Agents can score with varied sports and entertainment industry

The leisure industry is big business, and insuring the wide variety of sports and entertainment activities and venues is an equally large opportunity. From rock-climbing walls and inflatables on-call for children’s birthday parties to the proliferation of youth athletic leagues, the leisure activities available are endless and everywhere. All of them need to be insured.

Things rarely stay the same for long in the leisure segment and the opportunity from a risk transfer and insurance standpoint change with it. As interest in golf boomed in the 1990s, more courses and businesses catering to golfers sprang up. Now that golf has slowed, other activities such as fitness, soccer and gaming are trending up.

Sports and entertainment as a category is vast and depending on how it’s defined, the size of the segment can vary wildly. However, any way it’s defined, it’s huge. It its 2004 update, the U.S. Census Bureau estimated that the Arts and Entertainment segment alone topped $104 billion in revenue, not including spectator sports. The overall sports industry was estimated to top $390 billion in 2006, according to Plunkett Research Ltd.

At James River Insurance Co., we break the industry down into three distinct segments: sports, recreation, and entertainment.

Sports

There are two general pieces to the sports segment: professional and amateur. Amateur athletics is where the vast majority of agents and brokers are going to see their opportunity. Amateur opportunities can be in collegiate, adult or youth sports. The gamut is wide; everything from ‘Tee-ball’ and ‘Pee-wee football’ all the way to college sports teams and events. Liability premiums can range from a few hundred dollars to seven-figure programs.

Amateur sports can also be broken down into teams, leagues and associations with and without facilities that they own or control. For those without their own facilities, the primary underwriting consideration is the liability to the participants themselves including injury to an athlete and the potential for molestation and abuse related to youth activities. The spectator liability depends on the size of the crowds and the contractual obligations of the team for use of the facility. In the case of amateur sports, the waivers signed by the participants and whether the league or event maintains coverage for accidents are important considerations for the general liability carrier.

If a team or a league owns, leases or controls a facility then its exposure increases to that of the landlord. Maintenance of the facility, lighting and security, bleachers and wet surfaces and other considerations all then come into play. Essentially, the larger the facility and greater the number of participants, the higher the premium.

Recreation

The recreation segment includes activities in which patrons are personally engaged. Some are businesses that have actual facilities such as health clubs, camps, ski resorts, golf courses, country clubs, bowling alleys, family-fun centers, amusement facilities, water parks, and skating rinks just to name a few. The underwriting focus in this area is the premises liability and the associated controls. In some classes, like camps, another whole area of liability is created by the youth exposure, any overnight exposure, and the array of activities available to campers. Some activities are relatively low-hazard but others such as high-ropes courses or equestrian activities have a limited number of markets willing to underwrite them.

Recreation also includes businesses without actual facilities including special events, outfitters and guides, festivals, clubs and their activities. A special event can be a private event such as a wedding or large party. A special event can also be providing the liability coverage for a promoter of a boat or auto show, concert or festival. With these exposures, the underwriting focuses on the experience of the promoter, the activity itself, the type and numbers of the audience expected, security, and other issues.

Entertainment

In contrast to the recreation segment where the patrons are engaged in the activity, entertainment involves performance: customers play their role primarily in the audience. This segment captures comedy clubs, casinos, nightclubs, adult entertainment, theaters, even multi-purpose venues such as arenas. Theater companies, touring companies, lighting and sound reinforcement contractors are all within the entertainment segment.

Liquor liability is often important in underwriting in the entertainment segment but size, activity, housekeeping, ingress and egress, pyrotechnics and life safety issues all play a part.

It is in the best for brokers to work with a carrier that understands the legal arena of this industry. States have different statutes and case law regarding certain segments, such as equine or skiing or other activities important to their tourism and other industries. In addition, waivers and releases hold varying degrees of value depending on their location.

With premiums ranging from a few hundred dollars on up, the sports and entertainment arena offers opportunity to agents and brokers of all sizes and in every region of the country.

Eric Taylor is vice president of P/C Underwriting at James River Insurance Co. and a 17 year underwriting veteran of the sports and entertainment industry. James River is a surplus lines carrier writing in all states except Ohio and New Hampshire through a network of authorized wholesale brokers and select retail specialists. www.jamesriverins.com.

Topics Agencies New Markets Underwriting