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A tradition in Sandusk , Ohio, for as long as anyone could remember was the Fourth of July Parade. It was one of the largest and most popular events on the city’s annual calendar. No , in 1988, the city mayor was hit with some startling and potentially disastrous news. The State of Ohio was mandating that liability insurance be carried on every attrac- tion—floats, bands, majorettes—that partici- pated in the parade. To protect against the possibility of injury or accident of any parade participant, each had to be covered by liability insurance.

The trouble, of course, was that taking out a liability insurance policy for all parade participants would require far more expense than the city could afford. The amount of insurance required for that large a number of participants and equipment made it impossi- ble for the city to carry the cost. On the one hand, the mayor hated to cancel an impor- tant tradition that everyone in town looked forward to. On the other hand, to hold the event would break the city budget. If you were a consultant to the mayo , what would you suggest?

Commonly suggested alternatives in this problem include the following:

  • 1.

    Try to negotiate with an insurance company for a lower rate. (However, the risk is merely being transferred to the insurance company.)

  • 2.

    Hold fund-raising events to generate enough money to purchase the insurance policy, or find a wealthy donor to sponsor the parade. (However, this may deflect potential donations away from, or may compete with, other com- munity service agencies such as United Way, Red Cross, or local churches that also sponsor fund-raisers and require donations.)

  • 3.

    Charge a “participation fee” to parade partici- pants to cover the insurance expense. (However, this would likely eliminate most high school, middle school, and elementary school bands and floats. It would also reduce the amount of money float builders and spon- soring organizations could spend on the actual float. Such a requirement would likely be a parade killer.)

  • 4.

    Charge a fee to spectators of the parade. (However, this would require restricted access

to the parade, an administrative structure to coordinate fee collection and ticketing, and the destruction of the sense of community partici- pation that characterized this traditional event.)

Each of these suggestions is good, but each main- tains a single definition of the problem. Each assumes that the solution to the problem is associated with solv- ing the financial problem associated with the liability insurance requirement. Each suggestion, therefore, brings with it some danger of damaging the traditional nature of the parade or eliminating it altogether. If the problem is reversed, other answers normally not con- sidered become evident; that is, the need for liability insurance at all could be addressed.

Here is an excerpt from a newspaper report of how the problem was addressed:

Sandusk , Ohio (AP) The Fourth of July parade here wasn’t canceled, but it was immobilized by liability insurance worries. The band marched in place to the beat of a drum, and a country fair queen waved to her subjects from a float moored to the curb.

The Reverse Community Parade began at 10:00 A.M. Friday along Washington Row at the north end of the city and stayed there until dusk. “Very honestl , it was the issue of liabil- it ,” said Gene Kleindienst, superintendent of city schools and one of the celebration’s orga- nizers. “By not having a mobile parade, we significantly reduced the issue of liabilit ,” he said.

The immobile parade included about 20 floats and displays made by community groups. Games, displays, and food booths were in an adjacent park. Parade chairman Judee Hill said some folks didn’t understand, however. “Someone asked me if she was too late for the parade, and she had a hard time understanding the parade is here all da ,” she said.

Those who weren’t puzzled seemed to appreciate the parade for its stationary quali- ties. “I like this. I can see more,” said 67-year- old William A. Sibley. “I’m 80 percent blind. Now I know there’s something there,” he said pointing to a float.

Spectator Emmy Platte preferred the immobile parade because it didn’t go on for “what seemed like miles,” exhausting partici- pants. “You don’t have those little drum




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