High insurance rates decimate profits for area limo companies

Insurance costs are a standard business expense but limousine operators say it's extraordinary to have to pay $8,000 annually per vehicle.

Limo companies must insure each individual car. Today's high rates mean they're having a tough time keeping up.

Nationwide, limo company operators

In 1999, Dean Schuler, president and chief executive officer of Carey New Orleans/Signature Livery, paid an annual premium of $33,000 for $1 million in coverage on his 10-car fleet. Now he pays $82,000 for the same amount of coverage - a 148% increase.

Right off the bat, anyone who had to renew insurance after the (Sept. 11 terrorist attacks), faced a terrible battle, Schuler said.

A rocky stock market, losses on investments and a tragic crash of a Customs Charters bus on May 9, 1999, that killed more than 20 people, all combined to hurt operators as well, said Gary Baca, general manager of the Louis Armstrong International Airport.

We can't shop for proper rates, Baca said.

In Louisiana, two major companies write commercial operator insurance for limo companies: Imperial Fire and Casualty Insurance Co. in Opelousas, and Prime Insurance Syndicate, which is part of the Illinois Insurance Exchange.

Without competition holding down rates, Louisiana drivers are forced to pay high premiums to operate.

I have a profitable company, but if insurance rates double again, why should I be in this business? Schuler asked.

There's no relief in sight for limo drivers.

To stay in drive, limo companies need to be creative with how they market themselves and the type of service they do, Moore said.

In New Orleans, A Airport Limousine operators have become creative in beefing up their walk-up business. Nine independent limo operators pooled their cars and drivers together in December under the A Airport umbrella to start offering walk-up limo service at Louis Armstrong New Orleans International Airport, Baca said. It's been a big success.

We expected to run 60 to 70 cars a day but individual runs have exceeded that to 150 to 185 cars a day, he said.

New Orleans does not have a big corporate base, Baca said, so limo drivers depend on tourism travel. Opening on Sugar Bowl weekend helped boost initial operating figures, Baca said.

A Airport member operator Cyndi Pianka, president of Blue Moon Limousine in New Orleans, said it was the shot in the arm she needed to keep her six-car fleet afloat.

Pianka is struggling to pay an insurance premium that jumped 240% from $2,500 per car in 2000 to $8,500 this year. A Airport business helps her break even.

Honestly, I'm frightened to look at my (revenue) as long as I can pay the bills, Pianka said. Insurance companies, she said, have held us hostage. We have no choice.

After investing 10 years in the limo-driving business, Pianka said she has no intention of exiting.

The last thing you can afford to do is move into something else. You find other ways to cut back. You don't take trips, you don't dine out. Your lifestyle changes, she said.

Baca pays about $9,000 per vehicle in annual insurance premiums. Baca hopes A Airport will get a break on rates when it renews its insurance policy because of its accident-free record.