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Specialty lines
Reaching for the prize
Promotion-minded agents can help clients jump-start their business
By Dave Willis
Broadly speaking, as promotion budgets go, so goes the prize and contest insurance business. “Obviously, marketing budgets got hit last year,” says Doug Burkert, president of Richardson, Texas-based National Hole-In-One Association and Grand Prize Promotions. “The auto industry had a record year, but not necessarily a good record. It’s not often that you bankrupt two manufacturers in a year.”
Challenging times for auto dealers yielded fewer insured golf events, notes Mark Gilmartin, president of Reno-based Hole In One International and Odds On Promotions. Auto dealers are prime sponsors of such contests. “And charities hosted fewer events,” he adds. “The bigger impact there was they tended to have fewer players for their events.”
Today, promotion insurance providers are in somewhat of a wait-and-see mode. “Like everyone else, we’re waiting for the economy to turn,” explains Bill Hubbard, chairman of HCC Specialty Underwriters, Wakefield, Massachusetts. Dan Biga, director of sales for Tampa-based SUREBET Prize Indemnity, echoes the sentiment. “With the economy what it is, everybody’s treading water.”
Markets continue to be accessible and rates are generally good, Burkert says. Some providers are tweaking programs. For instance, Gilmartin says his firm now offers each hole-in-one event participant a $50 gift card to an online golf store.
Modest gains
In the past year, some areas held their own or improved slightly. “There’s been increased interest, although not dramatic, in over-redemption insurance,” says Hubbard. “That’s where a company makes an offer—it might be, ‘Collect three game pieces and we’ll send you a $10 coupon’—expecting a 5% redemption rate; we insure against a redemption rate above, say, 10%.” It’s protection from being too successful.
Golf-related events may be rebounding. “We’re seeing better traffic than a year ago,” says Burkert. “A year ago, everybody was just flat scared. The economy may not be a lot better, but the fear factor is gone. People are getting back on the horse.”
Internet-based platform games also have notched modest gains. “As online marketing increases, that should grow even more,” Burkert adds. Such promotions help insureds generate traffic while harvesting e-mail addresses and other contact information for future marketing.
Gilmartin has seen more conditional-rebate promotions, which deliver a rebate if a certain event occurs. “These can be done around any big event—March Madness, weather events, you name it,” he says. “They help retailers generate excitement, spruce up their advertising and bolster sales.”
Businesses are also tapping prize and promotion insurance to recognize employees and customers. “We’ve seen an uptick in the use of contests to give back to clients and to show employee appreciation,” Biga says. “In today’s market, companies need to do a little extra to show clients and staff that they’re valued.”
Bright prospects
Economic conditions may actually bode well for this line of insurance. “‘Build it and they will come’ is no longer holding true,” explains Gilmartin. “Businesses must become innovative and interesting to attract customers. We help them do that.”
Adds Hubbard, “There’s a philosophy that says when times are tough is the time to market and promote more.” Businesses that boost marketing activities—especially with competitors hunkered down—can position themselves to take advantage of an economic rebound.
Retail agents can use prize and contest insurance to help businesses prepare for better times and help their brand stand out. “This is especially true for agencies that are spending more, marketing more and showing results,” Hubbard notes. “They can go to clients and prospects with a certain degree of credibility.”
The ideas are virtually limitless. Burkert cites a rebate promotion his firm insured last fall. “We had a jeweler run a very successful promotion before the Oklahoma/Oklahoma State football game based on the underdog holding the favored team scoreless in the first half. They did it, and buyers received rebates on roughly $100,000 worth of jewelry. It was a good deal for everybody and the business owner has done a great job of promoting it since then.”
Biga believes agents can do well tying insured promotions to sporting events. “Sports is a mainstay in today’s culture,” he explains. “Wrapping a contest around the possibility of a local sports team winning their division or league pennant or championship rallies a client or prospect base.” On-the-fence shoppers may buy, knowing the purchase could be free if the local team wins.
Weather promotions, tying rebates to snowfall or rainfall on a specific day, are also popular. “They’re easy to execute,” Hubbard says. “Plus, everyone understands the weather. With all the snow this year, a lot of retailers may wish they had bought it.” Record snowfall may be just the entrée agents need to pique buyer interest. However, there are others. “We can find a hook for 365 days of the year,” Hubbard adds.
Bracket-type promotions were all the rage during March Madness, notes Robin Lang, HCC Specialty Underwriters promotions vice president. “We do a number of skill-based promotions for consumers around these kinds of events,” she says. “For instance, amateur basketball shots during half-time, half-court shots or four-shot parlays, are very popular.”
Other sports provide opportunities, too. “With golf, besides hole-in-one, we insure putting contests,” Lang notes. “Other popular contests include field goal kicks, hockey shots and football tosses, as well as achievable sports-related feats around collegiate and professional teams.”
Promotions are not always sports-related. Lang sees success in online and in-person engagement. “A business may want to increase newsletter subscriptions or encourage more drop-in business,” she explains. “They can offer a basic giveaway each week of the campaign, which they pay for themselves—self-insure. Then one of the weekly winners could have a chance to win a million dollars. The business can tout a large prize while paying a fraction of the cost.”
A variation on that theme would allow a business to offer a major prize—again, insured for a portion of its value—if someone signs up for an online newsletter or registers at a Web site at a precise, predetermined time, Lang adds.
Ready markets
Retail agents and brokers should consider how promotion insurance might help their business—and their clients’ businesses. According to the experts, there are number of reasons to do so.
“Businesses tend to cut back on insurance coverage during down times, so agents need to be more innovative,” says Gilmartin. Agents can use promotion insurance to become more involved in their clients’ business and bring fresh ideas to the table. “It’s totally different than casualty and liability insurance,” he notes.
“Agents who are able to share business-building ideas demonstrate a real concern for the insured’s success,” he adds, “which strengthens the agent-client relationship.” And when clients succeed, agents prosper.
It’s not just for current insureds, though. “We have an agent who has been looking to land the P-C business for a wholesale supplier,” Burkert notes, but couldn’t get in. The agent used Burkert’s firm to put a game in place, which got access and positions him as more than just a source for P-C coverage. “We’re a tool in an agent’s toolbox,” he adds. “Maybe not the ultimate sale, but we’re a way in the door.”
Coming up with successful promotion ideas can be as easy as calling a provider or clicking some links. Biga’s Web site, for instance, hosts a calendar of possible tie-ins. His site and others offer various other creative resources, too.
Often, though, ideas are readily visible. “Pay attention to what your prospects are doing already,” Biga advises. “For instance, if they’re sponsoring basketball games or concerts, suggest a promotion tie-in that relates to that, but that can provide much more for their promotion dollar.”
Lang adds, “Sometimes, people have their own ideas on how they want to run a promotion. It might be perfect the way it is, and we can insure it. If not, we will work with them and present different ideas to make something insurable. We like to roll up our sleeves and get as creative as possible.” Agents should work with providers to make sure promotions meet all applicable regulations.
Agents are well positioned to succeed in promotion insurance. “Retail agents have an advantage, from a grassroots marketing standpoint,” says Biga. “They are embedded in their local communities. They know what is important. They know what drives interest. They know what will work and won’t work.”
The time is right. “More than ever, agents might want to get more involved in their clients’ businesses and bring some ideas to the table, such as prize indemnification, to help them out,” adds Gilmartin. “Let them know what’s out there.”
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