By Paul Porter1
Revised: October 31, 2011
Introduction: Securing liability insurance to protect those involved with putting on a triathlon is an important pre-race detail. However, it is not a form of coverage that is readily available.
In the early stages the race director often got help from organizations such as the YMCA, YWCA, health clubs or public agencies that already had insurance for sports activities that could be extended to cover a specific event. Occasionally commercial businesses such as Fleet Feet Sports, Inc of Sacramento, CA. extended their programs to help.
This arrangement lacked uniformity, was time consuming and often unaffordable and called for a program of insurance that was tailored specifically for the new sport. Locating such a program is usually arranged by an insurance agent who negotiates the terms and rates on behalf of the race director. The development of such a national insurance program for triathlons was done through the efforts of Paul Porter.
This process began when Porter arranged insurance for a triathlon that he directed, and later became the insurance representative for The American Triathlon Association (ATA), changed to the United States Triathlon Association (USTA) and then Tri-Fed/USA (TriFed).
How Did It Happen? The 1979 “Sports Illustrated” HI Ironman article grabbed the attention of three Muncie, Indiana runners. This lead to a challenge “I’ll bet you can’t do it”. That was the catalyst for organizing a September 1980 triathlon, which become the Muncie (IN) Endurathon, and Porter became it’s first race director. This was a learning experience as it was among the early events in the country, and there was very little in the way of guidance. With concerns for safety a prime concern, the first Muncie Endurathon was restricted to 50 competitors.
At the beginning it was felt that it would be an annual event so plans, including safety, were developed around the concept of improving the race from year to year from the standpoint of the participant. This philosophy contributed to it being selected in 1996 as the first USA Long Distance World Triathlon Championship.
Porter coaxed one of the branch level insurance company underwriters to provide a liability program for the 1980 Muncie Endurathon. Later the senior underwriting management reviewed this, and a decision was made that no future accounts of this type would be accepted. This acceptance, rejection and replacement process occurred several times.
By word of mouth it became known that Porter had arranged a program of both Liability and Accident insurance for the sport. Other insurance programs may have been developed. However, Porter had a unique set of credentials that gave him a negotiating advantage in developing a meaningful insurance program that could be written nationwide.
Part of his 30 years of insurance experience was as a Casualty Underwriter for three different international companies at a senior management level. In 1970 he joined one of the larger Midwestern insurance agencies and was functioning as a managing partner at this retail level when triathlon came into existence. 20 years as a marathoner plus the professional designation “Chartered Property Casualty Underwriter” (C. P. C. U.) helped in communicating with insurance company underwriters on sports insurance needs.
Early Insurance Negotiations: The growing sport of triathlon had a real need for insurance but there was considerable reluctance by insurance company underwriters to accept a new account that had no previous history, particularly one with such potential for catastrophe losses. In submitting the concept to a prospective insurance company, it was necessary to convince them that the race events could be conducted in a safe manner, and there was a reasonable chance for their making a profit. Unfortunately, in the early years much had to be learned about race safety with the result that several losses with high pay out potential took place causing several companies to loose interest.
Insurance Underwriting: In the final analysis one person with the insurance company had to make a decision on the acceptability of a new submission. Generally an insurance companies board of directors establishes broad underwriting goals, and then delegates underwriting authority down the corporate chain through senior underwriting management, then to regional and finally to branch underwriting personnel. Negotiations for triathlon insurance was generally done at the branch level.
An inducement to the underwriter is the prospect of a large premium pool that will cover overhead expenses and inevitable losses leaving a margin for profit. This broad concept will only work if each individual race has a good chance of being conducted loss free. This is likely to occur only if races follow a uniform set of safety standards coupled with race monitoring to assure that the standards are followed. If the events are not inherently safe, no matter how many races are insured the expenses will exceed the income.
An interesting overlay that affected the negotiations was the collective frame of mind that insurance companies go through. During periods of general underwriting profits insurance companies tend to be more aggressive in their desire to write more business making it easier to encourage an underwriter to accept an unusual risk. Fortunately, the overall insurance market was in a more aggressive period when race insurance was being negotiated in the early and mid 80’s.
Early Sports Association Developments: Concurrent, but independent, from the above the early stages of a national triathlon organization were developing on the West Coast. This group had also identified the need for conducting safe events and had started the codification of rules that would encourage safer racing events. This group, The American Triathlon Association (ATA), mandated safety rules in conjunction with their race sanctioning process. These guidelines were similar to those being used by Porter. At this point each was unaware of the others efforts. It was inevitable that some of the individual race directors that approached Porter for insurance were also involved with ATA, which laid the groundwork for an eventual contact.
In 1982 Shirley Jensen, working for Valery Silk, HI Ironman race director, called Porter and inquired about the availability of liability insurance for the Ironman event. A program was arranged for that and subsequent Ironman races. In view of the size and prominence of the Ironman Porter felt monitoring on behalf of the underwriters was appropriate and attended.
It was customary for ATA to have their organizational meetings in conjunction with a race event, and its representatives, with Carl Thomas as leader were also in Kona. Porter attended these meetings informally, and learned of the progress being made for safety as well as for race monitoring. This mutual discovery was the beginning of a working relationship.
At this meeting ATA, renamed United States Triathlon Federation (USTF), realized that the availability of race insurance would be a signifiant inducement for race directors to sanction their event with ATA/USTF. Subsequent to this meeting Murray Reinschreiber, the new Executive Director of USTF, invited Porter to participate on future USTF board meetings.
Safe Events and Rules: In those early days Porter used his race directors and past underwriters experience to develop safety requirements. Due to time constraints, it was difficult to thoroughly review each application, much less monitor each race to determine if the recommendations were being followed. For example, the only way to monitor “drafting” is to see it. As the demand for insurance increased the ability to properly supervise safety diminished.
As Porter became more familiar with ATA/USTF, he realized a great deal had been done to formalize event rules including specifics for conducting a safe event and having a representative monitor every sanctioned event. In 1985 Al James on behalf of the national federation (now renamed Tri-Fed/USA) wrote, and the Board approved the “1985 Triathlon Guidebook” which included safety standards and competitive rules.
Insurance Benchmarks: The benchmarks for securing insurance included the need for a financially high rated insurance company (all were triple A),that was licensed in all 50 states and with national claim facilities. Pricing had to be at an affordable level and the process for putting coverage in force, including the delivery of evidence of coverage, be made reasonably easy to administer.
Race event liability insurance was generally written with an effective date sometime prior to the race providing coverage for the activities leading up to and following the actual race. Unfortunately many race directors overlooked this need until the last minute creating panic processing. This contributed to unsafe race conditions as deficiencies revealed in the application were hard to correct by the race starting time.
Standard Programs: The standard package of insurance that was provided included “Comprehensive General Liability”, “Non Owned & Hired Auto Liability” and “Accidental Death & Dismemberment” coverage. When the race committee had a paid staff, the program was extended to include “Workers Compensation and Employers Liability” coverage. High limit “Excess/Umbrella Liability”s coverage was developed as an option.
Special Needs: Special needs were addressed individually. For example, the HI Ironman race was offered a loss of income program based on unacceptable weather conditions that could result in high waves preventing the swim portion of the event to proceed safely. This option was not taken. However, the research pertaining to it was interesting and useful.
As race events matured, many developed the need for the type of insurance that would be typical of a small business. This also was handled on an individual basis.
Insurance Administration: Administration was complicated as there was no accept/reject screen that applications could be measured against. Consequently arrangements for coverage and for Certificates of Insurance had to be approved by Porter and were often done by telephone and FAX frequently “after hours” and/or on the race weekend. For the most part the race directors were cooperative though a few displayed some aggressiveness in their efforts to gloss over important details, and a few failed to pay their premiums. The problems intensified on popular weekend race dates with many race directors trying to make last minute arrangements.
As the national federation became more effective in its supervision of the race sanctioning process, the shared administration smoothed out. At this point Porter made a unilateral decision that only events sanctioned by the national federation (Tri-Fed/USA) would be offered insurance based on the federations evolving safety standards.
Tri-Fed/USA publicized the entire process thereby reminding race directors of the need to allow time for the insurance processing and becoming familiar with the specific rules that had to be followed throughout the event production.
Claims: While there were some frivolous claims, it was no different than many other group programs, and they were treated as their merits justified. All claims, frivolous and serious, were turned over to the professional claims department of the underwriting insurance company and were adjusted on their individual merits. The loss statistics were reviewed for patterns, and suggestions passed along to the national federation board where corrective action was considered.
Occasionally there were very unusual claim circumstances that required continuing personal involvement by Porter to keep things moving. As an example, one such claim involved a race director that was conducting his event outside the United States. It was made clear the insurance program would not be available, except for the activities within the US, and additional coverage would have to be secured for the foreign activity. An automobile accident occurred outside the US causing multiple deaths as well as other severe injuries. The race director in an effort to provide the best medical treatment brought the injured back into the US, and the coverage that had been provided for the part of the event inside US came into play. While this was an unusual set of circumstances, it was not the only claim where the underwriters faced a high limit payout.
Additional Variables: It was observed many of the governmental and other agencies requiring evidence of insurance had no concept of what should be included in the insurance program for which the certificate was issued. For example, accident insurance was sometimes “passed off” as adequate coverage when in fact a broad form of liability insurance should have been the bare minimum.
All of this adapting was running parallel to continuing negotiations with several insurance companies that were considering providing coverage, or who actually were involved. It was important that this process continue in the event the current insurance company elected to withdraw necessitating a replacement program.
By the late 1980‘s insuring of the sport developed to the point that insurance could be handled in a more conventional manner with actual statistics available which allowed pricing and terms based on past experience which tended to improve as the safety program produced better results.
1. Paul R. Porter: 20 years practical sports knowledge including triathlon race director of Muncie Endurathon; 30 years of experience in underwriting insurance; Professionally recognized “Charter Property Casualty Underwriter”; Board of Directors Member, USTA & Tri-Fed/USA 1983-1989; Helped promote triathlon as an Olympic sport including representing the Board at GAISF - the General Assembly of International Sports Federations in Amsterdam; 1982-84 HI Ironman support staff.
Note: Comments and suggestions are encouraged and should be addressed to:
Revised: October 31, 2011
Seneca, SC 29672