Hard market hits Fairways: After nearly a decade of competing intensely for new policies, insurers of golf courses are raising rates and turning down some business. (Property/Casualty: Golf).Golf's popularity grew smartly in the 1990s as more players took up the game and the industry built new courses. Insurers, meanwhile, were eager to join in with new programs of coverage they wrote at artificially low prices as they competed for the business. Since 2000, however, the insurance part of the game has lost some of its exuberance. Insurers have raised premiums sharply, just as they have in the property/casualty market in general. Some insurers have turned down business rather than accept higher risks, and some insurers and program managers have reportedly left the business altogether. "Until a couple of years ago, companies with underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. losses looked the other way, but they can't afford to do that anymore," said Fran Coulter, president of Fairway Underwriters Inc., a golf course insurance wholesaler based in Lowell, Mass. "Competition among the carriers had been fierce. They gave away more coverage and charged less." According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. spokesmen at several insurance companies, premiums are up roughly 40% to 50% over the past two years--more in states subject to windstorms or fires. Insurance packages provide property coverage for buildings, equipment, greens, tees and fairways, and liability coverage for use of herbicides and pesticides and for other perils. Coulter said the premiums charged by insurers for the decade or so leading up to 2000 had been "way off manual," meaning far below the rates suggested by the loss-cost data compiled by Jersey City, N.J.-based Insurance Services Office Insurance Services Office, Inc. (ISO) is a provider of data, underwriting, risk management and legal/regulatory services to property-casualty insurers and other clients. Headquartered in Jersey City, New Jersey, the organization serves clients with offices throughout the United Inc. "If you start so far off, then even if you double or triple your rates, you may not come back up to manual," he said. He suggested that insurers had been content to make up for their underwriting losses by investing in the stock market, but when stock values declined, they had to tighten underwriting and raise rates. Package Policies Working through property/casualty agents, Fairway Underwriters has written insurance on about 900 daily-fee and semi-private courses in 45 states. It has been in business since the mid-1980s; in 1989, it introduced its package policy, Club Champion, the first to offer rates based on rounds played rather than revenues. Fairway also offers insurance for driving ranges, holes-in-one, weather loss of income and golf course architects. Allmerica Financial, whose golf course program is managed through Fairway Underwriters, has been in the market for five years. The Worcester, Mass.-based company is underwriting much more selectively and is significantly increasing premiums, said spokesman Michael Buckley. Its losses have been mostly in the property area. Despite the problems in the business, Allmerica will stay in it, because it represents a valuable market for its local independent agents, who are able to provide underwriting expertise to their clients, said Buckley. Subsidiaries Citizens Insurance Company of America and Hanover Insurance Hanover Insurance (formerly NASDAQ: HINS) based in Worcester, Massachusetts is one of the oldest continuous businesses in the United States, still operating within its original industry. Co. underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. the policies. Courses do not appear to be having any trouble paying the higher premiums, he said. Their options are to buy less coverage and/or increase their deductibles. They also can improve their protection- and loss-control systems, he said. The Chubb Group of Insurance Cos. has provided coverage to courses through its Preferred Club Program package for almost five years. Premiums have risen an average of 20% to 50% over two years, including coverage for workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. , said Assistant Vice President James Cortellessa. As the package's name implies, Chubb seeks out the best-protected and best-managed golf operations. The business has been profitable for Chubb, which is why the company will continue to write business, said Cortellessa, who as senior package specialist underwrites more than 500 courses throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. with a concentration in the Northeast. Part of the challenge in today's climate is to develop a relationship with club officials who will allow Chubb to help them manage risks, he said. "I can't say that the higher premiums are something clubs can easily afford," said Cortellessa. "Many are nonprofits, and they have to pass along the costs. Some increases impact on the financial health of the club." A typical package of property and general liability costs a club from $30,000 to $75,000 annually, he said. Cortellessa said he hasn't seen any course managers decide to go without insurance, but some increase their deductibles or reduce the coverage limits. Most can't forgo coverage, because they are responsible to the public and/or to members. The larger risks tend to be on the structures, including clubhouses, pro shops, restaurants, lounges and maintenance buildings. Cortellessa said clubs that have sprinkler systems and smoke or heat detectors in their buildings tend to earn better underwriting grades. Chubb's comprehensive package includes business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. with an unlimited extended period of indemnity; a $1 million limit on the course and all playing surfaces, including wind peril The designated contingency, risk, or hazard against which an insured seeks to protect himself or herself when purchasing a policy of insurance. Among the various types of perils for which insurance coverage is available are fire, theft, illness, and death. PERIL. ; pollution liability; liquor liquor /li·quor/ (lik´er) (li´kwor) pl. liquors, liquo´res [L.] 1. a liquid, especially an aqueous solution containing a medicinal substance. 2. liability up to umbrella limits; fleet coverage; high excess/umbrella limits; and boiler boiler, device for generating steam. It consists of two principal parts: the furnace, which provides heat, usually by burning a fuel, and the boiler proper, a device in which the heat changes water into steam. and machinery. The Preferred Member Plus option provides blanket accident death and dismemberment dismemberment /dis·mem·ber·ment/ (dis-mem´ber-ment) amputation of a limb or a portion of it. dismemberment amputation of a limb or a portion of it. coverage for members, guests and management that extends worldwide in certain circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . On the workers' comp comp See comparison. side, the package includes loss-control and risk-management services as well as claims-management services provided by Chubb Services Corp. St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery Cos. has perhaps the longest-running package program in the industry, Eagle 3, which it developed in 1987. Spokesman Pat Hirigoyen described the business as "a real mainstay" of St. Paul and said the company has invested a lot of resources in it. Eagle 3 covers about 1,100 golf facilities. Premium last year was about $38 million, or close to $35,000 per course. The package was specially designed by St. Paul and the Professional Golfers Association Professional Golfers' Association, (with or without the apostrophe), is the usual term for a professional association in men's golf. It is often abbreviated to PGA. There are several PGAs around the world, including: Hirigoyen said that after about 10 years of "very competitive market conditions," St. Paul was forced to reconsider re·con·sid·er v. re·con·sid·ered, re·con·sid·er·ing, re·con·sid·ers v.tr. 1. To consider again, especially with intent to alter or modify a previous decision. 2. its rates and the experience of the book of business. "A lot was not priced adequately," he said. He estimated that rates this year are up 20% to 25% nationally, with the higher increases in hurricane-prone areas and in newer courses that are farther away from populated pop·u·late tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates 1. To supply with inhabitants, as by colonization; people. 2. areas and firefighting 1. firefighting - What sysadmins have to do to correct sudden operational problems. An opposite of hacking. "Been hacking your new newsreader?" "No, a power glitch hosed the network and I spent the whole afternoon fighting fires." 2. equipment. Property insurance rather than casualty insurance is driving the higher rates, he added. He estimated that even with the increases, rates now are about what they were 10 years ago. Like other businesses, g8olf courses may refuse coverage and seek insurance arrangements through the alternative market. Course owners, however, are paying the higher prices, Hirigoyen said. "They are not forcing us to walk away from a lot of business," he said. "Eleven hundred courses covered is down only a bit from previous years." He estimated that a typical golf course devotes less than 5% of annual revenues to insurance premiums. St. Paul bases its rates on rounds played rather than overall revenues. Hirigoyen said owners and operators particularly like St. Paul's
2. and insects Insects See also ants; bees; biology; butterflies; zoology. acarophobia a fear of itching or of the mites or ticks that cause it. aeroscepsy, aeroscepsis perception by means of the air, said to be a function of the antennae of insects. . Improper
Chubb's Cortellessa said excessive applications can pollute pol·lute v. 1. To make unfit for or harmful to living things, especially by the addition of waste matter; contaminate. 2. To make less suitable for an activity, especially by the introduction of unwanted factors. groundwater and course owners are particularly concerned about liability when courses are close to residential areas. Most states, however, require that licensed professionals oversee applications of the herbicides and pesticides. Neither Cortellessa nor Hirigoyen was aware of a pollution claim ever being filed, and Goulter said Fairway Underwriters had never had a pollution claim in 12 years. Still, there is some uneasiness about whether pollution claims will emerge in the future, Coulter said. On the issue of herbicides and pesticides, Buckley said courses are concerned about "pollution, overspraying and damage to other people's property." Allmerica offers limits up to $1 million on herbicide/pesticide liability. Owners also have coverage for above-ground or underground fuel storage tanks that courses maintain for their fleets of tractors, mowers and gas-powered golf carts, Cortellessa said. Fore! A more obvious danger on golf courses is flying objects--specifically, rock-hard golf balls whizzing at high speeds for as many as 250 to 300 yards. They have been known to hit players and off-course objects, including people, vehicles and houses. Many newer golf courses are part of residential developments with single-family homes, Hirigoyen said. St. Paul provides coverage when an errant er·rant adj. 1. Roving, especially in search of adventure: knights errant. 2. Straying from the proper course or standards: errant youngsters. 3. shot damages an auto, but Hirigoyen said coverage for other kinds of damage is on a "depends" basis. "We have nothing specific in our program for damage to a home;' he said. "The point is that this has not been a big factor in the rates going up; it's windstorms and fires hurting properties!' Cortellessa said Ghubb handles errant-shot damage as a third-party exposure in which a claim would have to be made against the club. "Some forms treat damage as a first-party exposure," he said. "The policyholder--the club itself--would have to be the one to make the claim." Liability for damage caused by errant shots varies by state, said Coulter. "Courses can be liable, and some states are strict, and others are lenient le·ni·ent adj. Inclined not to be harsh or strict; merciful, generous, or indulgent: lenient parents; lenient rules. ," he said. "Some states say the onus is on the golfer." But in some new developments, home buyers must sign waivers before occupying the property, he said. Sometimes, liability claims stretch all the way back to the golf course architect, Coulter added. "In Florida, they often level the land, then plant baby trees," he said. "You can have a green 30 yards away from a tee, and there's no buffer, and people are hitting into the green as people are teeing off." Cortellessa said he doesn't know whether an architect or developer can face exposure if houses or roadways are too close to the course. Zurich North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , a property/casualty arm of Switzerland-based Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance Group, covers the effects of errant shots on a case-by-case basis, said Jason Sauer, the company's underwriting specialist in Orlando, Fla. "Homeowners policies normally apply," he said. "More often, we don't cover errant shots, and we shouldn't. They are not a negligent negligent adj., adv. careless in not fulfilling responsibility. (See: negligence) act on anyone's part. We focus on covering the golf courses." In Texas, players are in little danger of being held liable for damage from an errant shot, said attorney Randall Sorrels. For example, if a golf ball breaks a window on a house near a golf course, the player has no legal responsibility for damage done, unless there was intent to harm, Sorrels said. Insurance companies and golf courses might argue otherwise, but that's the case law on causing damage off the course or hitting other players, he said. In some cases, a golf course can be held liable, such as if players are consistently getting hit with balls on a fairway adjacent to a practice range, Sorrels said. In February, an appeals court in New Jersey found that a golfer was not liable for damages caused by a poor shot that hit another player. Appellate Relating to appeals; reviews by superior courts of decisions of inferior courts or administrative agencies and other proceedings. Judges Stephen Skillman and Philip S. Carchman backed a ruling by Superior Court Judge William C. Todd III. In dismissing the case, Todd ruled that bad shots are part of the game, "even the essence of the game in some ways," according to an Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. report. Growth Opportunities Zurich North America in February strengthened its position in golf course insurance by forming a strategic marketing alliance with the National Golf Foundation. Since 1936, the foundation, based in Jupiter, Fla., has provided information on the business of golf. It has more than 6,000 member companies, including equipment manufacturers, builders and developers, courses and driving ranges, course architects, retailers and turf maintenance suppliers. The alliance provides Zurich, based in Schaumburg, Ill., with the opportunity not only to sell insurance, but also to help foundation members with risk management and protection of assets, according to joint statements by the insurer and the foundation. Zurich sells through the Lumbra, Robinson & Associates Insurance agency in Maitland, Fla., and through the insurer's Middle Markets system of agents, who provide commercial insurance to midsize businesses with 50 to 500 employees. Risk engineering aims to reduce the chances of slipping, tripping and falling accidents. It also addresses swimming pool safety, liquor-liability control, large-event planning, disaster-recovery planning, fire-protection evaluation, employee-injury reduction, windstorm wind·storm n. A storm with high winds or violent gusts but little or no rain. windstorm A storm with high winds or violent gusts but little or no rain. and lightning assessment, herbicide herbicide (hr`bəsīd'), chemical compound that kills plants or inhibits their normal growth. A herbicide in a particular formulation and application can be described as selective or nonselective. and pesticide pesticide, biological, physical, or chemical agent used to kill plants or animals that are harmful to people; in practice, the term pesticide is often applied only to chemical agents. assessment and golf cart evaluation. Zurich has had a target market and program for about 15 years and specific golf course coverage for eight years, Sauer said. The company has about $20 million in annual premiums, an average of about $75,000 to $100,000 per course, he said. Opportunities for insuring courses have increased in the past decade as new courses have been built, especially in regions of the country in which weather permits year-round play, Sauer said. But Zurich helps manage exposures even in places like Michigan, where courses may be used six months for golf and the other months for a snow sport, such as cross-country skiing cross-country skiing Skiing in open country over rolling, hilly terrain. It originated in Scandinavia as a means of travel as well as recreation. The skies used are longer, narrower, and lighter than those used in Alpine skiing, and bindings allow more heel movement. or snowmobiling, he said. Zurich's customers are concerned about vandalism The intentional and malicious destruction of or damage to the property of another. The intentional destruction of property is popularly referred to as vandalism. It includes behavior such as breaking windows, slashing tires, spray painting a wall with graffiti, and , especially the risk of damage to grass with toxic sprays. Fire concerns are high in dry and/or windy parts of the country, and windstorm damage is a significant concern. Most of the expense of windstorms is from debris removal, Sauer said. Drought is not much of a concern, however, and Zurich does not offer drought coverage, he said. "Golf course operations usually have the means to steer away from effects of a drought," Sauer said. "They can take on that exposure and deal with it themselves."
Golf Course Property Loss Experience
ISO's data covers all kinds of golf facilities, not just courses.
Insurers submitting data represent about 55% of the golf market
nationwide.
Number of Adjusted
Year Earned Premium Claims Incurred Loss Losses (1)
1997 $17,806,478 2,892 $21,524,862 $31,329,750
1998 $17,882,226 2,384 $18,088,585 $23,798,381
1999 $19,534,723 2,625 $22,765,690 $29,039,810
2000 $20,153,780 2,494 $20,361,733 $25,060,529
2001 (3) $21,257,337 2,527 $17,965,988 $24,947,408
Year Severity (2)
1997 $7,443
1998 $7,587
1999 $8,673
2000 $8,164
2001 (3) $7,110
(1)Adjusted losses include legal expenses, administrative, processing,
claims.
(2)Severity is the average claim per incurred loss.
(3)2001 data is pro-rated as of year ended 3/31/2001.
Source: Insurance Services Office Inc. (ISO)
RGLATED ARTICLE: Golf Course Revenues, United States Median cost of a weekend round of golf: * $36 at an 18-hole municipal golf course, including cart and green fee * $40 for same at an 18-hole daily-fee course. Course Statistics: * 30,000 rounds played per year at average 18-hole daily-fee course * Revenues average $992,000 a year per course * Courses average 13 full-time employees * 17,000 rounds played per year at average nine-hole course * Nine-hole courses average four full-time employees Source: National Golf Foundation Property/Casualty Golf's Growth Since 1986 * Number of golfers up 34% to 26.7 million * Number of women players up 11% to 5.1 million * Junior golfers up 43% to 2.1 million * Golf courses up 28% to 17,108 * Annual new golf course construction up from 150 a year to more than 400 * Golfer spending on fees and equipment up to $22.2 billion from $7.8 billion Source: National Golf Foundation |
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