First Dive Insurance: A Year Later

A Beer between friends: Peter and Ryan Meyer of First Dive discuss their dive insurance program one year later.

by Sean Harrison

“Right from the outset, when Ryan and I talked about a new dive insurance program, we knew we had to do it differently…”

I’m sitting in a quiet corner of Cardero’s restaurant in Vancouver, BC with Peter and Ryan Meyer.  Peter, all six foot five of him, is sipping on ice water and looks like a guy who’s seen a lot but hasn’t been this relaxed in years.  There’s a bit of sun on his brow, his deck shoes are a polite kind of trendy; he looks younger than he did five years ago in the height of managing Willis’s dive insurance program through Catlin syndicate.  Peter continues, “Dive insurance programs have always had problems and diving as a risk isn’t particularly attractive to most insurance markets.”

“If we were doing it the same way, I wouldn’t want to be doing this,” Ryan chimes in.  At thirty-two, he’s already got a strong background in the insurance industry, but I can tell by the glint in his eye that he’s not going to let experience force him into old ways of thinking.  “I mean really, if someone tried to do this the same way it has been done in the past they would have been laughed out of more than a few boardrooms.  Walking into a meeting with a large insurer to convince their actuaries they should write scuba diving insurance and price the product cheaper than they can get for insurance coverage on a corner store or food truck usually goes as well as asking Tipper Gore to produce a Twisted Sister reunion album.”  Peter and I chuckle at the analogy.

“Why do you think that is?” I ask.

“Essentially, you’re providing liability insurance to people breathing in a foreign environment, physically exerting themselves with students who might be under ten years old.  There are currents to deal with, there are gas mixes to understand, there’s marine life, some of which will try to take a bite out of you, and there are occasional equipment malfunctions.  All this and you need to price the liability cheaper than coverage for a guy who just sells juice and chocolate bars.  There’s a lot more that can go wrong in scuba.  So yeah, if I was going to get into the dive business and Peter was going to get back into the dive business, we were going to need to change our approach.  And that’s what we’ve done.”

After several meetings with Peter and Ryan, and their business partners Tony and Clive, I’ve learned a lot about the storied history of dive insurance.  Peter, now in his early sixties owned two dive shops and ran a charter boat all the way back in the 1970s.  “I used to place quite a bit of marine insurance business back then.  I remember going to my manager back at Dale & Company in 1986 to say I was looking to put a dive program together.  I got laughed out of the office.  I didn’t get any support from anybody in a traditional marketplace and had to go to Lloyd’s of London on my own dime to try and get a program together.  I had thirty meetings that week and most of them ended with a polite handshake and a head scratch from whichever VP I’d just spoken with.”  The prevailing sentiment always seemed to be, why would you want to insure something so dangerous when there are so many other risk/reward scenarios that don’t keep you up at night?  The answer to why anyone would want to write dive business isn’t exactly an easy one.  If you ask Peter, he’ll make no bones about telling you, “I was lucky enough to convince people that I knew what I was talking about.  And if I didn’t know what I was talking about, it was always my neck on the line.”

“That was back then, how have things changed in the thirty years since?” I ask.

“Back then, there wasn’t as much compliance to deal with and there wasn’t the same level of record keeping,” Ryan tells me.  “People used to underwrite based on their gut feeling.  It was part of the ‘art’ of the business.  Technology has taken a lot of the mystery out of underwriting these difficult classes but at the same time, when you have the claims information for a class like dive; it’s not necessarily a feather in the proverbial cap.  It was David vs. Goliath back then for Peter.  It’s still David vs. Goliath but now we know the exact height and weight of Goliath and can look at his advanced stats before the fight.  It’s great in identifying business that’s actually better than it appears.  Inversely, if the numbers show that it walks like a duck and talks like a duck…”

“What do you have against ducks?” asks Peter to a small round of laughs before he continues.  “It really does pain me to say it, but diving is dangerous.  People get hurt on a regular basis and it’s right there in the data for all to see.  I don’t know a single underwriter who actually made any money doing a dive program.  It’s a perennial loss leader in a business where spreadsheets and ratios are replacing the ‘art’ that Ryan talks about.”

“So then how did you get this new program done?”

“We evolved,” said Peter.  “We put our thinking caps on and figured out how to do it differently.”

“And we still struck out on our first few tries,” Ryan answered.  “Even when Michael Burry shorted the housing market in 2006 and 2007 there were people screaming that he was insane.”  First Dive was the same way.  People might not know it, but Peter already revolutionized the industry by offering instructors E&O as an extension to the standard policy for a diving facility.  People fought against that and now everyone does it.  “We knew we needed a big step and we ended up with more than one.  Even with that, we had to work with multiple Lloyd’s brokers to get it done.  We had several Lloyd’s markets on deck, claiming interest, but none stepped up to the plate for nearly a year.”

“First and foremost,” says Peter, “we knew that pricing was an issue and we knew that a one million dollar liability limit was insufficient for this class of business.”

“I was shocked, when Peter and I first started talking dive, that so many people only carried a million dollars of liability.”  I’ve heard Ryan mention this a few times, but every time we get on the subject, his voice rises and he talks with his hands.  “I come from a background of insuring contractors, manufacturers and retailers and I can’t remember ever selling only a million dollars of liability to anyone.  I’ve provided abuse cover for daycares and churches, and had a book of hot torch roofers at one point.  In insurance, these are some of the most volatile business classes you can cover and we always sold more than a million dollar liability limit.  No one asked for less.”

“I knew it would be met with resistance,” says Peter.  “But the more we talked, the more I knew selling a minimum of $2 million dollars was the way we needed to go.  If you look at insurance premiums as all going into a big pot, the premiums of the many are paying the losses of the few.  It just made sense to give people a bit more limit while also getting a bit more into the pot.  In a lot of cases, we can provide an extra million in coverage for a minimal increase.  If you’ve got a $500 policy, it seems foolish not to buy that extra million in liability coverage for $25.”   Now it’s Peter’s turn to get animated.  “You buy insurance for the day the shit really hits the fan.  And when the shit really hits the fan, a million dollars isn’t going to cut the mustard.  You might as well have just kept the $500 in your jeans.  But you pay $650 and all of a sudden you actually have a useful product.  On that really bad day that none of us think is going to happen, the extra $150 you spent on insurance should let you keep your house and your business.”

“It provides stability to our product too,” says Ryan.  “The more money in the pot, the more claims you can pay while keeping the folks in London happy.  They’re not writing insurance to lose money and if they do lose money, they’ll just offer their insurance capacity to someone else.  They’ll get the same $650 writing insurance for the guy who owns a corner store and they won’t worry about losing their jobs when the results come in at the end of the year.  I want to give credit where credit’s due, the guys who work with us in London are gunslingers.”

“It’s funny, you know,” says Peter, who’s now looking relaxed again.  “We’re all running businesses here.  The insurance buyer is running their facility business or their dive boat.  Ryan and I are running an agency.  The underwriters in London are running a risk transfer operation.  They’re the ones who are really gambling in this game.  It’s their money that’s on the table.  At the end of the year, all three parties want to see their businesses in the black or there might not be bread on the table.  It creates a very interesting dichotomy of offering the right price for the right product and providing the right value for the customer.”

“It goes beyond all that though.”  There’s a pause as Ryan asks the waiter if he can get a coffee.  “Sometimes you need that little afternoon pickup,” he says with a smile.  “Yes, we offer a minimum of $2 million in liability.  Yes, we’re the first to do it.  We think it provides value to the customer and when we set this up, we looked at other ways to provide value.  We can work with any retail broker licensed in the USA and Canada, Bonaire, Cayman, etc.  Any retail broker in the world really.  We’ve set this up as a global operation where a small dive facility in Turks & Caicos can talk to their local insurance broker and access our product.  For me, the two million dollar minimum limit is a small step compared to this ability to work with brokers globally.  It provides service the average dive client has never seen before.”

“It’s true,” says Peter.  “When you go in to get your home insurance renewed, you can ask your broker to give us a call and we can quote your dive business at the same time.  I mean, you are able to choose who represents you in pretty much every other insurance transaction.  There’s an old saying that the customer needs to pick their insurance broker, not their insurance company.  The broker finds the right company to fit the customer needs.  Dive insurance has always forced you to pick your broker based on your need for dive insurance and we’re very happy to say that we’re changing that.  If you’ve got a broker you know and like, tell them to give us a call and we’ll work with them to get you the product you need.”

“That seems to be a big change,” I say.  “If you could put it into one sentence, why is this change so important for the customer?”

“A good broker protects their client’s interests by negotiating with insurance companies and the dive business has always been set up as insurance brokers selling their own products.  When brokers sell their own products, they don’t always have the customer’s best interests at heart.”  Ryan sighs.  “Sorry, I think that was two or three sentences.”

“I’ll give it a try,” says Peter.  “If you have someone you trust to handle your other insurance, like your home coverage, why wouldn’t you want to use them for your dive insurance?  Why make more than one stop, why be forced to call two insurance brokers when you change your mailing address?”

“That was at least two sentences, and a question too,” says Ryan, blowing on the freshly delivered cup of coffee.  You can tell there is a friendly family competition between Peter and he.

“With something this good, why only give it one sentence,” is Peter’s retort.

“It’s interesting,” I say.  “You guys talk about this stuff because you work with it every day.  I mean, I can keep up but this isn’t the first time you two have talked to me about this.  And so, it does seem to me that there’s a very real possibility of confusion or smoke and mirrors when talking about insurance.”

“That’s why you want to have an insurance broker you can trust,” says Peter.  “And that’s why we want to give our customers the ability to deal with someone they have a relationship with.”

“Good,” I say and now it’s my turn to signal the waiter.  I’ve been hanging out with these two for a few days and they’ve kept their eyes on the proverbial prize.  They’ve kept me entertained; they’ve made sure my accommodation is okay.  I’ve met Ryan’s daughter, who’s very proud to tell me how her kindergarten classes are going; her small lisp complimenting the utter joy she displays in most moments.  I’ve met both of their partners, Olga and Michelle and shared polite chats with their associates Tony and Clive, who are happy to let Peter and Ryan rule the dive roost.  I’ve spoken to Brian Carney at SDI/TDI/ERDI about them and I’ve reached out to other dive stalwarts at DAN and NAUI to discuss these two.  And yet, Ryan seems the most leery of my presence.  “I know we should be treating you well to get some good words out of you.”  His comment was followed by a large hand clap on the back.  “We’re happy to hang out, but we do have a business to run, and I’m not afraid if you tell people we’re assholes.  A lot of them probably think we are already.”

And this sentiment does ring true.  Peter and Ryan, above all else, seem very aware of what they are doing and know they are delivering a message the industry doesn’t want to hear.  At one point, I asked Ryan if he wanted his daughter to get into diving when she was a bit older.  His face hit a note more morose than a Beethoven requiem.  “With us, sure,” he said.  “With Peter, yes, I’d let her learn when she was fifteen or older, just like I had with Peter.” He pauses at this point (we were standing on the deck of his modest apartment in Vancouver).  “It’s probably bad for our business, but I’ve got to tell you, I’ve been hearing about diving accidents since I was a kid.  Since before I started diving.  Much as we don’t want to say it, insurance is a business that’s very easy to bring home.  And Peter loves diving, it really is his passion in life – insurance isn’t.  But when you hear about the accidents that happen regularly to people, it becomes a hard proposition in promoting the sport when it comes to your kids.  Not all things in life are equal.  I’d let Peter teach Georgie how to dive.  I wouldn’t let anyone else.”

It’s this openness that’s led me to a subtle understanding of Peter, but perhaps more so Ryan.  Ryan is ‘an insurance guy.’  He understands risk and started in this game from a young age.  His mom is an insurance broker; his step dad is; as are his step brother and aunts.  While he puts on a brave face and wants to support the sport, you can tell it scares him.  It was on the patio as we talked about his daughter that he really opened up.  “We had four deaths on the books in December.  Just in the one month, we had four deaths come over our desks.  It’s not necessarily a situation where we’re writing the insurance for them, or we think our clients are liable but I mean… name me another class of insurance where getting reports on four dead people, in four separate incidents is normal.  Bottom line is it’s not.  Four to one DSD ratios are not in place for the safety of the customer, they are there so operators can make money.  Knowing what I know, I would never let my daughter get into that situation.”

“You two don’t allow 4:1 ratios in your insurance do you?”  I ask again as it’s something Peter holds as gospel.  The father and son laugh and joke, but when it comes to their convictions in diving risk management, they form an astute duo of stat tracking and unbridled emotion on the product.  In spite of Peter’s insistence on not following certain Training Agencies DSD ratios, Ryan is the one who took lead on the subject that evening as we stood on the deck.  “An instructor only has two hands,” he said.  “Two hands but they can have four diving newbs with them?  Shit, PADI used to allow 8:1 ratios of uncertified divers.  8:1!  When I learned to dive, I held Peter’s hand for more than my first few dives.  For us, the ratio was 1:1 and there wasn’t going to be any discussion about it.  Here’s a question: when it comes to your kid, you teach 1:1, so why is it okay to teach everyone else’s kid 4:1?”

Peter has read incident reports on dead children, and throughout my visit it was never something he wanted to talk about.  It was the only subject that made him touchy.

And so now, as I signal a waitress at Cardero’s, I think it’s time to have a beer with these two.  Most of the time, I get an hour with someone I write about and these two have kept me along for the ride for two days.  I’ve seen their online system and I know it works.  I’ve seen them strategize.  I’ve seen the passion they work with and honestly, I can’t help but like them, even if they don’t think anyone else really does. “Round of beers?” I ask.

“When it comes right down to it, we can’t turn you down for a beer,” says Peter.  It was odd just then, as the two had always seemed relaxed, but at that moment, I felt as though just a little pressure had let out of the room.  And so we waited for our round and I asked, “When it comes to your business, what else do you want to tell people?”

“Peter?” Ryan’s looking at his dad.

“Way to put the pressure on,” says Peter before a pause.  “I want people to know that we give diving a hard rap because we love diving.  We really do.  When I was a kid I wanted to be Jacques Cousteau and frankly, I still want to be.  We want to give them a product that has as much thought going into it as possible, even if it’s different than what they’re used to, or what everyone else is doing.”

Ryan continues.  “From a logistics standpoint, I want people to know that we’ve implemented a system that gets insurance documents out faster than anyone in the business.  It keeps our cost down, which keeps premiums down.  We’re running a tight ship here and we just hope the people we insure are doing the same thing.  And beyond that, we want to keep a discussion going.  You hang out at DEMA and everyone talks about how diving is one big community.  Sometimes it doesn’t feel that way and I think the more Peter and I can talk to people, or let them know what we’re trying to do, the further we’re going to be able to get things pointed the way we feel they should be and the way others think they should be.”

With that, the final round of beverages arrives.  As we clink glasses, I notice Peter and Ryan each give each other a nod.  At this moment, I can’t help thinking of Ryan, smaller and a child, standing on the back deck of Peter’s boat, Hemisphere Dancer, both in their dry suits, talking much as they do today, about life and love; understanding each other’s passion as they prepare to push just a little bit further into the wilderness, concrete or natural, expected or not, wanted or forced.  When push comes to shove, you know both of these guys will be there, if the shit does hit the fan or if it’s time for a chin wag and a couple laughs.  I see them talking like a father and son do, about baseball cards and horror movies; superheroes and sports cars.  They’ve been together for thirty two years, even though their business is just ten months old.  They have each other’s backs.  And now it all really makes sense to me.  These two are always going to be in that place, on a boat, dipping the lines around midnight to see the phosphorescence and laughing.  Now that both are older, these two are always going to be there.  And if you ask them nicely, they’ll let you know they’re always going to be there when the shit hits the fan, even if it means they need to suggest how to do things differently.

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