Personal Injury Insurance
For the benefit of all Speedway Australia licence holders, Speedway Australia has arranged through its appointed insurance brokers, Marsh Ltd, a Group Personal Injury insurance policy underwritten by AFA Insurance Ltd.
By purchasing this policy on a group scheme basis, Speedway Australia is able to provide broad cover to its licence holders.
INSURANCE DOWNLOADS: Forms & Files
We recommend you read and understand the cover provided and contact Marsh Ltd directly on (08) 8385 3612 if you have any further queries.
Public Liability Insurance
QUESTION: Who is Marsh and how long have you been involved with Speedway and Motorsport?
Marsh Pty Ltd are the world’s largest insurance brokers and risk consultants with offices in all Australian States and Territories. Their expertise in Sport and in particular Motor Sport began in 1985 when they placed the policies for the first Formula One Grand Prix in Adelaide. They have in fact, placed the Formula One policies for all Formula One events in Adelaide and Melbourne since 1985.
Since 1985 Marsh have built relationships in Motor Sport acting for CAMS, Clipsal 500 V8 Events, Moto GP, the Le Mans event in Adelaide, Summernats and of course, Speedway.
In 1987 they negotiated the FAS Liability program which still ranks as one of the best motor sport policies in Australia.
QUESTION: What is Marsh’s role as a broker for Speedway Australia?
Marsh is the appointed Insurance Broker to Speedway Australia. An insurance broker acts for the client, not the Insurer. Marsh’s brief is to deliver a quality insurance product to Speedway Australia and their affiliates.
Simply put, Marsh has to design a broad protection policy, include cover for all Speedways stakeholders, deliver a competitive price having regard for:
- Insurer Security
- Insurer Claims Performance
- Level of Cover
Of course the ability to obtain the policy we seek depends on a number of factors including the state of the insurance market and factors such as recent Speedway claims histories.
QUESTION: Does Marsh have to follow any guidelines when finding an appropriate underwriter?
In general, Marsh’s financial guidelines for Australia require a Standard & Poor's rating of BBB or higher and the equivalent of at least US$25 million of unencumbered policyholders' surplus.
The responsibility for establishing standards, guidelines and procedures with respect to Marsh’s insurance placing activities comes under the supervision of Marsh’s Market Information Committee, which is comprised of eight members of senior management based in New York.
The Market Information Group analyses publicly available financial information such as statutory annual and quarterly statements filed with regulatory agencies. All information gathered and accepted must be of a public nature. Other important sources of information are annual reports, documents filed with securities and exchange commissions, industry publications and rating services.
QUESTION: The insurance crisis of 2001 to 2004 is still fresh in our memories for the effect it had on Speedway insurances which was one of many activities that was considerably affected. So what occurred then that contributed to the problem and why?
In the period from 2001 to 2004, it was extremely difficult to obtain quality of liability coverage and in particular for Motor Sport with secure insurers.
The actual problem stems back further than 2001. Over many years insurance premiums had been very low because many insurers were competing for market share. This was a global phenomenon and Australia in particular, enjoyed very competitive premiums. However, by late 1998 the extent of losses being suffered by insurers became apparent and insurers began a drive to increase premiums to return to profitability.
This process to claw back profitability was accelerated by reinsurers who, as the insurers insurers, began to insist on increasing their proportionate share of every premium dollar paid. Heavy losses incurred by the insurance industry affected the decisions of many investors who were called upon to provide additional capital to insurers and the Lloyds Syndicates.
Premium rates were rising in 2000 and early 2001, however the collapse of HIH in Australia and then the collapse of the Independent Insurance Company in UK, both of which were involved in Motor Sport, exacerbated the situation substantially. Insurers reinsurance costs rose ever more steeply and the events of September 11 occurred, all in all a very dramatic year.
Investors began choosing other investment opportunities rather than in insurance companies. Ironically, the increases in premiums eventually returned the insurers to profitability resulting in an investor return to the sector which eventually caused an oversupply of insurers. This has had the effect premium reductions to compete for market share and so the whole cycle commenced again.
In early 2005, the insurance market eventually returned to what the insurance industry refers to as a “soft” market where premiums were reduced and cover became more freely available. Since 2005, market conditions have been favourable to insurance buyers generally although high risk sports such as Speedway still require specialised services to place and price.
QUESTION: Considering that the insurance market is to subject cyclic changes, how hard has it been to insure Speedway?
In 1987 when Marsh first dealt with the FAS we had the problem of bringing together approximately 140 Speedway tracks across Australia into a Corporate buying group and we were successful in putting together a policy with a $2,000,000 limit. In those days there were 10 insurers sharing that $2,000,000.
Today we would be hard pressed to find 10 insurers who would be remotely interested in insuring Motor Sport.
The policy for the year 2008/2009 has a liability limit of $50,000,000 with a sub-limit cover for errors and omissions set at $5,000,000. Marsh have also negotiated a new risk management grant scheme to allow continuation of the very good work already carried out by Speedway Australia in this all important area.
The outlook for 2009 and beyond is that insurance premiums are expected to increase as the market firms. Industries that can demonstrate sound risk management practices will be least affected. Another particularly important factor is a well developed and long relationship with current insurers. Marsh have been able to consistently obtain best terms from Speedway Australia’s current insurers.
QUESTION: The Speedway Australia policy has been continually developed and improved over 21 years to provide for quality protection for all Speedway participants and spectators. Who is protected under the Speedway Australia policy?
As mentioned in answer to one of the earlier questions, the brief for Marsh is to put in place a quality insurance coverage for the Speedway stakeholders. It is important to just take a moment to restate the people who are protected by the scheme policy.
This is probably one of the major deficiencies Marsh see in other insurance policies in that they either do not cover some stakeholders or are unclear about who is covered. Listing people as an insured party gives certainty. This policy covers the National Association of Speedway Racing Pty Ltd, other state bodies, other specific bodies involved in the sport of Speedway, individual affiliated and associated clubs/tracks and committee members, volunteers, competitors, competitor groups, racing teams and race car owners, event and series promoters, speedway/track owners, landowners and/or lessees of property, sponsors, event organisers and their servants, fire, rescue, towing and medical organisations who supply services to Speedway. The policy also notes the interests of government bodies as required by relevant legislation.
The unique part of this scheme is that once the track is part of the scheme and declares meetings under the policy, the premium that is paid by the track covers the liabilities of all the insured parties.
As an example, a claim occurred involving a competitor who was injured in a fire and made a claim against eight people and groups. These varied from the fire crew who attended the scene, to the flag officials, the race director, the club itself, the committee, the landowner and the authorising Speedway body. Fortunately, the scheme policy ensured that all of these parties were protected from serious financial loss under the one policy.
Part of the protection under the scheme policy is the lack of exclusions for operations in the red zone. The main exclusion is participant to participant, otherwise injury to participants, officials and volunteers is not excluded from the policy.
Sixty to seventy percent of all our claims historically come from the red zone. If a policy excludes the red zone or persons in the red zone there is a serious financial risk to drivers, officials, club officials, the club itself and any other party who could be involved in a law suit.
It is important for competitor groups and officials groups around Australia to check insurance policies to ensure they are protected and not exposed to financial loss. If it were me racing at a speedway and a policy was providing deficient cover, I would sooner not race than risk losing my house and my personal wealth.
QUESTION: Can you give us some other examples where cover may be deficient in cheaper policies?
The Speedway Australia scheme policy is a claims occurring policy. This means that the date of the incident which causes the claim is the trigger for cover under the policy, irrespective of the date at which the claim is brought. For instance, an incident could occur today from which personal injury occurs but the solicitors writ is not received for two years. Under a claims occurring policy the trigger date for the insurance claim is today and therefore the policy which is in place today will react to the claim.
Some policies which Marsh has seen are claims made policies. Claims made policies mean that the trigger date for the claim is the date on which the claim is reported.
This is not a problem if the policy is kept constantly in force on the same basis, however if for any reason the policy is terminated either by the insurer or the client then all cover ceases on the cessation date. There are other complicated problems that may result from a claims made policy that are too complex to discuss here. Suffice to say that when it comes to Public Liability cover, claims made policies are not recommended.
Turning to some insurance jargon now, it is important to talk about policy warranties.
A policy warranty means that an insurer is imposing an obligation on an insured to do something or not to do something.
If there is a breach of a policy condition, the insurer can only reduce its liability under the policy if the breach relates to the loss and then only to the extent that the breach caused or contributed to the loss. If the breach is not related to the loss then it is irrelevant to getting the claim paid.
For this reason, when considering other policies which have policy warranties, you will need to consider the effect of these warranties on your activities.
We have seen a warranty which indicates that the general public is not allowed in the pit area or in the race track proper. Many Speedway tracks allow the public to purchase entry to the pit area and do allow occasional visitors into the red zone.
The effect of the warranty is that if a person, other than a driver, pit crew or official, was injured in the pits or in the red zone the policy would not apply to the injury.
We have seen a further warranty that the general public and spectators are not allowed in the pit area until 5 minutes after the conclusion of the entire event and the engines of all race vehicles are shut down. Again this is a similar situation, if the general public or spectators were to be in the pits prior to the designated time and were injured there would be no insurance cover applicable.
In past years, the signature of the waiver and release of liability was a voluntary code, but it was encouraged and was not mandatory nor a policy warranty. Persons other than official drivers and pit crew etc. are allowed in the pits at the discretion of the promoter, track or club.
For some years now, insurers have made the signing of waivers by participants compulsory and given the recent advent of the law reforms in each State as well as Federally, the signing of waivers has become an integral part of good practice in the defence of claims.
It is also important to talk about Policy Exclusions.
As important as the policy coverage is, all policies do have exclusions and for this reason, it is important to understand them.
For illustrative purposes, policy exclusions will tell anyone who reads the policy who or what is not covered by the policy. In summary form, we’ll run through some of the exclusions found in other policies we have reviewed and compare them with the Speedway Australia scheme policy.
- Liability of one participant to another- whilst both are competing in the same event. This liability is excluded by the Speedway Australia scheme policy.
- Personal Injury to event participants other than participant to participant liability- There is no exclusion in the scheme policy for this risk. This means that if a driver were to be injured in a manner where he believes the track owner is liable for this injury, the track and the other insured parties are protected if the driver elects to sue.
- Personal Injury to event judges, referees, officials and organiser- There is no exclusion for this risk under the Speedway Australia scheme policy. The effect of such an exclusion would mean that a driver spun out on a track and collided with a flag marshal, fire crew or any other official in the red zone, there would be no cover. The Speedway Australia scheme policy does cover such claims.
- Personal Injury to Event Employees and Personal Injury to Volunteer Workers-
- There is no exclusion in the scheme policy for injury to these parties other than workers compensation benefits which are excluded where the employees are eligible for Workers Compensation.
- Sub Contractors- There is no exclusion in the scheme policy for injury to Sub-Contractors supplying services to a Marsh insured Speedway Australia speedway.
- Liability arising from Fireworks- Even though a fireworks contractor may have their own insurance, the Speedway and all of the normal insured parties are not normally covered by the contractor’s policy. If the policy specifically excludes fireworks, any claim against the track or others would be excluded from the cover. The Speedway Australia scheme policy does not have a Fireworks exclusion.
- Liability arising from escape of fire or flood- There is no exclusion in the Speedway Australia policy for this risk. In fact, we have had claim paid where a Speedway track was conducting a burn-off to keep down long grass in a car park. The fire escaped and burning crops and fencing. This claim was paid under the Speedway Australia policy.
QUESTION: What is the importance of Errors and Omission cover and how does it work as part of a public liability policy?
The scheme policy has a separate section – the errors and omissions section.
Essentially this cover applies for errors in professional judgement and breach of professional duty which do not necessarily involve injury or damage to property.
Some examples of claims which have occurred are
- errors in scrutineering of vehicles causing vehicles to be eliminated from events and subsequently found to be legal
- errors in judgement in disciplining drivers who are mistakenly sent to the back of the grid and sue for missing out on points or prize money.
This is important protection for officials and for the Car Sections who provide disciplinary tribunals and appeal mechanisms.
QUESTION: How does the Speedway Australia scheme work?
All tracks who choose to participate in the scheme are part of a “communal” buying group – a group of people clumping together to buy the best possible cover at the most economical price. All tracks contribute to the policy according to their track activity and risk exposure. The main advantages of group buying over purchasing individual policies are;
- In the longer term group buying is cheaper.
- Most importantly, the scope of cover is usually broader than individual policies
QUESTION: What should tracks look out for when considering a public liability policy?
It is very difficult for a non insurance person to accurately evaluate what an insurance policy does and doesn’t cover and we certainly understand why many people are left confused.
There are many public liability policies but the scope of cover can vary dramatically. So some things to consider are:
First of all the selection of the insurer, bearing in mind that this is a “long tail” cover which is means that claims may occur but may not be reported or become apparent to an insured over a long period of a few years. It is preferable to avoid insurers that are not well known or where the insurer is located in an area which makes it difficult for local representation on claims.
On a related note, is the policy subject to Australian law or foreign law? As a general rule, Australian law is more beneficial to the insured if there is a dispute. The operation of policy warranties I talked about before is just one example of this – where any breach of a warranty may mean no cover for a claim at all whereas under Australian law, if there is a breach of a policy warranty, the insurer can only reduce its liability to the extent that the breach caused or contributed to the loss, so it is much fairer.
Another consideration is the amount of cover that is selected. The scheme policy currently has an indemnity limit of $50 million. This sounds a lot of money but if you consider that, in our current legal system, individual claims have occurred where claimants have received multimillions of compensation, the $50million would not pay for too many claims arising from a single event.
Always read and understand the policy conditions that are offered before buying. Cheap insurance may be cheap because it only offers a limited amount of the cover. A cheap policy can be very expensive for the insured party if the policy does not cover the claim and has to be met out of their own pocket.
Most people naturally prefer to say “it won’t happen to me”, but it only has to happen once and can cause a lifetime of misery.
Generally speaking the old purchasing maxim of “if it looks too good to be true it probably is” holds true to insurance.
QUESTION: Some tracks will justifiably argue that they just can’t afford the Speedway Australia insurance. What can be said to them?
It is very true and we sympathise with each track that is struggling under increasing cost pressures, diminishing crowds and participation. Public Liability insurance costs have been the catalyst that has closed many tourism and sporting organisations. It is not surprising that the cost of public liability insurance has caused some Speedway tracks to close across Australia.
Another old adage is that the more who participate the cheaper it gets is very true. Where you get greater participation in a scheme the unit cost usually drops. In fact, a few years ago a number of tracks dropped out of the scheme and sought other insurance. Had they stayed in the scheme the premium rate would have been $400-500 per meeting cheaper for everyone.
The conclusion we can come to is that:
- the more that people keep together the better the product
- the better the cover
- the better the price
- the more security can be provided
- complicated insurances require specialist expertise and market influence
At the end of the day when you need to rely on a policy to pay a multi million dollar claim you don’t want to have to chase an obscure insurer or worry about surprise policy exclusions or warranties.
Should the worst happen, we wouldn’t like to be in a situation where a competitor or a track owner finds out that they may lose everything they own and we certainly would not like to see a situation where committee members are subjected to personal lawsuits risking personal assets.