For most golfers, there's nothing worse than a two-stroke penalty. Golf course owners face their own unique set of hazards, and many extend beyond the course: property exposure from fires and catastrophes, the ever-present threat of lawsuits, and the risks that come with operating course restaurants and clubhouses. Indeed, it may seem that the course itself is a side note to insuring the facility. "When you are insuring a golf course, you really have three or four businesses in one," said Bill Dalton, president of Bridgepoint Insurance Group, Wayne, Pa. "There is the golf course, restaurant and banquet facilities, retail and other amenities. You need to analyze all of those exposures individually to make sure they are effectively handled." Dalton has been focusing on the golf insurance sector for more than 10 years. He started Bridgepoint Insurance Group with golf as a key focus. Today, the agency insures nine clubs in the mid-Atlantic region, which makes up 15 percent of the agency's insurance portfolio. AA&B spoke with several agents who specialize in golf coverage and what to look for in a golf program. Losses
Wind and fire damage are two of the most common property claims. According to Travelers' 2006 "Safety on the Fairway" study, destruction from windstorms makes up 23 percent of total claim costs. Branches damage the greens, and the golf manager can control some of the damage by trimming dead limbs from trees and cleaning debris as soon as bad weather subsides. After wind, fire causes the most destruction at golf facilities, even though the actual number of claims filed is small (see Table 1). The most common cause of fire is from electrical deficiencies, usually in the golf cart storage area. Restaurant operations also play a role in fires. Other weather-related losses have large impacts on outdoor facilities, and these include hail, lightning and water damage. Catastrophe exposures can be the most severe: The West Coast has earthquakes, the Midwest has tornadoes, and the Southeast has floods. Golf clubs often incur frequent workers' compensation claims and historically these claims increase during difficult economic times, Dalton said.

Economic conditions

The golf industry has been uniquely affected by the economy. Public clubs need effective daily fees and number of rounds. Private clubs are driven by dues revenue. "There is need for these clubs to be more fiscally responsible than they may have been in the past," Dalton said. So while insurance pricing is important–maybe more so today–the insurance buyer and the insurance broker must still analyze these programs for overall value.

People in white-collar jobs may belong to private or semi-private clubs. When there are layoffs in these positions, the memberships at these clubs decline. "When people have to choose between their country club memberships and their mortgage, we see people walk away from their memberships," DeMarco said.

The type of memberships may decline as well. People may only be social members for the use of the pool or for dining–and this affects liability exposures. The restaurant revenues, liquor revenues, pro shop revenues and golf and green fees decrease.

Sirmans echoes these observations. "While the economy doesn't effect the property exposures, we are seeing a slowdown in the amount of rounds played or sales. And in this case it reduces liability exposures."

Clubs also are introducing new amenities–and new activities–to entice new guests. Some clubs may conduct year-round activities or cut green fees, and private clubs may open to the public.

Berliner sees another effect. "For the second consecutive year, more courses have closed than new ones have opened," he said. The number of courses opened in 2008 is the lowest in decades, and many of the closed courses are tied to housing developments that never took off, he said.

But what about that all-important question: Any signs of hardening rates? Important dates for reinsurance treaties have been Jan. 1 and April 1–and July 1 is approaching. Because of the way the economy is going and the insurance industry in general, DeMarco said he thinks that rates will become "very firm, very fast." He also said that late summer's hurricane season also will lead rates to become more firm.

Liability
Liquor liability has the most exposure, said Mike DeMarco, executive vice president, Venture Preferred Club Programs, West Chester, Pa. However, slips, trips and falls are the most frequently filed claims, he said. Depending on the amenities that clubs provide, drownings also are an issue. The Preferred Club program is underwritten on behalf of Chubb, OneBeacon, RSUI, The Hartford and USLI. The program includes general liability, building and personal property, herbicide and pesticide, D&O, liquor liability and high excess/umbrella limits, among other features.
Slips, trips and falls may be more prevalent on the golf course because of its terrain–rolling land, water hazards and various pathways. The Travelers study found that most of these accidents involved stairs, wet floors, icy sidewalks and holes around or in the fairway. Owners also should be aware of claims relating to cardiac arrest on the golf course. The remote locations of golf courses and frequently older demographics of club members make cardiac arrest a growing concern, said DeMarco. Venture noticed this trend and now provides a service to assess a club's preparedness to respond to that type of emergency. Risks
Golf course risks vary, depending on the type of course. On the property side, the largest exposure is the clubhouse, which can range from $500,000 to $20 million or more, said Ric Sirmans, underwriting manager for Travelers golf programs. "That is your largest asset and you want to protect it and the assets inside of it of which include any business interruption loss," he said. The clubhouse can include a restaurant, bar, kitchen, ballroom, fitness center, sauna and locker rooms and many other types of exposures. The Travelers Eagle 3 program covers property and casualty and has been writing the PGA TOUR and its managed Tournament Players Clubs since 1988. Dalton echoes this statement. "In my opinion, the biggest risks clubs face are loss of damage to their clubhouse and course," he said. "The clubhouse is where you typically serve food. And the course is why you are there. Those two areas are where to concentrate the bulk of your focus." If a course loses its maintenance building, it can still deliver services by renting equipment or purchasing new equipment in a timely manner; but with loss to the clubhouse or course, it is inevitable that the club's service to its members and customers will be interrupted. The type of course affects risk, Sirmans said. Through the '90s and up until the last 2 years, the standard for course construction was tied to real estate. "In the last few years you saw more family-friendly courses and country clubs, with additional exposures besides just the golf course, including swimming pools and waterslides, day care, fitness and activity centers," he said. Risks on the course include protection to the greens and tees and plants surrounding the course. Slips, trips and falls and other accidents pose risks for members. "D&O is a big one because you are talking about individuals on boards and committees at a private club who are making decisions for the membership," said David Berliner, director of the Medalist golf program at SilverStone Group, Omaha, Neb. SilverStone Group, a private company, wrote $33 million in commissions last year with its 185 employees. "Their personal wealth is on the line with those decisions."

How to find new business–and keep what you have

The agents in this article recommend several ways to find new business in the soft market. They include:

o Membership in golf associations such as the National Golf Course Owners Assn. of America or the Golf Course Superintendents Assn. of America. These associations have industry shows and local chapters. Agents and producers would do well to participate in those type of events in their local territories.

o Service your customers well. Word-of-mouth works wonders. The golf industry, more than most industries, is a relationship business; everybody knows everybody, DeMarco said. If you are doing a good job and your customer has a friend who is not satisfied with his or her insurance program, the customer will recommend your program to their friend. "A qualified referral is a much stronger opportunity than any cold call," DeMarco said.

o Differentiate yourself and be true experts in your segment.

o Choose partners that either have outstanding existing programs or an interest in designing a new program with you to meet the needs of your clients. That strategy has been successful for Berliner at Silverstone.

o Don't disregard the Internet. It can locate types of risks that may be forgotten about on the golf course.

o Bring your A game–your program is always under review. Competitors may belong to the club that you insure, or the course manager is friends with another agent. Make sure you build a strong program and strong relationships with your customers.

Personal property
"It's not just protection for the club," Sirmans said. "In a private equity club the owners are the members." With that in mind, when insuring private clubs and high-net-worth individuals, providing adequate coverage for members' and guests' personal belongings while using the facilities is important. Having the right coverage for fine arts, golf carts, and maintenance equipment is recommended. Pollution liability
Pollution is an area often overlooked because exposures other than herbicide and pesticide are forgotten. Examples of other pollution exposures include incorrectly stored chemicals, chemical runoff and chlorine in the swimming pool. "You can purchase total pollution coverage; it's a bit more pricey, but definitely worth the expense," Berliner said. "I'm seeing more carriers that are able to incorporate that total pollution coverage within their policies." Total pollution coverage may be ideal for clubs that include more than just the golf course–clubs that have swimming pools and amenities that require gas-powered maintenance equipment.
DeMarco sees another trend with pollution coverage. "Because a lot of herbicides and pesticides are petroleum-based, as the price of oil and fuels fluctuate, we see less applications throughout the year," he said. "In other words, some clubs are knowingly reducing the lawn care and maintenance that members and guests are used to. The exposures have decreased because of economic restraints some clubs are facing."

Unique
Other common coverages in the golf industry are:
o Hole in one
o Event cancellation
o Event liability
o Errant golf balls
Many public courses are routed to cross public roadways, Berliner said. Proper signage is a big element in making guests aware of their surroundings. A golf program is extensive, and this list encompasses just the key elements. Agents can best serve their clients by choosing partners with flexible programs to respond to these needs.


David Berliner	Bill Dalton	Mike DeMarco	Ric Sirmans

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