One would not think when walking by an inflatable “Moonwalk” unit at a street fair that the frolicking youngsters would be risking life and limb. But some faulty equipment a few years ago, resulting in serious losses, gave the industry a bad reputation with standard insurers–which in turn opened up a great opportunity for program business administrators.

The class is known as party planners and includes arcade games, popcorn stands and other portable equipment that can be set up for a small fair or even a private party.

“But it was the inflatables that were the problem,” said Greg Thompson, president of Atlanta-based Thomco. “Once you covered them, everything was easy.”

Mr. Thompson recalls being approached by an independent agent who felt there was a tremendous need for a national market.

“He was very knowledgeable and felt he knew which manufacturers to avoid and which ones you could write,” he said.

Many of the standard insurers writing that coverage soon shied away from it after the mounting losses, with only a couple of regional companies willing to take the risk.

“But there was nothing on a national level,” Mr. Thompson said.

Identifying the need is just the beginning.

Mr. Thompson spent the next three years researching inflatables industry data and learning all he could about inflatables manufacturers before presenting his ultimately successful case to the Zurich Financial Services Company.

The fact that Thomco already had an existing program with Zurich gave him a leg up, “but we still had to give them a tremendous amount of research about why we thought it would be a good deal for them and why they thought [the program] would make an underwriting profit.”

“When you are doing it from scratch, the bar is much higher,” he said.

The program got the thumbs-up in February, with $20,000 in premium scored in the first month. Month 2 showed $50,000 and Month 3 came in at $125,000.

Of the estimated 16,000 party planners in the country, about half qualify for the Thomco program with the average premium size of $5,000.

“So, you are looking at $30-to-$40 million in business, and we think we can write half of that,” he said.

Like most programs, the party planner business faces the commoditization process once the quality of equipment improves enough so that the serious losses of a few years ago do not get repeated.

“When that happens, what we try to do is distinguish ourselves by doing some coverage improvements. And you try to tweak the product,” Mr. Thompson said.

But, ultimately, “we just might have to lose a little ground if the premium is not right, and then go out and find something else to write a program for.”

Special Reports /

Thomco Looks Beyond Losses To Find Niche Opportunity

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