Theme parks, cruise lines, and other tourism-driven business are watching their insurance rates rise due to the fallout of the Sept. 11 attacks, according to the Bloomberg News.
Carnival Cruise Lines, a Miami-based operative, filed a report with the Securities and Exchange Commission stating that they were having trouble obtaining adequate insurance coverage.
Spokesperson Tim Gallagher commented that although the premium was small to begin with, the increase was substantial.
Six Flags Inc. recently reported that its insurance expenses would increase by 40 percent this year, or more than $7.5 million, according to CFO James Dannhauser.
Dannhauser brought attention to the fact that not only has the Sept. 11 attacks contributed to the rising costs, but also because of the consolidation of the insurance industry.
The company reported a net income of $30.7 million, or 11 cents a share, on sales of $963.4 million in the first nine months of 2001.
It was further reported by industry consultant Dennis Speigel that theme parks usually allot no more than 5 percent to the payment of insurance premiums.
However, with the economy struggling to rebound from a recession, and the detrimental effects of Sept. 11, premiums have risen dramatically, and consumers have been wary to travel.
Six Flags will likely face reduced earnings of a couple of cents per share annually, said Todd Griesbach, an analyst at Liberty Wanger Asset Management in Chicago.
Disney also expects to see a boost in their insurance rates, spokesperson Ken Green commented. They also face decreased profit margins with increased rates.
Cedar Fair LP, owner of Knott’s Berry Farm and five other theme parks, stated that their insurance premiums would increase more than 10 percent this year, according to spokesperson Brian Witherow.
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