Golf Insurance Prices Up, But Cover Still Available

"The market has tightened up substantially," said Fran Coulter, president of Fairway Underwriters in Lowell, Mass., a program manager specializing in insurance for daily-fee golf courses. The underwriter is Hanover Insurance Company of Worcester, Mass.

While the increases are substantial, especially for the Mom and Pop operations he insures, rates are only moving up into the reality of the market that for years has been heavily discounted, Mr. Coulter said.

He said that for the last 10 years, insurers have been very lax in their pricing and underwriting of the coverage, worried more about marketing than the risk. Now, like much of the rest of the insurance market, carriers are looking to turn a profit on their underwriting, he said.

"We, at one time, were 70 percent off of manual," said Mr. Coulter, describing the magnitude of the discount available to insureds in past years. "When you tell a client [premium] pricing is up from $2,500 to $5,000, almost double, it sounds horrible. But all I know is if you look at losses in country clubs and golf courses, you have got to have higher premiums than what insurers were quoting over the last five to eight years. Rates were inadequate. Now it can be a profitable business if it is done right."

"The core product is the same, it is just more expensive," observed Mr. Marks, whose program, underwritten by New York City-based American International Group, specializes in the high-end private county club golf courses. He added that clients have been looking at changes in sub-limits and taking on some more deductible to help reduce premiums.

The same is evident even with a new program entering the field, said Kenneth D. Robinson, a partner in the brokerage firm of Lumbra Robinson Associates Insurance in Maitland, Fla., which is marketing Zurich North Americas golf course insurance product.

The Schaumburg, Ill.-based insurer announced in February that it had formed a marketing alliance with the National Golf Foundation in Jupiter, Fla. The NGF provides information and research material for golf businesses.

Mr. Robinson noted that as difficult a market it is, this is also a time of opportunity for those insurers with experience in underwriting golf courses as others withdraw from the market.

Among those who have withdrawn from the market are Northland Insurance Company subsidiary of Hartfordbased Travelers (which only writes hole-in-one coverage) and Royal & Sun Alliance U.S.A of Charlotte, N.C.

The three agents noted that increases reflect property exposure concerns in coastal areas and in situations where courses lie in remote locations and are not within easy reach of fire department services.

"Nobody is going without, unless there are some outrageous claims," commented Mr. Robinson. "But, everyone will see substantial increases."

When it comes to coverage, golf courses can obtain coverage for property, buildings, tees and greens, and equipment. For clubs with restaurants and bars, there is coverage for liquor, food spoilage and club management liability. Clubs can also obtain environmental coverage for use of pesticides.

One insurer active for a number of years in golf insurance is The St. Paul Companies in Minnesota with its "Eagle 3″ policy.

The product, developed in 1987, is endorsed by the Professional Golf Association, which organizes and operates the mens professional golf tour. "Eagle 3″ is a business insurance policy encompassing property and liability insurance.

The St. Paul is also a sponsor of the first three months of the PGAs tour known as the West Coast swing.

The policy, said Patrick Hirigoyen, a spokesperson for the company, is available to both public and private courses and municipal courses. He said while there has been no reduction in coverage, premiums have increased on average between 20-to-25 percent generally.

Mr. Hirigoyen said the company continues to write new business while closely assessing risk. The program is broken down into nine coverage categories covering all aspects of course operations, including customers and members.

For agents looking to find an insurer for their local club, experience in underwriting should be a primary consideration, Mr. Hirigoyen noted.

"There are a lot of different exposures to consider and this may not be the easiest class to underwrite," Mr. Hirigoyen explained.

Another aspect of choice is having risk control specialists who can come in and evaluate the course and work with the owners to reduce their exposures, Mr. Hirigoyen said. The St. Paul offers such specialists, as do the others.

Besides providing the golf course coverage and PGA Tour event coverage, The St. Paul also provides insurance to the Buy.com Tour, Senior PGA Tour, and the Ladies Professional Golf Association.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 5, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.