Your company wants to run a contest and offer a big prize to attract customers in a new market segment that you are entering. Question is, how to cover the cost of the prize without exceeding your market launch budget.
A big client has asked you to sponsor a hole-in-one at their charity golf tournament and they want to offer a luxury car as a prize. The price of the car will be more than the client pays you in a year! What to do?
Prize Indemnity insurance is the solution in both instances. Prize Indemnity allows the contest sponsor to leverage a relatively small expenditure into a major prize.
Prize Indemnity is part of a category of insurance called Contingency and it works by transferring the risk of someone actually winning a prize (resulting in a payout) to an insurance company. The insurance company calculates the statistical odds of someone actually winning the prize and bases the cost of the Prize Indemnity coverage on the probability of a winner. Contest rules are put in place to ensure no participant has an unfair advantage.
The use of Prize Indemnity is really limited only by the imagination since new contests involving skill or chance are conceived every day by marketing teams. Some of the common uses include:
Sports and skill-based events:
Consumer sales promotions:
- Hole-in-one (check out our Tee-to-Cup Program!)
- Shoot the Puck
- Basketball Shots
- Soccer or Football Kicks
- Predicting the score in a game
- Online promotions
- Scratch and win games
- Collect and Win games
- If X happens, we will give away Y