1-800-665-5252 or email us at dive.insurance@willis.com for real answers to all of your questions. If any of your members are insured elsewhere, they may want to consider sending their broker the above noted list and asking them to confirm that they do the same.




Sincerely,


Peter Meyer
Senior Vice President
Recreational Diving Programs

 

[diver257a]

I notice that there are 11 members and 9 guests viewing this thread as I type. I wonder who those guests are.

Hi Wookie,

FYI, I am probably one of those 9 guests pouring this very interesting thread. My personal practice is to visit as a Guest & only to log in as a member when someone wants some help. I have visited ScubaBoard regularly for several years because of its interesting content and its very civil atmosphere (some forums can be very abusive). I only joined because one day, someone asked a question which I could expertly answer.

Regards

 

[CozumelAntonio]

Don't know if this has been posted yet, but PADI has released the following in a Newsletter email:

Contrary to comments and claims recently made by Attorney Rick Lesser regarding the PADI-endorsed insurance program that was offered to PADI dive centers and resorts through PADI’s insurance broker, Vicencia & Buckley Insurance Services, Inc.:

* Lexington Insurance Company, an A.M. Best A-rated U.S. insurance carrier, is the insurer, and the certificate of insurance received by each insured is legal proof of coverage by Lexington.

* An independent claims management company under contract with Lexington is the adjuster for all claims; PADI and Vicencia & Buckley do not adjust claims or determine the amounts to be paid on claims.

* PADI does not receive or have access to any premiums paid for the coverage; Vicencia & Buckley earns a standard brokerage commission on the premium paid to Lexington.

In conclusion, we assure you that stores and resorts participating in this program are covered under Lexington's policy. While we felt it was necessary to publicly respond to the irresponsible and inaccurate allegations being made, shortly we will respond to the lawsuit in court filings and do not intend to try this case through additional press releases. We are confident all of these irresponsible and inaccurate allegations will be proven to be completely false.

For more information regarding this message, please contact Al Hornsby at PADI, 800 729 7234 or +1 949 858 7234, ext 2390 or Steve Vicencia at Vicencia & Buckley, 800 223 9998 or +1 714 739 3177, ext 219.

PADI News :: PADI at DEMA 2010

 

[Thalassamania]

So what's the story with the first $300,000 of any claim? Who is responsible for that?

 

[Zippsy]

* PADI does not receive or have access to any premiums paid for the coverage; Vicencia & Buckley earns a standard brokerage commission on the premium paid to Lexington.

If it is anything like the Instructor's insurance, I love they way they worded this. 100% accuracte and also 100% misleading. PADI receives no "premiums" but they take 25% of what we pay as a "finders fee". We call it a premium when we pay it but they don't call it that when they get it. Also, it's true that "Vicencia & Buckley earns a standard brokerage commission" but PADI's cut is anything but standard.

 

[SoccerDad]

PADI will be responsible for the $300K. That is how an SIR works and is quite common in Commercial Property Insurance, on large accounts that SIR can be several million. An SIR has nothing to do with a Risk Retension Group they are separate. An SIR is just a hybrid deductible to keep it simple.

The issue here for PADI seems to really be disclosure and how the courts will look at what they did. That 2.5M is put in an account to cover the SIR over the year the gamble is that at the end of the year there are funds left in the account which they recover. You do not worry about a hurricane scenerio because if 20 dive shops were flattened by one event it would be a single Event and only one 300K SIR would be required.

 

[PuMpUi]

PADI will be responsible for the $300K. That is how an SIR works and is quite common in Commercial Property Insurance, on large accounts that SIR can be several million. An SIR has nothing to do with a Risk Retension Group they are separate. An SIR is just a hybrid deductible to keep it simple.

The issue here for PADI seems to really be disclosure and how the courts will look at what they did. That 2.5M is put in an account to cover the SIR over the year the gamble is that at the end of the year there are funds left in the account which they recover. You do not worry about a hurricane scenerio because if 20 dive shops were flattened by one event it would be a single Event and only one 300K SIR would be required.

I think PADI denies being an SIR, and it seems that if 20 dive shops holding 20 seperate "insurance certificates" from the same "insurance company" were hit by one hurricane that there would still be 20 claims made by each individual shop against their insurance company, and that $300k would be required from PADI for each claims, and THEN the real insurance company chips in. (This is very simplistic math, and I don't know if PADI actually insures for hurricanes, tsunamis, water or wind damage, or flooding, so there may not be any "claim". Someone else has posted something about this previously.)

From what I understand you to be saying, then even with 20 losses then PADI pockets the $2.5m minus the one-pay of $300k until the end of the year ?

I think that more than simple "failure to properly disclose" is the issue.

Besides, the amount of $2.5m seems to be a figure that just showed up ... anyone have any idea how many dive shops/resorts/centers are insured with PADI? Or how much the premiums are?

I know one dive shop with 2 locations is insured for $5m and they pay nearly $9,000 each year for their premiums. If only 56 dive shops paid a similar amount that alone would pay for the $500k that PADI pays for the policy ... so what happens to the REST of the money that is collected ???

 

[PuMpUi]

PADI will be responsible for the $300K. The issue here for PADI seems to really be disclosure and how the courts will look at what they did. That 2.5M is put in an account to cover the SIR over the year the gamble is that at the end of the year there are funds left in the account which they recover.

IF that is really the case ... then "why" did PADI NOT pay the $88k claim that the Plaintiff in the lawsuit submitted when his dive center burned to the ground?

It seems to be a VALID claim ... a LEGITIMATE loss ... maybe PADI didn't really HAVE the $2.5m in "an escrow account" like you are suggesting ... and they could NOT pay a measly $88,000 ???? (My condolences to the Plaintiff ... a loss is a loss, regardless of the amount ... I am saddened that PADI chose NOT to pay instead of cover as they said they would.)

 

[Thalassamania]

Interesting question, especially when combined with the diving industry being off 55% this year and other rumors of PADI financial shakiness and layoffs. Ya gotta wonder.