Promotional Risk Management: Customized Insurance Solutions
Published: 11-Jul- 2011 | Product Category: Other
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Marsh provides unparalleled expertise and experience in promotional risk management to help clients manage the risks associated with marketing promotions. Such risks include unexpectedly large prize payouts, a higher than anticipated number of consumer redemptions of an offer, a sponsored athlete triggering a large payout, an event cancellation, an injury, among others.
Promotional risk management helps organizations prepare for the unexpected.
Marsh’s specialists develop a comprehensive, consultative analysis that summarizes the full spectrum of an organization’s promotional risk. Then, they develop tailored solutions to help mitigate exposures.
Marsh’s team of global experts includes former underwriters for the largest promotional risk management insurers and attorneys experienced in creating manuscript policy wording and providing essential claim adjudication services.
Marsh generally places insurance with highly rated insurance markets and has developed longstanding relationships with the worldwide contingency insurance markets, having placed substantial premiums on many of the most highly publicized events and promotions.
Summary of Coverages
The promotion and event insurance industry is a highly specialized area of insurance outside the traditional property and casualty lines. Promotion and event products are generally underwritten by Lloyds on non-admitted paper.
It is important to note that all are subject to policy terms, conditions, and exclusions and should be reviewed for specific applicability to any particular risk.
The products include:
Redemption Insurance: Redemption insurance is used to manage the financial liability associated with higher than anticipated claims on redemption programs involving items such as rebates, coupons, instant wins, incentive offers, and loyalty programs.
These promotions typically offer a reward to motivate a specific action by the target audience within a certain timeframe. With the cost of running a program being solely dependent upon how many people participate, a promoter cannot predict the ultimate financial “risk” or outcome. To alleviate this uncertainty, redemption insurance is applied to transfer the risk.
Prize Insurance: Prize insurance manages the financial liability of large prize pools. Using mathematical odds of winning a prize allows marketers to significantly leverage their budget and increase the value of their prize pool. Securing insurance for the prizes (and ultimately transferring risk) eliminates the risk of paying out. Examples include leveraged sweepstakes, scratch-and-win games, and skill-based competitions.
Event Cancellation and Non-Appearance Insurance: Event cancellation insurance covers the lost revenue and expenses that result from the cancellation, abandonment, postponement, interruption, or relocation of an event, in whole or in part, due to uncontrollable circumstances. Causes of event risk include, but are not limited to: adverse weather, fire, power outage, and non-appearance of a celebrity. Considering the time and money it takes to plan an event, the risks to the bottom line are substantial. Safeguarding your events against unpredictable circumstances is a smart business practice. These policies can be written on an annual or individual basis.
Contractual Bonus Insurance: For a sports team or corporate brands, investing in an athlete or a team is about more than short-term performance. Building a long and mutually beneficial relationship sets the stage for continued success and prosperity. Financial incentives are commonly used to brace relationships with athletes, but the cost to do so can be high. Contractual bonus insurance is a financial risk transfer tool designed to protect the balance sheet without compromising the clients’ need to stimulate performance.
Special Events Liability: Special events frequently include activities that fall outside an organization’s typical operations and require a short-term liability policy. The policy protects the corporate program’s loss experience, “buyback” corporate program self insured retentions, and offers enhanced coverages. These policies can be written on an annual or individual basis.
Weather: By insuring against unfavorable, weather-induced financial impacts, weather insurance is a powerful risk mitigation/risk transfer product.
Understanding clients' industry and risk issues is a key factor in Marsh’s ability to deliver the right services and solutions. We understand the unique exposures related to contingency coverage, and are able to help clients manage the risks and mitigate exposures. Our coverage professionals are experienced in tailoring critical coverages to meet client needs, and our specialists work with clients and their risk management teams to obtain the most comprehensive and competitive coverage terms to help address short- or long-term promotional needs.
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