A specialty that mixes business with pleasure

Few agents get to merge their favorite pastimes with their insurance practices. I'm happy to say I'm one of them. I love to play golf and am a big fan of the game. So I couldn't be more pleased that 20% of our office's business comes from insuring golf courses and country clubs.

I got into golf insurance soon after I joined Edward F. Hallahan Inc., an independent agency founded by my grandfather. When I came on board, the agency insured two country clubs, which had been written by my father. He was a member of one of them and knew many people at the other, which led to an opportunity to quote. It wasn't long before I wrote the agency's third club, and in subsequent years, I continued to develop the niche. Today, as a branch of Lawley Services Insurance Group of Companies, we insure some 20 country clubs and golf courses in the greater New York metropolitan area and upstate as far as Albany. Most of these accounts are high-end private country clubs, the most well-known being Winged Foot Golf Club, which hosted the U.S. Open last year, and Sleepy Hollow Country Club, which held the U.S. Women's Amateur Golf Championship in 2005. We also have a few public golf courses and private nine-hole clubs, one owned by a home-owners association. In this article, I'll discuss various aspects of our golf-insurance game.
Prospecting
I'm involved with local golf organizations, including the Metropolitan Club Managers Association. The MCMA holds a large show each year in which vendors, ranging from food sellers to golf-cart manufacturers, participate. I always attend this event and network with the vendors and club managers. I'm also involved with the Metropolitan Golf Association, which represents some 500 private and public golf courses in the area, and advertise in its magazine, The Met Golfer.
At least once a year, we mail brochures or other information to all area clubs. For targeted mailings, we follow up with phone calls and try to arrange appointments. We also may conduct general mailings just before major association meetings, primarily to increase our visibility and productivity at these events.
I have a database of prospects and continuously update it. I obtain basic information–a club's address and phone number–from a variety of sources. Then, through networking or other means, I add the names of specific contacts: general managers, presidents, board members, etc. I'd say I have such information for more than 90% of the prospects in my database.
Of course, one good way to prospect in this niche is to get out on the links. While I can't just go play the course at a private club at which I am not a member, I may get an invitation from a friend or client who is. This person may then introduce me to the general manager.
Analyzing exposures
When I first meet with prospects, I find out which insurer provides their coverage then ask for copies of their policies. I also like to talk to the manager for about an hour to learn how his club might operate differently from others. I try to speak with dining room managers, greenskeepers and other supervisors, who can provide additional valuable insight. Then I tour the facility.
Golf courses and country clubs have many of the same property and liability exposures as any commercial accounts. It's in the exposures and coverages more specific to this niche that I'm more likely to find gaps or other opportunities for program improvement. The possibilities include the following:
Computer equipment: Most clubs have a lot of electronic equipment. Cash rarely changes hands; rather, members use club cards to charge everything to their accounts. The equipment that handles these and other transactions can be covered as business personal property, in which case a $2,500 deductible may apply. Often an electronic data-processing inland marine floater provides better coverage, and the deductible may be just $500.
Maintenance equipment and carts: These items typically are scheduled and insured on an inland marine form, too. Sometimes, however, a country club leases such equipment. In such a case, I examine the lease to see whether the club is responsible for insuring it and whether it is in compliance with whatever additional-insured or certificate requirements the leases may impose.
Pollution: Golf courses and country clubs have significant environmental exposures. One consists of the herbicides and pesticides routinely applied to golf courses and club grounds. Some insurers' package products for golf courses and country clubs provide a basic liability limit or sublimit for this exposure. In that case, it's important to determine whether higher limits can be bought or whether the carrier's umbrella policy will cover this risk. Depending on such factors as lakes and streams on the property or adjacent to it, and local wells or aquifers, higher limits could well be advisable. Other pollution exposures to address include oil and gasoline tanks. What is their condition? Where are they located and how are they protected? Can someone accidentally back a truck into one? In case of such incidents, do the tanks have emergency shut-off valves that can limit spills?
Directors and officers insurance: D&O is a vitally important coverage for private clubs. Claims may arise from a number of parties, including potential club members whose applications are rejected. Sexual harassment and discrimination claims from employees or other parties are relatively common. The employment practices coverage that responds to them typically is included in clubs' D&O policies. Some clubs take a high deductible or retention on the D&O coverage in an effort to reduce premiums. If the standard deductible is $5,000, they may opt for $15,000. In such cases, I urge them to budget accordingly, because claims–especially employment-practices claims–do happen.
Business income and extra expense: We try to gauge the extent of a prospects' time-element exposures. Perhaps the most serious one is a kitchen fire, which could knock out a club's revenue from food sales and force the cancellation of weddings or other revenue-generating events. BI losses also can result from damage to golf courses that make them unplayable. One often-cited example is vandalism–sometimes inflicted with the help of a truck or an ATV–to greens and fairways. Major windstorms and floods also can close courses by toppling trees and scattering debris. Such events typically result in extra-expense claims (for removing the trees and debris), as well as business-income losses.
Atypical exposures: I keep an eye out for idiosyncrasies. For instance, I have two clients with skeet-shooting operations. The insurance companies cover this exposure under their general liability insurance; no special endorsement is needed. But insurers expect the clubs to provide details about the exposure on their apps and to meet risk-management requirements. Usually if a country club has a skeet-shooting operation, a member can't suddenly decide he'd like to shoot a few clay birds. Rather, he must first join the skeet club–a club within the club–then undergo firearms-safety training.
Another unusual risk I've encountered is a riding stable. It had about 15 horses of its own, as well as another 30 or so that the club boarded for others. This was something the package policy's GL insurance would not cover. Rather I had to turn to an insurer that specialized in equine liability and mortality insurance. I also had to obtain a separate umbrella policy to cover the stable and its operations.
Submissions
For submissions, we need an appraisal for all buildings and their contents. If a club doesn't have one, I can recommend a couple of appraisal companies that are familiar with this niche. It's also important to keep appraisals updated. For about $300, the two aforementioned appraisal companies provide annual updates based on general inflation and local construction-cost increases. I also advise clients to get full appraisals every seven years or so–especially if a club has undergone a major renovation.
We also need schedules of maintenance equipment and golf carts. Usually, they are readily available from greenskeepers and golf superintendents, who routinely maintain them on computer spreadsheets that list prices and serial numbers for everything down to the last weed whacker. Other information needed for submissions includes audited financial statements, copies of driver's licenses for any employee driving a vehicle for the club, copies of greenskeepers' pesticide-handling licenses, and prior coverage and loss data.
We have access to every market that writes golf courses and country clubs. Some are programs, like the Preferred Club Program administered by Venture Programs, or the club insurance program operated by Bollinger Insurance. While such programs typically are open to all agencies, we also represent insurers that have programs or individual products for country clubs, including Safeco, CNA, Selective, Travelers and Philadelphia Insurance Cos. Not all agents have access to these markets–so that sometimes gives us an edge, since each market has strengths and weaknesses that may come into play when quoting a municipal golf course in one instance and a $50 million private country club in another.
When making a presentation, I don't just provide a bottom-line quote. Rather, I prepare a side-by-side comparison of the country club's current coverage (assuming the club has given me copies of its current policies or reasonably detailed summaries) with what I propose. The comparison goes into considerable detail and typically runs to about five pages. I highlight the difference in red.
Building a relationship with a country club often is a long-term proposition. The first time I make a proposal, it may be rejected because the cost is higher than what the club currently is paying, even if its program is less comprehensive. Still, by being as thorough as possible, I feel I've done my job. Perhaps the immediate beneficiary of my work will be the current agent, but I've at least started to build a relationship based on credibility and trust. Down the road, a change in a carrier's program or an uncovered claim may give me a better opportunity to quote. Meanwhile, I stay in touch. I make a point of running into the club's general manager at meetings. If I get an invitation from another client or friend to play a round at the club, I pop into the general manager's office and say hello. I may invite the GM to play at my club, too.
Loss control
All program administrators and insurers in this niche make annual loss-control visits. I go along at least every other year and help explain any recommendations to the club. They can cover everything from creating eyewash stations where pesticides are mixed to updating the employee handbook and ensuring that everyone on staff has confirmed in writing that they've read it.
Sometimes required steps can be costly to implement; doing so may require planning and negotiation. For example, one carrier told a client that the Ansul fire-suppression system in the club's kitchen needed to be replaced. The carrier added that it would cancel coverage if it was not. The general manager and I both thought it would be counterproductive to simply convey an ultimatum to the club's board. Rather, we created a plan to budget for the replacement and to explain to the board why it was vital to the safety of club members and employees. After talking to the board, we came up with a plan to collect the necessary funds to replace the system in four months, and monitor and service it aggressively in the interim. That satisfied the carrier.
Of course, we implement some loss-control initiatives on our own. About a year ago, I conducted a seminar for the Metropolitan Club Managers Association on planning for medical emergencies. Suppose, for instance, a member suffered a heart attack out on the 14th hole–as far from the clubhouse as you can get. Would the club be ready to respond effectively? We conducted the seminar with Golfsafe, a consulting service that helps clubs prepare emergency plans and trains their staff to carry them out. The plans consider where emergency phones should be placed–not only on the golf course, but in places like tennis courts or riding stables. They also train staff on first aid and the use of defibrillators, which the consulting service provides at cost. Their plans go into minute detail–like designating a place where a summoned ambulance will park. Heart attacks are not so uncommon that a club shouldn't be prepared for one. Diabetic shock on a golf course is even more common, and occasionally a golfer has a bad reaction to a bee sting. For all these reasons and others, medical emergency plans make a lot of sense–and insurance companies love them.
Premiums in this niche vary considerably. Large private clubs with high-value property can pay $200,000 or more for coverage. A nine-hole public course with just a couple of buildings and a limited number of rounds played might pay only $25,000 to $30,000.
A $2,500 liability deductible is the norm for the marketplace, but some clubs increase it to $10,000. I've even been asked to quote $25,000 deductibles, although the premium savings rarely are large enough to make the option attractive. Clubs often retain much of their care, custody or control exposure. Suppose a club's caddy drops a member's bag of clubs on a rack, and later it disappears. If the member says the bag and its contents (which could include digital cameras, cash and other items besides the clubs) are worth $4,000 and the club has a $2,500 deductible, it may just pay the whole claim out of pocket rather than report it and possibly adversely affect their loss history and renewal premium.
As you can surmise from this article, there are more facets to the insurance programs of golf courses and country clubs than there are for those of many commercial risks. That makes it important to keep on top of these accounts and visit them often. Of course, that's something I'm only too happy to do–with or without a pair of golf spikes. Paul Hallahan is a branch partner at Lawley Richwood, which is part of Lawley Services Insurance Group of Cos., one of the 100 largest brokers in the country. The group has nine offices in New York and two in New Jersey. Mr. Hallahan entered the insurance business in 1990 as an employee of his family's agency, Edward F. Hallahan Inc. He became its CEO in 1995 and merged it with Lawley Services Insurance Group in 2001. He holds the CIC designation.