Hosting a hole-in-one?

By: Dave Honeyman, Business Head at SHA Risk Specialists.

Prize indemnity insurance can help a business promote its brand 

The 2023 Club Champs golfing season is in full swing. With fairways across South Africa being in pristine, pre-winter condition, many golfing establishments are also primed to welcome contestants to try their hand at hole-in-one competitions. Prize indemnity insurance offers a range of businesses an effective way of promoting their brands by offering grand prizes in the form of cars, vacations or large cash payouts.

SHA has underwritten prize indemnity policies for over 30 years, providing peace of mind for golfing estates and businesses with a means of paying for large prizes when lucky punters win big.

Hole-in-one competitions, purposed towards driving brand awareness and expanding marketing databases, have become commonplace in the golfing world. These competitions usually involve cash prizes or expensive items and require a substantial amount of skill and luck to win.

However, sponsors of these prizes are not always willing or in the financial position to pay out a large sum of money or the cost of a big prize. Therefore, to mitigate the substantial risk that comes with hosting these types of contests, businesses can opt to take out prize indemnity insurance

I recall one of our most memorable claims was for the cost of an Audi A3, won by a young man who won a hole-in-one competition at the Serengeti Golf Estate. We’ve also paid out for large prizes won by professionals during the Sunshine Golf Tour. With more businesses and brands seeing value in running these kinds of promotional contests, we foresee a greater uptake of prize indemnity insurance by establishments in other sporting disciplines.

Contestants and spectators at these events represent potential business prospects for brands, that use competitions of this kind to gather marketing leads. In an example of how a typical hole-in-one competition works; a solar power installation business could have a representative attend a popular golfing event and offer contestants the chance to win a solar power system worth R200 000 if they can get a hole in one.

A prize indemnity insurance policy will cover the full value of the prize and the insured would pay a once-off premium for the event. The nature and cost of this type of insurance depend on several factors, including the statistical odds of contestants being successful. Underwriters also consider the number of players participating in the competition as well as the distance of the shot.

In the case of a hole-in-one competition, SHA requires the minimum distance for the shot to be 150 metres for men and 130 metres for women contestants. Furthermore, if the indemnity exceeds R400 000, SHA will require video footage of the shot. These terms and restrictions will differ depending on the nature of the sport.

Small businesses can also take advantage of this kind of competition, for example, a butcher who may wish to run a promotional drive at a local course. The butcher could erect a serving station at the chosen hole and offer boerewors or chicken prego rolls to spectators, challenging them to try their hand at getting a hole-in-one. The prize, for example, would be a R3000 voucher awarded monthly for a year, for meat products from the respective butcher.

These kinds of examples, where small businesses use events as exercises to sign-up potential clients to their newsletters or promotional databases, are typically the kinds of clients we serve.

Rugby has adopted a similar practice, welcoming spectators onto the field to try kicking the ball to hit the crossbar for a chance to win a sizeable grand prize. Another variation of this competition could be executed in netball, with contestants trying their hand at shooting the ball through the hoop from a specified distance.

Brokers should encourage businesses in any sporting or related field to approach SHA with their proposals for high stake competitions. Our prize indemnity policies can be structured and tailored to any kind of sporting event, whether the contest involves a degree of skill, or the outcome is purely left to chance.