Insurers Play to Win When Writing Coverage for Sports Venues

Up and down the West Coast, stadiums and sports arenas welcome in fans every day. Whether it is for a football game or a pop concert, the venue is open to a number of exposures that must be covered before the public sets foot inside.

Common risks include fire, falls, theft, and much more. It could even be said it is a game of sorts figuring out all that is needed to properly cover both the facility and its inhabitants.

Todd Tropio is a broker for Westland Insurance Brokers, which places coverage for a well-known San Diego sports venue.

“It’s important to understand the risk that you will be dealing with, so the first thing to do is try to ascertain what goes on in the building,” Tropio said. “What kind of events are common to the venue and what tenants are currently utilizing the facility? Once that is established, you can break down the risk with a series of questions related to those particular answers.”

According to Tropio, the most important question for any building owner is to determine who should be contractually liable for what. “We normally go into the insurance program with the mindset that we want to try to deflect as much liability away from the venue/operator as possible,” Tropio said. “This is done through carefully worded contracts and the use of either special event insurance or the tenants’ own insurance.”

Overall, the most important people in connection with a stadium are the fans themselves, as they number the largest group in a venue for an event.

As Tropio points out, “Spectators need to be protected, and a certain amount of risk needs to be addressed by the building owner/operator…This stuff goes into loss control but is of maximum importance in keeping insurance costs manageable. Insurance is one of the largest expenses a venue will have, and to be profitable, a facility has to keep insurance costs down.”

Slip-and-fall/trip-and-fall hazards are right at the top of the list, according to Tropio, along with spectator handling by in-house or outside security.

“The steps are a huge problem for facility owners,” Tropio said. “The concourses can’t possibly be kept clear of water and debris. The sale of alcohol offers another challenge, and when you combine a determined security force with boisterous spectators, you are asking for an incident to take place. All these scenarios and others not mentioned require an in-depth plan. This is a plan you want in place prior to an incident or claim taking place.”

The age of a venue, the lack of sprinklers that automatically go on when in contact with high heat, the venue being situated in a flood zone or earthquake region, the type of construction or a high-crime neighborhood can all adversely affect the premium, according to Tropio.

Insuring the sports venue market can be a profitable venture, but as with any market, careful underwriting is essential.

“When an insurance company starts losing money in a certain area, they can do one of two things,” Tropio said. “They can either stop writing that type of business or try to write it more profitably. The one thing that does seem to remain constant is the people involved. It’s a specialty market and the underwriters seem to follow the markets that are or become involved in this area. I have been dealing with the same people for years and the majority are not with the insurance company that they started with.”

Adequately spreading the risk is also very important when insuring a sports venue. “The risk should be spread throughout the venue to those subcontractors, promoters, event organizers, concessionaires, and attendants who are most directly involved, and they should be responsible for their own actions,” Tropio said. “The markets for sports/entertainment venues are constantly changing due to an infinite amount of reasons, most notably their own experience.”

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