Promotions and special events

Rough Notes, May 2001 by France, Larry

Parades, conventions, holes-in-one and falling spacecraft

Get your free tacos." In March, when the Russian space station MIR returned to earth, Taco Bell floated a 40' x 40' target off the coast of Australia with the message "Free Tacos Here" for the world to see. If the core of the MIR were to hit the floating billboard, everyone in the United States (281 million people) would receive a free taco. At 69 cents each that comes to $193,890,000. (If only a fragment of the MIR hit the target, there was to be no payoff. The core of the MIR had to hit the billboard.)

Okay. So, if the core of MIR had managed to come down on that exact spot, there would have been a payoff. Not everyone likes tacos, however, so that dollar amount would have been less. If you are a taco fan, you probably are not going to eat just one-plus you will need a drink to go along with it, so you'll be increasing Taco Bell's volume of business. Wouldn't you like to have all those people visiting your business?

Assuming that the 69 cents is somewhat higher than the cost to produce the product, how much do you think Taco Bell would really have spent? It might have been tempting to use out-of-pocket cash to cover the risk, considering the remote probability of its actually happening. However, according to the media, Taco Bell purchased a policy to cover the cost of the 280 odd million giveaway tacos.

How much visibility has Taco Bell received just by setting up the promotion? Prize indemnification is a great marketing tool for businesses to gain publicity and increase sales with a relatively small outlay of cash. Newspapers, radio and television all reported this promotion to different degrees. They talked about the promotion prior to the splashdown and then reported that the "billboard hit" didn't take place. Great free publicity. The floating advertisement is still adrift in the Pacific, and Taco Bell is running a two for 99 cents special on tacos.

Innovation is the key word when talking about prize indemnification. Hole-in-one, half court shots, and fishing contests are common. Almost any idea a client might propose can be put together for the right price and policy wording. New product listings for prize promotions in the 2001 edition of The Insurance Marketplace include phone card, Internet, and media promotions. SCA Promotions of Dallas is the market for each.

With phone card promotions, the cards-providing free long distance time-include the sponsoring company's logo. Internet promotions offer information, buying and communication opportunities. Media promotions can boost market share for radio and print communications and also impact listener or reader loyalty.

TSI Sports of Flowery Branch, Georgia, offers promotion and contest packages for prize indemnification such as hole-in-one and fishing contests but also provides services, signs, and banners to help sponsors promote the event. According to Jennifer Spindola, "Using state-of-the-- art digital production capabilities, we supply a variety of signs to meet every requirement and budget. Our superior quality signs and banners assure these companies that they are putting their best image on the golf course."

Coverage for special events includes general liability and, in some cases, other coverages such as inland marine, auto, liquor liability, and workers compensation. Liability can be divided into two separate categories-- spectators and participants.

The one encountered most frequently is spectators liability, such as people in the bleachers. Some events also will have a participants exposure. Examples of this type of risk are sports (amateur and professional) and motor sports events. Most policies will exclude coverage for the participants; however, a buy-back or separate coverage can be placed. Rodeo riders have an association where medical coverage is available. Other likely exclusions are fireworks, watercraft, and carnival rides.

Attention should be paid to the policy form. Is it straight ISO or has it been tailored to anticipate special event exposures and conditions? Is the carrier admitted or non-admitted and will non-admitted be acceptable to the client? Don't just look at the pricing when trying to place coverage for an event. There are differences in policies that can put your client's financial position and your agent's E&O in jeopardy. If your client is just looking for a certificate, then price may be a factor, but in most instances the proper coverage is primary (no pun intended).

The more information you can provide the market, the better quote you can obtain. Loss history, schedule of events, photos, copy of contracts, evacuation plans, and maintenance records all can be helpful in giving the underwriter reason to accept the risk with competitive pricing.

The market for special events is firming. Dale Johnson of K&K's Events and Attractions Division states: "Because of current market conditions, we have seen some limitations in capacity available for special event risks, with some carriers pulling out of the special events marketplace entirely. Additionally, we've noticed markets that have continued to provide coverage but have implemented some fairly significant rate increases."