A Specialty in Golf Course and Country Club Insurance

INSURANCE OFFICE of America is an agency that has always placed a strong emphasis on growth. Since starting out in 1988 at a single location in Florida, IOA has grown into an organization with 22 offices throughout the Southeast, the Mid-Atlantic and California, according to Bruce Berthelsen, the agency's chief operating officer. The agency ranks 49th in Business Insurance's latest survey of the nation's 100 largest agencies and brokerages. Its 2004 premium volume was over $465 million and its gross revenues exceeded $47 million, according to the survey.

To maintain growth, however, one must constantly look for opportunities. Last year, IOA decided it had spotted one in the form of golf courses and country clubs. The niche really was a natural for IOA, Berthelsen said. Most of the agency's branch offices are located in prime golf-course country, he observed, although IOA can write such risks anywhere. Golf courses and country clubs tend to make sizable accounts, he added, generating roughly $50,000 to $100,000 in annual premium, and the agency already had some on the books; all it really needed to do was bring some focus to its marketing efforts.

IOA places golf courses and country clubs with a number of carriers that have developed products for this niche, including Fireman's Fund, CNA and American International Group. As IOA began concentrating on this specialty, it developed a particularly close relationship with St. Paul Travelers, said Berthelsen, who once worked for the carrier and is on good terms with the director of its national golf program.

Berthelsen said that with the help of the carrier, IOA secured an endorsement late last year with a marketing organization that provides services for numerous types of member-based clubs, including some 3,500 country clubs nationwide. As a member of the marketing organization's participating supplier network, IOA has access to the organization's directories, Berthelesen said, and also is listed as a supplier on the organization's Web site, where it has a link to its own site.

Targeted mailings also have helped IOA develop business in this niche, Berthelsen said. They are carried out by individual producers in IOA's various offices. The producers try to conduct these mailings monthly, he said. Each producer, with the help of a support team, sends information about IOA's golf-insurance programs to 25 prospects, then follows up with phone calls requesting appointments. Producers compile their prospect lists from various sources. A good one consists of the “books of lists” published by business journals in many communities for various kinds of enterprises and professions, Berthelsen said.

Depending on where they are located, some of IOA's producers also cultivate relationships with state associations representing golf-course general managers, Bethelsen said. Occasionally a center of influence–perhaps an accountant or attorney–can introduce a producer to a key decision-maker at a club, he added.

IOA backs its producers, regardless of the sort of business they pursue, with a general marketing program that includes charitable activity and advertising aimed at building name recognition, Berthelsen said. This includes advertising in the Orlando Magic's basketball arena. Once, he said, IOA was fortunate enough to have the ad appear in the background of a photo that was published in Sports Illustrated.

Sometimes, these various activities pay off in immediate appointments, Berthelsen said, but in other cases producers may have to pursue prospects for three years or more before being granted a meeting with a decision-maker at a golf course or country club. In the meantime, he said, the producers do what they can to further relationships by staying in touch and sending prospects articles and other information about clubs' exposures and how to cover them, not just sales literature.

At most golf courses and country clubs, IOA's producers interact with general managers or chief operating officers, Berthelsen said. Often these people are responsible for purchasing coverage, although in some cases that duty my lie with a board of directors. Some private country clubs are owned by just a couple of people–or even one, he said, and these executives, rather than a board or GM, may make the buying decision.

It's not uncommon to see coverage for a country club written by an agent who also is a member, said Berthel-sen. While that doesn't preclude the possibility that a club will seek competing bids, he said, it is an issue to address with a general manager at the outset. If the GM replies that it's highly unlikely the club will ever move the account, IOA move on.

Coverage
Currently, IOA has some 40 to 45 golf courses and country clubs as clients, Berthelsen said. Many are located in the Southeast, where windstorms are a major peril. Therefore, he said, IOA takes time to explain to clients the scope of their coverage for it. The clubhouse, which typically includes a restaurant, locker rooms and other facilities, is insured for full value but may have a windstorm deductible ranging for 2% to 10% of the insured limits, Berthelsen said. In dollars, such a deductible easily can be $25,000 or more, he noted. IOA advises the clubs to include funds for the deductible in their annual budget or otherwise prepare for the contingency of having to shoulder a substantial portion of a windstorm loss themselves. “You have your premiums and your deductible,” he said. “That's your total cost of insurance.”

The windstorm peril also affects coverage out on the links. Whereas insurers once provided coverage for wind damage to fairways, greens, trees and shrubs up to policy limits, Berthelsen said, most now contain a submit–perhaps $50,000 or $100,000–for this exposure. Most structures out on the golf courses, however, continue to be covered without submits, he added. Some carriers exclude damage to greens, he said, which sometimes are vandalized by persons who run over them with golf carts, cars or other vehicles.

Golf courses and country clubs also have a pollution exposure arising from the application of herbicides, pesticides and fertilizers, Berthelsen said, which can run off into streams or otherwise cause bodily injury or property damage. Coverage for this exposure generally is provided via a sublimit, he said, but the risk also is usually well controlled by clients themselves. Any potentially harmful chemical is applied by trained professionals under the supervision of experienced greens superintendents.

Coverage for golf courses and country clubs usually is written as a package covering the property and liability exposures, Berthelsen said. To this, a separate workers compensation policy typically is added. Workers comp losses are most likely to arise from such things as the country club's restaurant operations and grounds maintenance, he said, where employees may use tractors, mowers and other equipment. IOA stresses to client the “hidden” costs associated with workers compensation claims, including the lost time of injured workers and those assisting them, the expense of replacement help, etc. The agency also urges clients to create safety committees to help prevent losses and minimize the costs associated with any that do occur, he added. IOA provides guidance in the creation of these committees and information for running them.

Submissions
A great deal of information in needed to quote coverage for a golf courses or country clubs, Berthelsen said, and IOA's producers use checklists to ensure that nothing is overlooked. Among other things, he said, IOA needs payrolls and sales figures. For facilities with restaurants, separate figures will have to be broken out for liquor sales. IOA also needs an inventory of all personal property to be covered, as well as golf carts, machinery and vehicles. Other required underwriting information, he said, includes MVRs for all drivers of club-owned vehicles, three to five years of loss runs and a copy of the financial statements. Either before of after coverage is bound, the insurer will send loss-control specialists to inspect the premises, Berthelsen said. Among areas to which they pay particular attention are kitchens, where they examine how food is stored, and how ventilation and fire-suppression equipment is maintained. Golf-cart barns also draw scrutiny. Inspectors want to ensure that barns are not cluttered, that carts can easily get in and out, and that any flammable materials are tightly controlled, he said.

IOA stays in close touch with clients after the sale, Berthelsen said. Producers personally deliver the policies, which carriers typically issue 30 to 45 days after coverage is bound. After that, he said, producers may touch base with their clients two or three times during the year–or immediately, in the event of a claim.

Berthelsen noted that IOA really starting focusing on golf courses and country clubs just last June and has spent a lot of time since preparing its marketing plans. While IOA already has a number of accounts on the books, it really expects to move up on the leader board in 2006 and beyond.

Bruce Berthelsen is the chief operating officer of Insurance Office of America, an agency with headquarters in Longwood, Fla., and 21 additional offices. Mr. Berthelsen joined IOA in 2003 and works out of the agency's Atlanta office. Previously during his 33-year career in the insurance business he worked for Fireman's Fund, Willis and St. Paul Cos.