Magic Kingdom Captives

The Walt Disney Company has two Vermont-based captives at the core of its overall risk management programme. But this wasn't the always so, according to Stephen Wilder, vice-president of risk management for Disney. Until three years ago Disney didn't own a single captive. "I was always anti-captive. I didn't understand why we needed a captive insurance company. I learned," he said, speaking to 1,000 delegates at the Risk and Insurance Management Society conference in Philadelphia this year. "The insurance market until 9/11 had been very efficient and could take care of our insurance needs", Wilder added. But following 9/11 there was a capacity crisis generally and captives looked more appealing. Disney set up its first captive, Buena Vista Insurance Company, over three days in March 2002. The captive and its sister company are managed by Aon Insurance Managers in Burlington, Vermont. The captive was set up "due to a crisis we had", said Wilder, who refused to elaborate. "We had a gap in an insurance program we needed to fill and Vermont was a great place to go. The regulator was friendly and helpful. He tried to make things work instead of not work. So we have two captives as the backbone of our risk management programme". Wilder pointed out risk managers have had a rough five years. Here are some of the challenges, from a personal viewpoint.

9/11 business interruption

Disney was affected by the events of 9/11"in so many ways", said Wilder. Disney owned WABC-TV in New York had two antennae on top of the World Trade Center-and one was a back-up for the other. "We had difficult business-interruption issues as we couldn't broadcast from the same distance at the Empire State Building, which we used as a back ?up, as we could at the World Trade Center-we couldn't transmit to as many people." Meanwhile, people couldn't leave or fly to theme parks as airlines were grounded. Wilder and his team knew this would be a difficult claims adjustment. "We thought instead of being adversaries for the next five years, why don't we (Disney and the insurers) just get through it? We'll be fair. You'll be fair. A lot of insurers were involved, namely Factory Mutual and Lloyd's of London. In five months we settled one of the most complex insurance claims I had ever seen in my life."

From anthrax to S-OX

After 9/11, some of the major television companies, including the Disney-owned ABC network, had anthrax scares. The New York risk management team dealt with it. The company has also addressed the risks associated with ABC journalists on the front line of the Iraqi war, he said. A theme park is being built in Hong Kong and a construction manager is on site as part of the company's determination to be involved in all rides, shows and theme parks from concept to completion. The emphasis on corporate governance as a result of the Sarbanes-Oxley Act has also been a great challenge for all risk managers. Wilder said" When I was a risk manager in 1997 we were asking " how do we get risk managers to increase their visibility in their organisations? Well today it's visible and I think that's a wonderful thing for all of us."

Hurricanes

Disney World in Orlando has had a rough 2004 as a result of the unprecedented spate of hurricanes to hit Florida. Disney's theme parks are celebrating their 50th anniversary this summer and Disney World had only closed twice in its history until 2004. The first was in 1972 with Hurricane Floyd and the second was on 9/11. But the theme park had to close three more times last year for Hurricanes Charley, Frances and Jeanne. "I'm proud to say Walt Disney didn't have an insurance claim due to wind-strengthening programmes we implemented immediately after Hurricane Andrew (in 1989) and wind-strengthening programmes that we undertook this year." Said Wilder.