By Joe Palumbo
So you have a day off and decide to jump on a bus and try your luck in Atlantic City. Or you’re a club, a church or a civic group looking for charter bus transportation. Well, seat availability is getting scarcer.
The culprit once again is the ever-increasing price of insurance premiums. What’s alarming is the increasing scarcity of underwriters for New York City in supplying charter bus coverage. Many companies are being forced toward assigned risk programs, creating premium increases in excess of 150 percent.
That’s quite a hefty increase to one’s overhead. Just three years ago bus charter insurance premiums ran between $5,000 and $7,000. In that three-year period, premiums have jumped to more than $20,000 per bus. That’s an approximate 233 percent increase over the last three years. And if that’s not enough, another 40 percent to 50 percent increase is being planned.
“To some extent they’re driving us out of business,” said Sheila Prince, manager of Allen AME Transportation in Jamaica. So what’s the solution? Raise charter prices to cover these costs? Wrong! Beware of the out-of-town goblins. If our local New York charter bus companies raise their prices, the out-of-town buslines are ready and waiting. And why not?
These companies pay less insurance, and with lower overhead they can undercut our guys here in New York. The invasion has begun with bus companies marketing from Pennsylvania, Massachusetts and even New Jersey.
Let’s look at the pros and cons. Insurance companies argue that New York ranks fifth in the nation in traffic fatalities, according to the National Highway Traffic Safety Administration. New York also ranks high on the list of filed lawsuits. And if that’s not enough to scare insurance companies, New York is No. 1 in awarding the largest judgments.
But there is a counter argument. Won’t the out-of-town charters be just as accident-prone when doing business in New York? How many of those accidents and lawsuits involved out-of-town charters? When those buses from those three outlying states come roaring through Brooklyn, the Bronx and our very own Queens, are they not going to be subject to the same hazardous conditions?
These are very serious questions that should be addressed lest we stand to lose even more New York jobs and additional tax revenue. So how’s business for bus chartering? With premiums of $20,000 a bus and rising, when you think of New York bus charters think of the mammoth.
Joe Palumbo is the fund manager for The Palco Group, Inc. and can be reached at palcogroup@aol.com or 718-461-8317.
