LVCVA insurance rates could double in 2002

Wednesday, March 13, 2002 | 11:05 a.m.

The Las Vegas Convention and Visitors Authority's property insurance premium is expected to soar by as much as 100 percent in August, in part because the Sept. 11 terrorist attacks have tightened the insurance market.

LVCVA President Manny Cortez said even though the agency has a good "loss record" at its convention center, insurers are demanding more to reduce their exposure to large losses on buildings they say could be targets of terrorist attacks. Large public gathering areas like convention centers and airports are being scrutinized more by insurers, he said.

The issue was raised at Tuesday's LVCVA board meeting at which members were asked to extend the contract of its current property and liability insurance broker, Marsh USA Inc. The LVCVA staff recommended keeping Marsh on a retainer basis to negotiate with the convention center's property insurance carrier, Fireman's Fund.

The LVCVA's current property and liability insurance policy expires in August.

Charles Dorsey, senior vice president of Marsh in Las Vegas, has told LVCVA officials the cost of insurance coverage could climb from the current $600,000 a year to between $900,000 and $1.2 million a year.

Representatives of Fireman's Fund have told the LVCVA it could reduce its risk -- and therefore the cost of its insurance premiums -- by upgrading the fire suppression system in the oldest part of the convention center.

Tom Smith, vice president of facilities for the LVCVA, said his staff is now getting estimates on fire suppression system upgrades to determine if it would be cost-effective to install them based on how much it would save on insurance.

The upgrade would involve installing more sprinkler heads along the ceiling of the convention center to increase the flow of water in a fire.

Cortez stressed to the board that the convention center's fire suppression system exceeds Clark County fire code requirements and there are no life safety issues involved.

Asked how the LVCVA would pay for higher insurance costs or fire suppression system upgrades, Cortez said the extra money would come out of the agency's current operational budget for now and then be passed along to customers in the future in the form of higher rental rates.

LVCVA officials have written contract clauses that enable the agency to add rental surcharges for conventions and trade shows that use excessive amounts of utilities. For example, shows such as Comdex and the Consumer Electronics Show use high amounts of electricity and those costs are passed on to the show organizers.

But Cortez said no one considered the possibility of a sudden spike in insurance rates like those being brought upon by the terrorist attacks.

Several hotels have their own convention centers, but representatives of hotels that manage some of the largest centers could not be reached for comment on whether their insurance rates also are going up.