You can’t help but feel just a little bit sorry for the lucky bastard. Plucked from the crowd with no warning, the sweaty, middle-aged rugby fan is lining up a kick from 40m out with the chance to drive home in a fancy new sports car. He will be a hero to his kids if he nails it. If.

As though that expectation isn’t burden enough, he’s dealing with the added pressure of literally every single soul in the stadium willing him on. After all, the sponsor has already paid the insurance premium on the prize, meaning they’re eager to get more marketing mileage out of the vehicle, while the crowd are baying for him to break the half-time monotony.

Two thoughts other than the car now dominate his mind. The first, “why oh why did I wear my dress shoes tonight?”, followed by “just don’t bloody embarrass yourself”.

What he’s not thinking, however, is that the intense pressure he’s feeling, the inappropriate shoes he’s wearing, and his lack of preparation have all been taken into account well in advance by the insurer underwriting the prize. They’ve crunched the numbers; his chances are about 1%.

Audience participation

Half-time conversion attempts are just one product on offer in the growing market of prize indemnity insurance, which falls under the
contingency insurance umbrella.

Hole-in-one golf shots, half-court basketball throws and crowd cricket catches are the other well-known products commonly sold by underwriters.

“Not too many people can afford $1 million for a hole-in-one or a kick at goal,” explains the Australian Head of Beazley Underwriting’s contingency division Damian Kerin. “So we take the gamble, and they just pay us the insurance premium in case it goes off.”

He says underwriters like to keep the risk of a large payout at around the one-in-a-100 mark to help keep the insurance premiums low for clients.

They’ve only got one attempt, so if the person runs up and air swings, that’s it. Shut the thing down.

To minimise that risk, participants are usually selected at random to prevent them from practicing in advance.

They are often then required to sign a declaration stating they’ve never played the respective sport at a professional level. “There has to be a level of difficulty, otherwise it would be unaffordable and uninsurable,” Kerin says.

Half-time heroes

ACT Brumbies General Manager Simon Chester says prize indemnity insurance increased ticket sales for their 2015 Super Rugby season opener by providing fans with the chance to win a $65,000 Land Rover.

“The biggest advantage is obviously the cost. For us, if we have to outlay money up front to give away a car, it becomes quite expensive,” Chester says.

While the fan selected from the crowd didn’t win the car, Chester says they got enough out of this year’s promotion to warrant more of it’s kind in 2016. “It worked really well. We only did it at our first game this year, so we’d like to do it on at least half our games next year.”

Chester says shopping around for prize indemnity insurance is like any large product the organisation purchased. They don’t just look around for the best price, they also search for the best product – which includes the conditions surrounding a kick.

Clearing the bar

Beazley’s Damian Kerin says: “Sometimes a challenge is reverse engineered based on what an organisation has to spend. We will then come back to them with three or four ideas.”

According to Sportscover Australia’s Underwriting Manager Jarrod Bell, “product ideas are getting more weird and more wonderful every day”. The latest product is having fans attempt to kick an AFL ball into the back of a ute tray.

“Sport is so accessible via TV and online that it’s hard to actually get fans physically into a stadium anymore – and this is one way for clients to do it,” Bell says.

But there’s a risk with pushing challenges too far. When you increase the complexity of the challenge, there’s a higher chance something can go wrong and lead to a dispute over whether or not a prize has been won fairly.

On top of filming the entire challenge, Kerin says it’s imperative to ensure a participant understands all the rules before going for that winning shot. This is most effectively achieved by having a loss adjuster at the event. That person needs to be prepared to intervene if things start heading off-track.

“There’s a lot of pressure with big crowds, but it’s really up to the loss adjuster to make sure the participant has to do as little as possible,”
Kerin says. “If it’s a kick from 40m, the tee should already be placed on the ground at the 40m line, so basically all the participant has to do is place the ball and kick it.

Prize indemnity insurance

Click to enlarge.

“They’ve also got to explain that they’ve only got one attempt, so if the person runs up and air swings, that’s it. Shut the thing down.” It might sound harsh, but it’s a lesson insurance companies have learned the hard way since prize indemnity insurance began more than 30 years ago.

“What happens quite often in these things where you don’t have a loss adjuster is that with all of the excitement of $250,000 on the line, people forget things,” Bell says. “If there’s been an error and the bloke actually gets it, it’s so hard to go back with all those fans screaming. You don’t want to turn around and say ‘oh, by the way, sorry, you don’t win’.”

Backfield play

As well as paying a premium on prize indemnity insurance, Bell says brokers should be aware that organisations will generally also have to look at getting a liability policy.

“If it’s an event with a lot of crowd participation – people diving while trying to take a cricket catch – you couple a liability policy with the prize indemnity policy to cover off that exposure,” Bell says.

Due to intellectual property issues, the underwriters can’t go into too much detail about how they determine perceived risk when it comes to sports indemnity insurance, suffice to say it involves a lot more than an esky full of beers, a tally chalkboard and a few long range shots on a Friday afternoon.

But while the majority of the challenges are difficult and the premiums low – fans do emerge victorious. If they didn’t, there wouldn’t be a viable product to sell. “It’s important for the brand itself, that their reputation is kept in good stead,” Beazley’s Damian Kerin says.

After all, professional rugby goal-kickers split the posts from 40m out up to 80% of the time. How hard could it possibly be?