Insurance change could send Wisconsin ski areas downhill
Posted: May. 9, 2009
Jim and Kim Engel run the Sunburst Ski Area in Kewaskum, and they are upset. Jonathan Barry runs Tyrol Basin, and he is apoplectic.
Their major-league heartburn has been caused by the push by Wisconsin trial lawyers and their allies in the Democratic Party to change the game on legal liability. Since skiing is inherently a risky sport, the state's ski industry is perhaps the best example of what the changed rules mean for businesses.
They make the plausible case that their plight under the proposed changes would affect the rest of tourism and hospitality industries in the state and even business across the board.
At the heart of the dispute are the 1% and 51% rules. Under the existing law, adopted by relatively bipartisan votes in both houses after a long debate in 1995, only a party with 51% or more of the responsibility for an accident could be held liable for 100% of the damage award.
If a party is less than 51% responsible under present law, it pays only that percentage of the damages. If the business is 20% at fault, it pays 20% of the damages.
Under the proposed change, buried in the gargantuan budget bill, the burden could shift to anyone with 1% of the responsibility for the accident.
So, if I'm a skier, and I'm skiing at very high speed, intoxicated, and I hit another skier, I'm probably 99% at fault. If I have no insurance or money, the lawyers for the innocent skier can go after the deep pockets instead. They can sue the ski hill operator for 100% of the damages, even though the ski hill operator has only 1% responsibility for what happened.
Doesn't seem fair, does it?
But trial lawyers would be able to use the proposed rule to leverage out-of-court settlements from ski hill operators who don't want to take the chance of 100% damages if they go in front of a jury.
The damage to the operators could occur even before there is an accident next winter. The Engels and Barry say there are only two insurance brokers in the country that place casualty insurance for the ski industry and only a half-dozen insurance companies that will write the business.
They are afraid they will be unable to even get insurance if the proposed law passes. "We know we will be faced with a large number of frivolous lawsuits," Jim Engel said. That prospect may scare insurers away from covering the 32 ski areas in Wisconsin.
Before the 1995 reform, insurance cost about $6 for each ski ticket, Barry said. It is now running about $2.85 per ticket.
Either the failure to obtain insurance or the increase in the ticket prices could cause Tyrol Basin to close, Barry said.
There is an economic development dimension to the debate. Engel said the state's ski areas employ 4,500 people during the season, including about 200 full-timers. These businesses take pride in giving high school students their first jobs and job training.
Skiers at Tyrol Basin drive about $2.5 million in economic activity, Barry said.
Their case is strong enough that it at least deserves a separate debate in the Legislature.
Burying the liability change in the budget bill is a sneaky way to do business. It has little, if anything, to do with the state budget.