DENVER (AP) — With drought in the air and wildfires possible into the fall, Joe McNasby believes he may have a better market this year for the snow insurance he's selling to Colorado ski resorts.
After two unexpected insurance risks in three years — Y2K and Sept. 11 — the insurance offered this year will not cover all risks. It could, however, include wildfire damage that sends tree-loving skiers and snowboarders elsewhere.
"If a resort has its normal property insurance and a wildfire swept through, they would have coverage for property burning down and income for the time it takes to rebuild," said McNasby. "This would be to cover losses because people won't go to a resort and pay full price if the area is scorched. People want to look at nice pine trees, not scorched earth."
The price of premiums would depend on an area's weather history.
Two years ago McNasby's Steamboat Springs-based MDM Group Associates Inc. paid out more than $20 million to resorts from California to New England that suffered from late snowfall. Potential skiers also stayed at home because of Y2K computer glitch fears.
Vail alone got $6.2 million in the third quarter of 2000. Vail Resorts is not considering buying such a policy this year, said spokeswoman Kelly Ladyga.
Last year McNasby didn't have any takers for a weather-only product, which may have been a good thing for his group. Snowfall was down an average of 10 percent throughout the nation, and resorts were open an average of 12 percent fewer days.
McNasby said, "We think we have a potentially good market. It is a hedge for them. I am not sure a lot of operators are as optimistic as they have been in the past." He expects to have this year's proposed policies ready for examination after Labor Day.
Drought is a major issue this year. Colorado's precipitation is at its lowest level since record-keeping began in 1890.
Rob Perlman, president of Colorado Ski Country USA, said resorts not only need adequate snow it needs to come early enough to avoid the perception of a low-snow year. He said the perception of low snowfall could stick and cause some visitors not to come.
Several English and Australian companies offer policies for vacationers that cover their added costs if they have to change resorts because of low snowfall or avalanche conditions.