Water Park Risks

No Room for Error

Drowning, drones and civil unrest are on the list of water park perils.
By: | August 3, 2015 • 7 min read

Everyone’s familiar with the traditional summertime risks of poolside slips, falls and drownings. But now a whole new cadre of water park risks is coming into play.


They include a heightened risk of active shooter situations or civil unrest, bacterial infestation and camera-equipped drones.

Exposures are also increasing because water parks continuously develop new features, and more and more are now open year-round, said Bob Murphy, global sports and events practice leader at Marsh in Philadelphia.

“Water parks are no different than any other entertainment organization — they are always looking for the next best attraction, the newest ride — it’s all about fun and excitement,” Murphy said.


Michael Greear, director, risk control, Aon Risk Services

Moreover, many water parks have become destination resorts not limited to outdoors venues, he said.

One new potential risk exposure that is entering the world of outdoor activity is the public’s growing use of camera-equipped drones, said Michael Greear, director, risk control at Aon Risk Services in Denver.

Technological advances in these flying cameras have made them more affordable and accessible to the general public, leading to concerns about drone collisions as well as invasion of privacy issues.

“Water park operators should consider the development of a drone use/non-use policy and communicate this to all staff and water park guests through training of staff to signs in the park to messages on websites,” he said.

Frequent Exposures

“Operators need to have a very specific skills set on their management team if they are going into the water park business,” said Franceen Gonzales, executive vice president, business development at WhiteWater West Industries Ltd. in Richmond, British Colulmbia, Canada, a manufacturer of water park and amusement attractions.

The three biggest risks in the water park business are water quality, bather supervision, and attraction operations, she said.

Gonzales serves as a board member for various safety-related organizations, including the technical committee for the Centers for Disease Control-hosted Model Aquatic Health Code (MAHC).

For water quality standards, sometimes even separate counties within a state have their own code, so it’s important to review all applicable regulations, she said.

“The MAHC takes into account the scientific research and new technology that’s been developed since most state codes were formed over 30 years ago.” — Franceen Gonzales, executive vice president, business development, WhiteWater West Industries Ltd.

The CDC’s MAHC was recently created to provide model language for states to adopt, which could improve consistency across the country. “The MAHC takes into account the scientific research and new technology that’s been developed since most state codes were formed over 30 years ago,” Gonzales said.

“This is a great resource on how to manage water quality and other safety considerations in aquatic environments.”

One potential risk is water-borne illnesses from bacteria such as cyclosporidium, Murphy said.

The chlorine used in water park pools may kill 99.9 percent of the bacteria, but a minute risk remains, he said.

“Lifeguards also have to be hyper-vigilant about watching for people with open cuts, such as when a kid’s Band-Aid falls off, a bike scrape, or when somebody takes a spill and cracks their head open and bleeds,” he said.

“The entire area needs to be disinfected before they let anyone back into the area.”

Another risk is posed by common filtration and recirculation pump systems, such as when multiple pools are being operated at the same location, Greear said.

If blood or fecal matter contaminates one pool, water park operators need to respond to the reality that other pools could also be indirectly contaminated through the common filtration system, he said.

Regularly testing the water for the appropriate chemical balance is important, he said, noting that before a park is built, the design should take into account all water-borne risks.

Substantial Business Interruption

A major issue for water park operators is business interruption, especially if it is a seasonal park that makes virtually all of its revenue over a fairly short period of time, Murphy said.


Parks that depend on summer for their revenue cannot afford to be shut down, particularly for a contingent business interruption, such as in the event of a riot or water main break.

“We also get parks to think and train for the unthinkable catastrophic event, such as an active shooter situation,” Murphy said.

A more common exposure is slips, trips and falls, given the wet surfaces on pool decks, slide ladders, stairways and locker rooms, said Greear.

“We also get parks to think and train for the unthinkable catastrophic event, such as an active shooter situation,” — Bob Murphy, global sports and events practice leader, Marsh, Philadelphia.

They are often not high-dollar claims, but “frequency often breeds severity,” he said.

In addition to posting no running rules and trying to enforce compliance, some parks have installed abrasive strips to minimize accidents, Greear said.

This is particularly helpful when adults are the transgressors — “it can be tough for a young, 18-year-old worker to tell a 45-year-old what not to do.”

When risk managers and safety engineers are involved in the park’s design discussions, they can offer input on what sort of materials should be used on the decks, tiles and other surfaces, he said.

Water slides and other attractions also need to be well-designed and engineered, fabricated with quality, well-installed, and tested prior to opening to the public, Gonzales said.

They also need to comply with industry standards, state-specific codes and manufacturers’ instructions, she said.

Collapsing water slides can result in injury or death, Murphy said. Parks should document every inspection of their slides, and immediately fix every issue, no matter how minor.

Swimmers in Distress

As for bather supervision, parks should focus not just on prevention, but on managing the diverse risks posed by different types of aquatic venues. Training staff to be able to recognize someone in distress and have the ability to reach that person quickly is crucial.

The training organization credited with developing the 10-20 protection standard for lifeguards is Jeff Ellis & Associates Inc., said Richard Carroll, the firm’s chief operating officer.

“Lifeguards have a zone of protection — a defined area where they are able to scan the entire zone of water within 10 seconds, and be capable of physically reaching a distressed swimmer within 20 seconds,” Carroll said.

“Parks should overlap these zones so that multiple lifeguards are scanning areas that are adjacent to each other.”

Wave pools generally have such zones, but that’s not the case at most catch pools for slides and other attractions, which typically have a two- to four-person maximum bather load, depending on the depth of the water, he said.

“The single most important factor in being able to maintain a drowning-free environment is lifeguard vigilance and attentiveness,” Carroll said. It requires foundational and continuous vigilance training as well as proactive supervision of the lifeguards on duty.

Ellis’ vigilance awareness training program uses live employees or mannequins, putting them at the bottom of the pool in certain lifeguard zones during the day to see how fast lifeguards react and reach the object. The firm’s clients conduct hundreds of these drills throughout the season, and remediation is provided if needed.

“The drills become so commonplace, we have patrons who frequent our clients’ facilities going back to their community pools and telling managers they need to be doing the same things,” he said.

Operators should also ensure that lifeguard staff regularly rotate positions, said Charles Landrum, director of underwriting at Specialty Insurance Group in Carmel, Ind., because when lifeguards sit in the same place for a long period of time, their minds begin to gloss over important details.

“Unlike other amusement options, there really isn’t any margin for error when it comes to the water park business.” — Charles Landrum, director of underwriting, Specialty Insurance Group

He said the quality of management is the most important factor when underwriting policies for water parks.


“We clearly want an operation that has the latest state-of-the-art safety equipment, which could be devices that eliminate water-borne illnesses, or water suction lines to prevent hair or body entrapment, or the types of chemicals used to treat the water, how they are handled and stored,” Landrum said.

Having a robust aquatic safety management program is also very important to underwriters.

“Unlike other amusement options, there really isn’t any margin for error when it comes to the water park business,” he said.

“For an amusement park kiddie ride that has adequate restraints, if an operator has a momentary distraction there won’t be catastrophic consequences.

“But in the water park business, any distraction could have catastrophic results,” Landrum said.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.


Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.

R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.


We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?


Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.


Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now and where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.


More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]