Insurance For the Season Pass Holder

I removed the link to this article (http://www.msnbc.msn.com/id/6667060/) from the title because it was goofing up the overall look of the blog. DT 1/12/05

Recently, National Union Fire Insurance Co. of Pittsburgh brought the idea of insuring against the risk of injury on ski resorts, and the implications created by injury. Unlike most common insurance packages, this new policy covers the loss of season pass capacity. Most season passes cost upward of a thousand dollars. Historically, resort patrons ski and snowboard on parts of the mountain before enough snow has accumulated to cover dangerous hazards. The dangerous conditions often lead to injury. Sometimes, the injury sustained early in winter causes total loss of season pass holders. To remedy the injured pass holder, National Union Fire Insurance has developed an insurance package that covers the loss of a season pass as well as other medical expenses as a result of injury. Incidently the service of indemnifiying someone for a lost season pass is big news, and the source of big time revenue. NUFI has found a niche that is willing to pay for coverage. NUFI got a jump start on a market with high demand. Luckily for NUFI there is a limited number of companies who offer any kind of risk coverage to skiers. The market is an oligopoly. NUFI really cornered the market by offering a product that no other company has. Profit taking is being had right now. Most likely these short term profits and higher premiums will quickly start seeing Cournot model type results as competition stiffens.


Dr. Tufte said...

-1 for no link in Stevepadilla2's post.

Economists like to point out that there are markets for everything. The absence of a functioning market for a product is usually a sign that the transaction costs are too high. So, I'm wondering in this case 1) why the transaction costs were high in the first place (perhaps getting the message out to skiers), and 2) what happened to lower them (perhaps NUFI figured out a way to connect to skiers at the time they buy the season pass).

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