To an outsider it seems like a simple operation. Not to mention astonishing. Do no advertising. Orders flood in from around the globe. Be loved by everyone. And work just one month out of the year.

But the truth is that Santa Claus's operation is much more complicated and not always so jolly. The amount of things that can, and do, go wrong is legion. Few know this but the bearded one has an insurance program as complex as that of a drug manufacturer.

It wasn't always this way. "Why on Earth would I need insurance?" Santa would say to the insurance agents constantly making pitches to him while their kids were bouncing on his lap. "Insurance? Who would sue Santa Clause?" he would ask incredulously while letting out a big belly laugh.

But times change.

In '68 some heathens in Philadelphia booed Santa. And two years later someone did the unthinkable and sued Santa. The reindeer came in for a hard landing and damaged a few shingles on a roof. It was minor. But Santa got dragged into court — mumbling all the way about no good deed going unpunished.

After that, Blitzen bit off a kid's finger and the family was pretty frosty. The floodgates were now open. Insurance became one of Santa's biggest expenses. He stopped delivering gifts to trial lawyers' houses.

For the past four decades Santa's insurance has been written by Arctic Insurance Group. But despite all of Arctic's promises to bail him out of trouble, it has been quite the opposite. Santa's success at getting claims paid has resembled that of the Cubs. And the reason for this is easy to explain — for the past 33 years, Santa's claims were assigned to the Insurance Grinch.

The Insurance Grinch found just about every way possible to disclaim coverage for just about every claim that Santa presented. His skills were unparalleled. When Santa began to get inundated with claims for knocking out Dish Network service with his sleigh, the Insurance Grouch disclaimed coverage on the basis of the aircraft exclusion. Wow! Now that's impressive.

Good news for Santa: The Insurance Grinch recently retired. He's headed to Minnesota to enjoy the warmer weather. He bought a house in a neighborhood with lots of kids so he can tell them to get off his lawn. The Insurance Grinch agreed to give an exclusive interview to Coverage Opinions addressing a claims career like none other.

Coverage Opinions: Thank you Insurance Grinch for taking the time to discuss your 30-plus year career handling Santa's claims. Were the other adjusters jealous that you handled such a fascinating and unique account?

Insurance Grinch: Very much so. But not because I was handling Santa's claims. Because it meant that I didn't have to deal with any construction defect claims.

What was your favorite thing about handling Santa's claims?

When you put on your Match.com profile for "occupation" that you handle Santa Claus's insurance claims, it makes a lot of people want to meet you.

What was the most common claim from Santa that you handled?

That's easy. A kid would ask Santa for something — like an iPad. And he'd wake up on Christmas morning and find a sweater. Then, just as day follows night, in rolled the claim against Santa for breach of contract and detrimental reliance.

How did you handle these?

Well, there was no "bodily injury," "property damage" or "personal and advertising injury" to trigger commercial general liability coverage. And several years ago, the North Pole Supreme Court held that when Santa opens a letter from a youngster, it qualified as the formation of a contract. I know. It's crazy, right. But it's a liberal bench up here. But once the court found that an opened letter was a contract, it became easy to disclaim coverage since the professional liability policy has a breach of contract exclusion.

Tell me about that claim where Blitzen bit off a kid's finger?

The kid was visiting Santa on a school trip and handing Blitzen a carrot. Except the kid was holding it in front of Blitzen's mouth and the pulling it away. Holding it in front of his mouth and the pulling it away. The kid deserved it. I'm pretty sure Blitzen did it on purpose. At least I hope he did.

Was it covered?

No. We had a reindeer exclusion in all of the policies. I know. It seems strange given that the reindeer are such an essential part of Santa's operation. But Santa didn't read the policy. At least not until it was too late. And the broker was asleep at the switch. So we were able to get it in. And we have refused to take it out. We're the only insurer in the North Pole. So where else is Santa going to go?

What was the most expensive claim that you handled?

One year Santa was in someone's living room, and his toy sack knocked a vase off a table. Turns out it was from the Ming Dynasty. Worth $2 million. The homeowner's insurer paid for it. We were sure a subro claim would be made. We kept waiting but it never came in. Word on the street was that the homeowner's carrier was afraid of the bad press from suing Santa.

Were there any unique liability issues involving Santa?

Many years ago, the North Pole Supreme Court held that Santa can be liable for a defective product under the Restatement of Torts 402(A). As you can imagine, this opened Santa up to massive products liability exposure — defective BB guns, Easy Bake Ovens that start a fire, Parcheesi pieces that get swallowed. He was never able to get products coverage after that.

You don't get too many visitors up here. Seems like Santa's premises exposure was pretty minimal.

True. Not many make their way here. No direct flights. But that didn't stop Santa from having premises liability exposure. Santa never shoveled the snow. He blamed a bad back, but I think he was just lazy. The mail man would come 10 times a day during the busy season, and constantly wipe out on ice while walking up Santa's driveway. Santa knew it was going to happen. Finally, we said enough is enough and disclaimed coverage based on no "occurrence."

Were there are claims that involve Coverage B of the commercial general liability policy?

One in particular. Santa would put a kid on the naughty list. The brat would turn around and sue for defamation. But we were successful in knocking these out of coverage on the basis that there was no "publication" of the kid's naughty status. The only one who knew was the kid himself when he received the mandatory 10-day notice letter from Santa.

What about the elves. Did they ever cause any trouble for Santa?

Look, this was a big operation. At peak time, the elves work 16 hour days. What choice did Santa have? Work the elves to death or disappoint a kid in Cedar Rapids who wanted a fire truck. So of course, there were some wage and hour and overtime disputes. But we had an exclusion for this. The elves also got hurt fairly regularly. All the uncovered lawsuits required Santa to cut some corners on safety. Thankfully we didn't write the comp.

Did Santa ever damage any chimneys? Let's face it, he's not exactly svelte.

All the time. But that was an easy one to handle. Those claims fit right into the exclusion for property damage to that particular part of real property on which you are performing operations.

Any other interesting things about Santa's risk program?

We require Santa to be an additional insured on all of the mall Santa's policies. Not surprisingly, Santa sometimes gets brought into a suit against a mall Santa who did something stupid. But Santa didn't police their policies so he was never an additional insured. And we had an exclusion for Santa's failure to secure additional insured rights.

I'm starting to wonder — were any claims covered?

Of course. Back in '98 we paid a claim. Wait. It might have been '97. A tyke fell off Santa's lap. We looked at everything but just couldn't find a reason to disclaim. We thought about no "occurrence" since it seemed like faulty work. The kid is supposed to stay on Santa's lap. He fell off. That sure sounded faulty to me. But in the end we settled and wrote a check. The policy had a pretty low sub-limit for claims arising out of, based on, in connection with or related to kids falling off Santa's lap.

Have you been training your successor?

I have. But he still has a long way to go. On my last day in the office he got in a claim from a germaphobe family saying that Santa sneezed on their son. The kid is seeking medical monitoring for the rest of his life. The new adjuster was ready to appoint counsel. I said not so fast. Sounds like the pollution exclusion.

What advice did you give to your successor?

I explained to him that the vast majority of the claims come in the door in January and February. If he's doing his job, he'll have them all disclaimed by the end of March. After that the key is to pretend to be busy for the next nine months.

This article originally appeared on Coverage Opinions.

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The Insurance Grinch tells all about Santa's insurance woes

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