Specialty Lines

Prizes, promotions and contests

Agents can be big winners boosting clients' business in a slow economy

By Dave Willis

Canadians love snow. Well, many of them do, anyway. For the past few years, a Canadian travel agency has run a promotion called “Let it Snow” to get clients to book winter and spring vacations during summer and fall. The bonus: If any of the major airports receive more than five inches of snow on New Year’s Day, these customers receive their vacation for free, explains Brenda Given, vice president of marketing for San Francisco-based WeatherBill, Inc., which covers the promotion. “The first year we did it, everyone in Montreal got paid out.” The next year, travelers from Halifax hit the jackpot.

For the 2007 Super Bowl, Tampa-based SUREBET Prize Indemnity awarded $10,000 to a Miami bar patron as part of an insured promotion based on the game-opening kick-off being returned for a touchdown. According to Dan Biga, SUREBET sales and marketing director, this year the company insured a large rebate program based on the same criteria. History did not repeat itself.

Whether someone wins or not, insured contesting is exciting and is something retail agents can offer to a broad range of customers. “It’s good business to have a contest because the human nature is always willing to have a go,” says David Price, executive vice president and chief underwriting officer at Burns & Wilcox, headquartered in Farmington Hills, Michigan.

According to Mark Gilmartin, president of Reno-based Hole In One International and Odds On Promotions, three main types of risks exist. “There’s the skill-based risk, such as a half-court basketball shot or a hole-in-one or putting contest,” he explains. “There’s odds-based risk, which looks at the likelihood a particular event happens.” Odds are generally set by professionals based on, for instance, the likelihood the Steelers will win the Super Bowl. Third is mathematical-based risk—picking one out of 100 envelopes to win a prize. “We have all kinds of variations, depending on the situation and the client, using those three parameters,” explains Gilmartin.

New economy, new opportunities

Perhaps the best-known prize and contest product is hole-in-one coverage, which often sees car dealers offering insured prizes. “The auto industry downturn could make this an interesting year,” notes Perry Schwartz, CEO of TSI Sports, Gainesville, Georgia. “We’ve seen dealers go out of business in the past few years.” However, opportunities exist. “If dealers really work them, golf tournaments provide great opportunities to connect with customers and prospects.”

Because promotions are completely flexible and scalable, they can work in any economy. “We’ve done a lot in the auto space, where dealers will promote, ‘Buy your car this month, and if it snows or rains a certain amount, your car is free,’” Given recalls. “One offered a free second car if it snowed. Some offer rebates of $5,000 or $10,000. There are endless varieties. It’s a great way to do an attention-grabbing promotion pretty inexpensively.”

The value of promotions may actually increase during a slump. “In today’s economy, businesses need to leverage sponsorship dollars,” Biga notes. “For pennies on the dollar, insured contesting gets their brand seen and offers a chance for someone to win a substantial amount of money or a large prize.”

This fact should not be lost on retail agents. “They can deliver an insurance solution to a non-insurance problem—the need to attract customers,” says Doug Burkert, president of National Hole-In-One Association and Grand Prize Promotions, in Richardson, Texas. “It’s a forward-thinking marketing program for agencies.”

Burkert’s firm is seeing an increase in conditional rebate inquiries from furniture, appliance and jewelry stores, heating and cooling supply firms, and auto dealers. These programs rebate the purchase price when a condition (two inches of rain during The Masters or on Labor Day) or event (the Cubs win the series or the Steelers repeat as Super Bowl champs) occurs. “It’s a great way to move on-the-edge buyers,” he notes.

Some agents aren’t natural marketers. “It requires a different mindset,” says Given. “You’re not selling risk management. You’re selling sales growth.” But growth sells. “While companies are reluctant to increase expenses, they do want fresh ideas for growing their business,” she notes.

Other agents relish the opportunity to don promotional hats. “Agencies we’ve dealt with have come up with really good ideas—things that fit the needs of their local market,” says Burkert.

“People get quite creative with these,” says Price. For instance, an agent he knows worked with a professional ball team on a promo-tion in which everyone seated in a particular section of the ballpark won if, say, the second batter in the seventh inning hit a homer into their section.

“Agents can devise virtually any kind of contest and, if set up right, we’ll insure it,” Price adds. “If it sounds like it could be won, but may never be won, it’s insurable.”

The role of local agents

Local agents are well positioned for success. “The benefit they have is from a grassroots standpoint,” says Biga. “They know what’s going on in their local community, and that’s a real advantage.”

There’s no shortage of ideas for retail agents. “Businesses need to attract customers to drive sales,” Burkert notes. His firm recently unveiled an online “safecracker” game—a registration platform for businesses and nonprofits—that can incorporate a customized, 30-second commercial message. “It’s possible to piggy-back something like the safecracker game with couponing, offering discounts to get people to the store and boost sales.”

Consider prize and contest insurance to expand existing business relationships. “Agents can work with the client’s marketing department and offer prize indemnification, acting as the insurance conduit for any promotion the business wants to insure,” says Gilmartin. Given adds, “We have a lot of brokers that specialize in some niche, whether ad agencies or golf courses or restaurants. That makes it really easy to tailor programs for them.”

The coverage helps in prospecting, too. “It’s a great conversation starter,” Schwartz explains. “People might not want to talk liability insurance, but they love to talk golf.” A sleeve of golf balls and the mention of hole-in-one insurance is a sure-fire way to get someone’s attention, he adds.

“One agency we deal with insures a lot of advertising agencies,” says Chris Zoidis, Burns & Wilcox vice president and director, special risk division-international. “Their clients do unique things to promote the businesses they serve. For instance, at the auto show last year, one company did a cattle drive in downtown Detroit to promote a new automobile. We insured that.”

While cattle drives aren’t covered as a prize or contest, they’re put on by promotionally minded folks—good partnership prospects. “Some of the advertising agencies we work with have said, ‘As part of our contract, we’re putting a promotion together and need coverage for event cancellation, hole-in-one insurance and other exposures,’” notes Michael Hale, president and CEO of Cambridge Property and Casualty, a commercial insurance agency in Livonia, Michigan. “A lot of our contest and prize activity comes from ad agencies.”

It’s simple to manage. “The product is readily available and easily underwritten,” Hale notes. “Some wholesale brokers have exclusive programs with the pen, which allows them to piece it together very, very easily.”

You are not alone

Such brokers, program managers and insurers do more than simply write the business. “We arm agents and brokers with case studies, white papers and ideas to help them understand how to work with clients to grow their business,” Given says.

They offer robust Web sites, too. “We provide a lot of online ideas and facilities in order for agents to get quick quotes,” says Gilmartin. “We offer online quoting and binding, all in an effort to make it as simple as possible.”

Event materials often are standard. “Anyone looking for hole-in-one insurance needs signs, banners, promotional items and those kinds of things,” says Schwartz. Insurance providers generally supply these. “It’s a nice little service to the customer.”

Carriers, wholesalers and administrators share know-how, too. “We help educate insurance agents, who then educate their clients on how contests and promotions can increase visibility and drive more business,” Biga says. Adds Zoidis, “We’ll explain what is a contest versus what’s gambling, so they can help advise clients. We make it easy for agents to explain promotions and how inexpensive they can be if they’re properly insured.”

Hand-holding comes with the territory. “Pick up the phone, call us, tell us what the type of contest is, and we will walk you through what key information to collect from the insured, what the key variables are and what the premium might be,” Zoidis says. “We are the behind-the-scenes expert for the retail agent.”

One word of warning: Be sure to understand how the prize or contest is underwritten and how and whether the provider is regulated. “There are some companies out there that are not properly licensed, not properly admitted or not underwritten whatsoever,” Gilmartin notes.

Properly underwritten prize and promotion insurance presents opportunities for agents and brokers to deliver a new level—and type—of service. Agents can focus on helping businesses grow, not just manage their risks.

“While the promotion business is not necessarily part of their standard expertise, we give agents a way to offer something innovative, that solves a real business problem today—creating excitement that drives people to stores,” Burkert says. “They can offer eye-popping prizes at reasonable rates, which lets them achieve a significant return.”

Of course, carrying a sleeve of golf balls with you as you go on client and prospect calls can’t hurt either.

The author
Dave Willis is a New Hampshire-based business and insurance writer and frequent Rough Notes contributor.