We got our start by insuring businesses in the tourism and resort industry, which was at the heart of development. You won't find a lot of manufacturing businesses here. Our clients include coastal properties, resorts, restaurants and planned communities.

It didn't take long for developers to realize that top-notch golf courses would be a huge attraction for the area. When the Sea Pines Resort started building its courses in the late 1950s and early 1960s, we got in on the “ground floor” of the industry. Today we insure several dozen country clubs, which account for approximately 10% to 15% of our annual premium volume. In general, our producers don't specialize in just one niche-each is involved in all types of business that we write. However, two producers and I are primarily responsible for working with our golf-course clients.

Our market area runs from Brunswick, Ga., in the south, to Myrtle Beach, S.C., in the north. We write insurance for several types of courses-public, private and semi-private. But the bulk of our golf course business comes from private courses, the predominant type of course in the area. Most of the courses we work with are parts of planned residential communities. Many country clubs in Hilton Head are distinct from those in other areas of the country. At most private clubs, prospective members must be sponsored by a current member and admitted by a vote of all members. When a course is built as part of a planned community, as they are here, membership in the country club usually is automatically included with the purchase of a property in the development.

Addressing the ball

Earning business from country clubs requires having strong, long-standing relationships with key “players” involved with the clubs. Thus our marketing necessitates ongoing involvement in the community, as well as a reputation for expertise.

Being involved in area organizations gives us entree to all types of business. Through participating in the local chamber of commerce, serving on the board of a hospital and supporting such institutions as the local schools and the art league, we maintain contact with valuable prospects and centers of influence, such as developers and individuals who serve on the boards of country clubs.

Our relationship with developers is especially important to our success. Developers in the area are responsible for the lion's share of new projects. We've worked with all of them for many years, making it easier for us to stay on top of new projects they're considering and to talk to them about insuring those projects.

Lining up the shot

Country club general managers speak to each other regularly. Occasionally one of our clients might suggest to another manager that he call us about a coverage question. This might lead to new business. A country club manager might also call to see if we can help reduce his premiums. With insurance representing one of the most significant costs for many clubs, many club directors feel they have a fiduciary responsibility to make such an inquiry.

For the most part, however, we start insuring a development by working with the developer, from the moment the first shovel of dirt is turned over. We stay in touch with the developer throughout the project. Since we've been involved with the project from the start, we don't have to qualify the development later on, when we meet with the “end user” property owners.

As individual property owners acquire homes and move into a community, the developer will maintain control of the course until a certain percentage of the properties in the development are sold. The length and structure of this process varies by developer. During this time, there is often a transition phase, at which time a property owner's association is formed. This association will eventually own and manage the country club-and thus become our prospect.

During the transition phase, we'll meet with a decision-maker for the eventual property owners. This may be one individual who will serve as the general manager of a course. Sometimes we may present to a finance committee or insurance committee of the property owners' association. At other times, it may be the general manager who reports to these groups after meeting with us.

By the time we make this presentation, it's easy for us to point out exactly how we can handle the club's risks. The course may already be in use, so we're already providing its coverage. This makes it easy to make a strong case for ourselves. It also helps that the individuals we meet with-whether a manager or volunteer members of a committee-are usually knowledgeable professionals who understand the importance of sound coverage.

Handicapping coverage

Our relationship with underwriters is just as important to our success as our relationship with clients. We want underwriters to have as much information as possible when we submit a client. Besides financial information about a club, we send photographs and maps of the development. We include data on all buildings associated with a course, such as replacement-cost value and square footage. We send information about the automatic sprinkler systems-both in the club house (for safety) and on the golf course (for watering the course).

Our submission includes an equipment schedule, which in addition to golf carts usually includes tractors, trailers, lawn mowers, backhoes and other heavy equipment. We send information on any employees who may drive club-owned vehicles so the carrier can obtain MVRs for them. Carriers generally want information about safety programs and loss-control measures in place. If the course has been operating before we come along, we include payroll information, receipts and three years of loss runs, including workers comp claims.

Underwriters use the receipts, loss history and property values, among other information, to rate a policy. In terms of premium, property values are really the engine that drives the price. Liquor receipts from the country club also are important, as is staff payroll.

Fore!

Property coverage starts with the course itself. In addition to the tees, fairways and greens, covered property includes the sprinkler system, as well as items such as bulkheads and bridges built into the course. Covered buildings include the clubhouse, restaurant and “halfway houses.” Other property, such as heavy landscaping equipment, is covered on an inland marine schedule. Coverage for buildings is usually written on a replacement-cost basis. Covered equipment varies, and is often insured on an ACV basis.

A typical property peril is vandalism; e.g., a teenager driving his car across a green. The windstorm coverage written into the policy is especially important to our clients, given our coastal location. Because of the damage a storm can do to the trees on the course, we also include debris removal in the policy. The largest “uncovered” peril is the risk of flooding. We've looked at getting flood insurance for courses in the past, but since we're on the coast, the cost of the coverage is prohibitively high.

A major liability concern for courses is the possibility of someone being injured on the course. We address this exposure with a $1 million general liability limit, then suggest an umbrella limit beyond that. Our clients' tastes range between $5 million and $15 million. In the hard market, however, some clients have reviewed their umbrella limits, and realized they probably don't have a $15 million exposure.

We also provide commercial auto insurance if a club uses vehicles in its operations. Pollution liability is another important part of our package. The groundskeepers who work the course and apply pesticides and herbicides must be licensed applicators.

The amount of business income coverage we write varies according to how much revenue a club's restaurant and pro shop bring in. This coverage also covers lost income resulting from damage to the course itself. With such coverage as BI and crime coverage, we're again fortunate that our country-club clients are educated and business-savvy. We don't have to work hard to convince them that the protection is important.

Some coverages that are not part of our standard package are still important to a country club, particularly D&O and workers comp. Some courses employ armed guards, which not all our carriers want to write. Our standard package often applies to special events hosted at the club, such as weddings. We may add some coverage if, for instance, someone contracts with a valet service to park cars at the events.

Check your scorecard

We visit each client several times a year, including before renewal, to make sure any new equipment or operations are covered. Prior to the inception date, we explain any changes in coverage or price. If a client's renewal date falls between June and November, we suggest they switch it to keep their premiums down. That's hurricane season, and underwriters tend to get a little jumpy during those months.

Our expertise includes recognizing hazards that can be managed without insurance as well. For instance, I was playing a new course on its first day of operation. The walking paths between the cart path and the tee box were covered in pine straw, which is somewhat slick. This is especially hazardous in light of the current movement to require “soft spike” golf shoes. These shoes save wear and tear on the greens, but I felt in this situation that they could also land a golfer on his back. I called the club the next day and advised them of my concerns, and they promptly removed the straw.

19th Hole

The managers and committee members we work with understand the need for a sound risk-management program. They implement solid loss-control measures and realize their insurance policy is not intended to serve as a maintenance agreement. Since they understand the complexity of providing adequate coverage, they appreciate our expertise even more, making long-term relationships more likely.

When we satisfy country club clients, we often gain access to a great list of personal-lines prospects. This is especially true with planned residential communities, where the property values-and the general insurance needs-are likely to be high. Indeed, the members of these communities account for a substantial share of our personal-lines business.

For a golfer, few things are sweeter than the feeling of hitting the ball just right and watching it land inches from the hole. For insurance agents and brokers, adding to your book of business by meeting the complex challenges of a country club client can bring you that same feeling.

Bill Thomas is president of Carswell-Lighthouse Insurance Services. He has been with the agency since 1976 and is a past president of the Independent Insurance Agents and Brokers of South Carolina. Carswell has been in business on Hilton Head Island since 1957 and merged with Lighthouse Financial Services in 1999. Readers can contact Mr. Thomas at william.c. [email protected].