Special events

Rough Notes, May 2003 by France, Larry G

Insuring special events, promotions and prize indemnification

Recent perceived and real threats to gatherings of people have put underwriters on the alert. Such was the case at this year's NCAA tournaments where all spectators were "wanded." Taking precautions is prudent-but can we take enough? Some markets think not. With "re-thinking" of underwriting futures, many carriers have decided to forgo the special events niche. Several factors have caused an exodus of players: losses (even prior to 9/11), lack of capacity, and carrier rating problems. Try to place coverage on an event that will attract more than 10,000 spectators-- placing and pricing that risk will consume a very good part of your week. Depending on the activity, placement may not be feasible.

The problem of security

Security is a major concern today. It is a problem because we really don't know what we need to secure against. Where and how will an event be threatened? Threats really do exist but we don't know how to underwrite an unknown exposure.

In addition, you may find that because of the current state of the economy, there will be fewer events to write. Budget cutbacks make it more difficult to obtain, and events face greater cost of security and insurance.

But, hey, let's write some "fun stuff." Prize indemnity and promotions are fun and allow you to use your imagination in putting together scenarios for your clients.

The problem of weather

Weather insurance isn't just rain insurance. It can be utilized to offset losses when governmental units exceed their budgets in the event of, for example, a heavy snow season-- which many of us experienced this past winter. Merchants' costs of overstocking winter items such as snowblowers, apparel, and rental equipment, can also be covered. Snow accumulation can be offered.

LauraLee Tillman of Good Weather Insurance Agency says that as businesses learn how weather insurance can stabilize income and contain cost increases, purchase of that coverage is increasing. "While historically used by events of one or more days, other seasonal exposures such as golf courses and restaurants are increasing their use of weather coverage," she explains. Regarding available markets, Tillman says that as underwriting markets harden, there are fewer underwriters today than even one year ago.

Innovation and fun

Being able to bring new tools to your client or prospect is fun (and you receive a lot fewer "no's" from underwriters). Prize and promotion coverage is very innovative. There are very few ideas that can't be put together with the proper pricing and controls.

IC Group, Inc., a provider of online promotions technology, insurance and risk management expertise, is an example of how to provide fun for the client as well as employees. The company was recently engaged by a marketing and promotions firm to put together an online program aimed at educating the employees of the Bank of Montreal.

The Web-based program was called "Commitment to Customers." Employees were encouraged to complete up to six modules containing company branding-related questions and fun facts. Each time the employee completed an online learning module, he or she received an online select-- and-win game that offered the chance to win a series of Bank of Montreal prizes. This accomplished the bank's goal of educating its employees through the creation of a fun vehicle.

According to a March 2002 study by the SITE Foundation, the research arm of the Society for Travel and Incentive Executives, incentives can improve employees' performance by 27% for individuals and 45% for teams.

Ideas for prize and promotional prospects are endless. SCA Promotions designed a holiday promotion for Shoe Carnival's 208 stores that was aimed at bringing in shoppers during a tough retail market. Shoe Carnival had conducted this particular promotion the previous year; not only did they decide to run it again, but they also doubled the prize. The day after Thanksgiving, each store gave customers a ticket stub as they entered. At 7:00, 8:00, and 9:00 a.m. one ticket number was announced. The chosen contestant then pulled a card out of a box that was decorated to look like a present. Each card revealed a gift ranging from a DVD player, to a dome tent, to a grand prize of $10,000. There were three grand prize winners in the first hour. The word spread about the contest, which filled the stores for the other drawings. The success of this promotion kept Shoe Carnival in the public eye long after Thanksgiving. Do you think that traffic will be brisk next year?

Other ideas include auto dealers' direct-mail programs, baseball toss and tagged fish challenge.

Look for clients or prospects who want to increase traffic in their stores, fill a stadium, increase entries for a contest or educate their employees. Your innovative ideas can place you in a position to write other lines of coverage.

Companies that provide this type of coverage are more than willing and able to consult with you in developing ideas that will appeal to clients.