Worsening insurance crisis

[kammel78]

That is the other part of the death knell...the cost of entry into this activity is way to high as is the cost to maintain being active in diving as an activity. I am not saying the cost is not commensurate with the costs instructors have to pay for insurance or the costs to run a dive shop, but those costs are out of pace with what folks are willing to spend.

The dive industry is an unsustainable model...one might not realize that by reading posts on ScubaBoard, but the voices here represent a scant minority of those out here. The only real thing the dive industry has going for it is that there historically and currently have been no recertification/continuing education requirements for continued participation, and one can arrive at a destination such as during a vacation and have an activity that they are readily available to participate in.

But outside of that, the model continues to spiral unsustainably. The margins for everyone that needs to profit are slim, and for the end user, the cost of renting and/or purchasing gear is high, with additional high maintenance costs for equipment that generally sees little use.

There has also been a marketplace shift where the current generation is not looking to make a long term investment in expensive gear with limited use, that they can't easily maintain, for an activity they only do a handful of times at best. The current market segment are not looking to invest. Their generational paradigm is about experiences...they have no problem paying for a discover scuba dive with their go-pro camera to bag the experience of having an extended stay underwater and posting the proof on social media....by and large, they are not looking for much more than that, and why would they want to when they can just rinse and repeat or just move on to entertain a different experience all together for much less than the cost of training and equipment (renting or owning).

Even if one tries to minimize the expense of participation, there are still obstacles and financial burdens one needs to contend with that most are just not willing to except those of us that are truly passionate. Take for instance the cost of owning a tank...unless one plans to dive locally, the cost of owning a tank is not worth it, and unless one is doing a plethora of diving year-round the same is true. In the US, annual visual inspections, plus periodic hydrostatic testing, coupled with the cost of a fill generally pushes the cost of owning a tank beyond being a reasonable expectation for most divers....and god forbid the tank fail one of those inspections/test or the local shop (which are few and far between for many of us) decides for whatever reason they no longer want to accept the risk of filling one's tank...that pushes the cost of ownership beyond what most would consider reasonable. The cost of owning and operating one's own compressor is beyond reasonable for all but the most passionate among us as well. Contrast that to the high cost renting a tank compared to the limited amount of time one will actually use it. For me, for instance, to rent a tank I have a 2-hour round trip drive to the nearest local dive shop...and I would have to make that drive twice to pick up and return the tank, I would have a set amount of time to hold on to the tank and have to coordinate using the tank during that period or pay extra to extend that period...and all for what, 30 to 60 minutes of use?

And then there is the rest of the gear that one either has to invest in and the required maintenance for it as well. Even if one accepts the burden or has the passion to maintain their own gear there are still obstacles and high costs that one has to navigate. Even if one can obtain service kits, the costs are fairly ridiculous, $20-$60 for service kits per stage for what amounts to pennies worth of o-rings and a few other bits like a plastic backup ring, and a rubber disc.

Again, I am not saying that costs are not commensurate with what it costs a dive shop to run a business but it adds to the very high barrier to commence and maintain participation in this activity. The fact that the internet has wreaked havoc on the ability for a brick and mortar establishment to sustain itself, and the high cost of insurance for dive professionals, the SCUBA industry needs a major overhaul to be viable other than being a "destination activity".

To be honest, if one was to ask me if they should take up diving, my recommendation is their money is better spent on a good pair of hiking boots or bicycle instead, and just do a "discover" type experience when on vacation. For those that want to be truly adventurous, take up rock climbing.

-Z

So, I think there's mulitple "markets" here and combining them tends to overgeneralize a bit. For example, tourism related diving isn't necessarily at the whim of the same market shifts as weekend lake/quarry divers, spearfishers, photographers/videographers, etc.

I think it's less of a generational issue as it is the lowering of standards and race to the bottom of training turns out divers (>50%) who aren't even comfortable diving post class. Who wants to pursue something that scares the s##$ out of them?

And it's a catch-22 when dropping OW student rates force shops to shift towards selling DM/AI/Instructor classes to people who honestly shouldn't be any of those who then deliver subpar experiences to OW students who then don't want to continue diving post class or that cruise they already have scheduled, which forces shops to....you get the point.

 

[Zef]

So what do people think agencies could do to address the problem of increasing insurance costs? There is the obvious of remedial training for existing instructors to teach better and require new instructors to teach at a level higher than what is required. While this would increase the level of safety during training (good) it would reduce the number of existing and new instructors (good in my opinion but bad for the agencies' revenue).

This whole self regulation thing isn't working out too well. Maybe this industry will de facto be regulated by insurance premiums in the end?

I think there was/is a push for diving to be more mainstream than was/is reasonable. The general cost of entry and continued participation is a major obstacle unless one is truly passionate and lives in an area where one can regularly participate without the additional burden of a long drives and such....and even then that only works if life's other endeavors/wrinkles don't become additional barriers for the individual.

The reality is that diving is an expensive niche activity, and the industry is collapsing under its own weight.

-Z

 

[wetb4igetinthewater]

I think there was/is a push for diving to be more mainstream than was/is reasonable. The general cost of entry and continued participation is a major obstacle unless one is truly passionate and lives in an area where one can regularly participate without the additional burden of a long drives and such....and even then that only works if life's other endeavors/wrinkles don't become additional barriers for the individual.

The reality is that diving is an expensive niche activity, and the industry is collapsing under its own weight.

-Z

As @kammel78 stated:

I think it's less of a generational issue as it is the lowering of standards and race to the bottom of training turns out divers (>50%) who aren't even comfortable diving post class. Who wants to pursue something that scares the s##$ out of them?

I think quality of instruction makes a huge impact on students continuing to dive. As I have stated multiple times, when I was first an instructor, I was a horrible one, and my retention rate was proof of that. Thanks to social media, I learned about this neutral buoyancy/trim "thingy" and as I adopted it, my retention rate flipped, as well as the dive planning that I do (seriously, all agencies suck at this).

I really don't think a cinderblock upside the head is sufficient to get agencies to be honest about the problems in the industry for which they are responsible.

 

[Zef]

As @kammel78 stated:

I think quality of instruction makes a huge impact on students continuing to dive. As I have stated multiple times, when I was first an instructor, I was a horrible one, and my retention rate was proof of that. Thanks to social media, I learned about this neutral buoyancy/trim "thingy" and as I adopted it, my retention rate flipped, as well as the dive planning that I do (seriously, all agencies suck at this).

I really don't think a cinderblock upside the head is sufficient to get agencies to be honest about the problems in the industry for which they are responsible.

None of that changes the ever spiraling cost barrier to starting or staying whether one is seeking their initial open water certification or a dive instructor struggling with the decision to pay their ever increasing agency fees and the rising cost of professional liability insurance.

-Z

 

[wetb4igetinthewater]

None of that changes the ever spiraling cost barrier to starting or staying whether one is seeking their initial open water certification or a dive instructor struggling with the decision to pay their ever increasing agency fees and the rising cost of professional liability insurance.

-Z

I would argue that the lack of quality and quality control are why insurance premiums are spiraling out of control. Insurance providers need to see their risk decreases, and decreases significantly to start lowering rates. The maintaining the status quo will not stop premiums from continuing to escalate.

 

[azstinger11]

^^^THIS^^^
It costs maybe $100 and a few minutes, using LegalZoom, to set up your LLC.

Sadly plus the stupid $800/year franchise tax if you are CA based.

Any yes they tax LLCs based outside of CA doing business within the state....

 

[GiraffeMarineSalvage]

So what do people think agencies could do to address the problem of increasing insurance costs? There is the obvious of remedial training for existing instructors to teach better and require new instructors to teach at a level higher than what is required. While this would increase the level of safety during training (good) it would reduce the number of existing and new instructors (good in my opinion but bad for the agencies' revenue).

This whole self regulation thing isn't working out too well. Maybe this industry will de facto be regulated by insurance premiums in the end?

Two things that jump to my mind are
1) Objectively assessing the insured... Examples abound for this model: 1) doctor's physical and rather extensive list of questions before issuing life insurance is great example, 2) partially car insurance (in my personal opinion some of the car insurance companies have some extremely biased approaches which are more correlation than causation...), and 3) at least one boat insurance company I'm aware of focuses almost entirely on the knowledge/experience/general practices of the boat owner as opposed to type of boat being insured...
2) Vermont (at least in theory) has the liabilities owed to free users of private property substantially narrowed by 12 V.S.A. § 5791 compared to what it would otherwise be in our overly litigious society and some protections specifically related to the ski/snowboard industry. Clearly instructors have a substantial "duty of care" way beyond a landowner permitting free use of their property but the same general concept could be implemented in SCUBA-centric states to protect instructors that were known to be acting within industry best practices..
(Establishing a fair judiciary would be huge as well, especially if focus could ever shift to restorative justice instead of the way it is now, but that's far beyond the sway of the entire SCUBA-industry combined)

 

[Zef]

Sadly plus the stupid $800/year franchise tax if you are CA based.

Any yes they tax LLCs based outside of CA doing business within the state....

$800/year sucks but is a lot better than losing one's house, savings, etc., as a possible result of litigation because one did not establish an LLC for their professional diving endeavors.

-Z

 

[wetb4igetinthewater]

I don't think this is OT, but look at the increasing costs of skiing: How Much Does It Actually Cost to Ski?. While as a patroller I wasn't privy to operations costs, but it is my understanding that insurance is a big part of the costs of running such an operation

Anywho.....

Two things that jump to my mind are
1) Objectively assessing the insured... Examples abound for this model: 1) doctor's physical and rather extensive list of questions before issuing life insurance is great example, 2) partially car insurance (in my personal opinion some of the car insurance companies have some extremely biased approaches which are more correlation than causation...), and 3) at least one boat insurance company I'm aware of focuses almost entirely on the knowledge/experience/general practices of the boat owner as opposed to type of boat being insured...

I know that if I owned an insurance company, I would not insure diving instructors. Would any of us here?

I would welcome detailed questions to demonstrate that I'm at a lower risk (low class ratios, adherence to DAN recommendations, etc). And if it were to be proven that in a course I was teaching I violated the claims I made, then I should lose coverage.

However, the problem I see with this is that it requires insurance companies to understand intimately dive instruction. As they do not, who would they ask? The largest agencies most likely, and these are the ones contributing to the problems the most.

2) Vermont (at least in theory) has the liabilities owed to free users of private property substantially narrowed by 12 V.S.A. § 5791 compared to what it would otherwise be in our overly litigious society and some protections specifically related to the ski/snowboard industry. Clearly instructors have a substantial "duty of care" way beyond a landowner permitting free use of their property but the same general concept could be implemented in SCUBA-centric states to protect instructors that were known to be acting within industry best practices..
(Establishing a fair judiciary would be huge as well, especially if focus could ever shift to restorative justice instead of the way it is now, but that's far beyond the sway of the entire SCUBA-industry combined)

I think best practices should be a shield for instructors. However, who defines these? I don't see the WRSTC doing this.

 

[GiraffeMarineSalvage]

... that it requires insurance companies to understand intimately dive instruction. As they do not, who would they ask? The largest agencies most likely, and these are the ones contributing to the problems the most.

I think best practices should be a shield for instructors. However, who defines these? I don't see the WRSTC doing this.

Insurance companies can easily understand all the details of dive instruction, they can simply hire a few of the instructors that stopped teaching due to low pay and exorbitant insurance rates
In all seriousness though, I agree the larger dive agencies don't seem to be looking out for their instructors as much as they should (or their own longer term interests...) but insurance companies shouldn't cover industries they don't understand. There's plenty of dive professionals that would eagerly provide that knowledge. I also really like the Human Factors In Diving initial online course in relation to addressing safety starting between someone's ears and standardizing some vocabulary combined with the rebreather industry being still around at a recreational level in a large part dje to a logical response to notable safety issues/deaths (simple standards on something like O2 on diver's right to policies on crossover training requirements and recent diving experience in similar conditions being pretty well emphasized). Plus unreasonable expectations and impacts of psychology need to be kept in check, "this is inherently dangerous and these are all the steps to minimize risks to a point it can be very safe.." is a million times better than a business advertising an "advanced" open water certificate being available to a new diver on vacation in less than 10 warm water dives (promised in a recent SB post...).