Insurance

[JohnRW]

If the Club did not have risk/liability coverage in place, where do you think someone with a hankering to sue will go looking ? Right at you, babe...right at you.

Yeah...we all sign a waiver...but if waivers were perfect and infallible, then we'd all sign waivers for everything in life and the personal injury bar would disappear. Fat chance.

Having a layer of insurance at the Club level does provide some amount of shield to all of us individuals. I don't give a rats ass if the insurance protects the Club...screw the Club...I'm alot more selfish...it's covering my ass, too.

Edit - as to why the "minimums" are so high...it's because those are the levels of insurance that we are required to provide by track owners/promotors for the right to play on their pavement. If you don't provide a bond with their required #'s, you ain't racing, period.

[Mattberg]

Who's going to sue and for what? In the last five years and as far as I can tell, all the time before that, the only claims are for track and property damage, and mostly from rally and solo. A slip and fall here and there but small potatoes. Meanwhile we're filling Pete Lyon's coffers with close to $2 million a year... for what? TO not pay off a $16,000 claim? To make sure we can pay a $1 million claim? Give up $2 million to feel warm and fuzzy about not paying out a million? Get realistic here.

First, there's nothing to sue for unless there's a fat insurance policy. Our risk analyst seems to have instilled the legal fear very effectively. We're providing that. Second, there's way too much money involved given the historic risk. Why do it? It just doesn't make sense. I just can't believe that we really believe it's worth paying all that cash for such little risk that's backed up by historical data. Why not just risk the catostrophic loss and keep $1.8 million a year and fire Pete Lyon? We put $2 million a year in the bank and take our chances. What do we have to lose? File for bankruptcy and call it a day. That's the smart play unless you have some huge asset. We don't. The problem is that I don't think that $2 million is going to one man or company. It's too much to overlook. Something stinks big time. As I watch the same people year in and year out in charge even after ousted from the BoD I get a very queasy feeling about what's really going on. Insurance is a great place to hide crap.

That's ok if you want to accept it. I've filed my complaint with the Kansas Insurance Board of Commissioners and will continue examining the situation. We'll see what they say. I will tell you this. I spoke with the head of one of the largest "special event" insurers and they said they can't believe the numbers. I can't either. I've also been told that Pete Lyon controls the bid process and specs and all other bidders are given less than 30 days to file their bids. An impossible task according to the experts for all but the current insurer.

No one's going to lose their house. No one's going to be made destitute. If something actually happened, we simply fold up shop and start a new club. Would you rather pay $2M a year to keep it the way it is on the total longshot that something happens? Or should we save that dough and maybe improve the club?

[Matt Rowe]

So let me see if I understand your plan Matt.

We drop insurance completely. Save 1.8 million in the first year. The ongoing litigation from the deaths in the rally program continue and wipe out those savings. Oh wait, that was already covered so let's assume that the car that hit the stands at Summit this year killed someone instead of a few minor injuries or one of a thousand possible scenarios and the club uses everything it has in defense or to settle. Meanwhile a significant number of volunteers abandon any position of responsibility because the club can no longer stand behind them in case of an incident. And yes people do stand to lose their house, cars and anything else a lawyer wants to take when they realize the club is bankrupt but the event organizers have money. Think it won't happen? It already does, but the club pays for all legal defense and settlements. If they didn't I wouldn't work another event again and I am certainly not the only one. Racer's in general accept risk. families and spectators? Not a chance. In this country if someone is hurt, they want someone to blame and deep pockets are shallow ones, settlements or court cases it all costs someone.

You seem to be missing one crucial point. Paying insurance does suck. It's like the lottery from hell, the tickets are expensive and you sit and wait praying that you don't "win". BUT, and here is the big point, when bad things happen nobody sits there and complains about the cost of the premiums. They thank their lucky stars they don't have to cover the losses and they continue on with their lives. The comparison to car insurance is dead on, if you're careful AND lucky it is money thrown down a whole. But it only takes a few seconds without it to really ruin you and things are never quite the same.

Now, I am all for greater visibility and oversight in the insurance process. And I don't see any problem with questioning how much coverage we need. But when you suggest self insurance I think you're off your rocker. What are we $7 million dollar gross anual income with almost the same in expenses? When is the last time you saw a company that size self insured? Yeah UPS is a $43 BILLION a year gross income and profits of almost $4 BILLION a year. They can afford a couple settlements a year and it won't even effect the executives bonuses. Our club? One incident and we could be done.

So Joe, please continue to ask questions and please make the information you have available to the rest of us, but let's not bet the whole club on a little luck, there are many people here that have a lot of time, energy and emotion invested in the club. With a name like saveclubracing I don't think anyone wants to take the risk of bankrupting the club.

[JeffYoung]

Matt B. -- you undersand that your position is contrary to the position that EVERY prudent corporation takes in the US? IT's from beyond left field. Other problems with your rant:

1. The SCCA does have a huge asset -- its name and history. This is what it is protecting and what it woud lose if it filed bankruptcy.

2. Lyons is not lining his pockets with millions. His fee as broker/agent is without doubt only a small percentage of the premium that is paid to the insurer.

3. In many cases, as someone else pointed out, it probably IS NOT the SCCA that is dictating the levels of coverage. It is probably the tracks/track owners that are requiring certain levels from the sanctioning bodies that are running there.

You may have a legitimate beef about (a) the amount of required insurance if it is much higher than what the tracks and/or our risk require, and I will tell you the policy limits I have seen do not seem extreme given what a single wrongful death claim could do to us OR ( if what we pay for that coverage is much higher than what other organizations pay for similar coverage.

The rest of the stuff you keep raising over and over just shows a lack of real world experience with insurance and risk.

[Joe Harlan]

Matt R. , Your right I have no interest in backrupting club racing and I certainly would not consider self insuring the club because I do believe the club has more than enough assets to protect. Those assets belong to the members that paid for them over the years. My concern is the proper division of expense and that the whole insurance process is being fairly put out for bid. from the information I do have we may be over covered in some areas but again I have no real issue with that as much as insurance costs get assigned to the proper areas of the club.
I will add this what we do need to ba able to do is question our elected leaders and expect reasonable answers in a reasonable time frame. We need to work hard to over come apathy of the membership and find qualified not just popular people to run this club.

[charrbq]

Matt may be on to something about the self insured thing. With no premiums, we'd have no insurance expenses that we all know are an expense in life we'd like to cut. Of course, with no insurance protection other that the hope of a claim less than a self insurance bond, we'd have no workers, no entrants, and no one would rent/lease us a track. Of course, no sponsors wouldl want to be involved as they could be named libel. That would result in no income for racing...except from possibly Solo II. We could then sell our race cars and the assorted tools, etc. and use the money to go on a cruise or send our kids to college or retire.

With no insurance, we wouldn't need any officers from club level to national as they would all be subject to any type of libel suit with no protection. With no officers or elected/paid leaders of the club, Mattberg would have very little to complain about (although that one's a reach), and he, too, would go away.

[Joe Harlan]

to go on a cruise [/b]

Do I have to take the wife or is this one of those Vegas kinda deals...It could be a deal breaker....... <_<

[charrbq]

With the kind of money I spend on my race car effort, each could go on a seperate cruise!

[Mattberg]

Jeff,

Please cite the case(s) in which anyone has ever SUCCESSFULLY sued for wrongful death after having agreed to participate and/or signed a waiver? I think you&#39;ll find it&#39;s never happened without gross negligence in an activity like ours and even in activities far less risky by perception. The simple proof is in a hockey puck at an NHL game. There&#39;s a dead girl&#39;s parents somewhere in Phildelphia wondering why they challenged those statutes and an attorney licking his wounds for the costs he thought he would recover. Get on WestLaw. Find the case that justifies our over insuring. We&#39;re protecting against a precedent that has been proven time and time again will not be established. The last place an ambulance chaser wants to be is at an SCCA event. It&#39;s a money loser.

As far as what we have to protect? A name? History? We lost that a long time ago. We&#39;ve got loans, leases and a mish mash of pretty much worthless assets. The brand has become relatively worthless. It produces less revenue than many of us make in a year. What sells is racing and the community. That would not disappear with a reorganization. But it is under the heavy hand of officials and corporate mismanagement. What you fail to realize is that the risk return we currently operate under makes no sense. I think forty years of history provide more than enough data to make a pragmatic business decision on insurance. What we are doing is the equivalent of insuring a non running Yugo for $100K a year on the chance that a tornado will lift it onto an innocent bystander two towns away and we will get sued for a wrongful death... and being subjected to a $50K settlement. At some point you must draw a line. Most of us pay for insurance at a rate of over 100 times the liabilty risk on an annual basis. SCCA pays 7 times with a deductible that basically amounts to the payouts per year. Did you know that the average SCCA payout is WAY less than the average auto insurance payout and considerably less than homeowners? Imagine paying $47,000 a year for your auto insurance per year, because that&#39;s what we&#39;re doing. Think about that one... please.

What is not pragmatic is over insuring to protect the throngs of officials, directors and officers we&#39;ve created who shed every last ounce of credibility and accountability on a fat insurance deal. I also remain suspicious of where that money goes because it&#39;s just too much. Insurance and liability are convenient terms that scares everyone and I fear it&#39;s being used inappropriately, but we&#39;ll save that.

If SCCA went under which it probably will anyway, it would be no big deal. Just as we did in the fifties, it would start up again with drivers with ambitions to road race. I&#39;m constantly reminded of this by a single event. Moroso a few years back. Funny because I was supposed to meet Steve Johnson there. Anyway, no workers or officials signed up and Stevie bagged out also. They were all at a pro race in St. Pete. I&#39;m not sure who it was but I thin it might have been Mike Cox, a regular here and big IT particpant, rallied the drivers. End result was not a cancellation but the best event I think I ever attended. At least the most fun hassle free weekend I can remember in 25 years of racing.

You may think SCCA is a name but it isn&#39;t. A brand is only as good as the awareness and revenue it creates. Ask someone on the street if they ever heard of it. Ask ten, a hundred. Go to a car show. Ask there. You&#39;ll be mystified with the results. Change the name tomorrow and you won&#39;t lose more than a handful of members. It is an organzation of virtual anonymity and private involvement. The brand has little or no value other than those who operate under it currently. It is in essence a private label offered to regular customers in a closed market.

I see the insurance as the ultimate brand killer. The money that could be garnered from that private label could be readily expanded. Sure enough, that comes with risk. But it&#39;s worth it if not simply to protect the private label. We cannot continue to pay out $2 million a year for risk management and insurance alone coupled with the enormous overhead of Topeka if we expect to survive. If YOU had any real life experience you might be able to see the business necessities required. Turn cost centers into profit centers. This is something we&#39;re not very good at doing. As a matter of fact, we&#39;re experts at creating cost centers. A result of having people in charge who don&#39;t run companies, don&#39;t have bottom line reposibilities or accountability and generally like to work with other people&#39;s money as if it were their&#39;s to use... without accountability.

We lack any significant responsible corporate governance and we certainly overpay for poorly implemented administration with expenses running without controls. Insurance is simply the first place to make a change because it offers the greatest potential return and savings. If you have a better solution for fixing our financial problems, which BTW Topeka has long denied but now admits are very real, please... I&#39;m all ears.

[bldn10]

Self insurance, all or part, is a legitimate course of action. I once worked in thge legal dept. of a nationwide plumbing/HVAC co. that decide to self-insure. You can go naked for the routine claims and buy coverage for catastrophic ones; e.g. a $500,000 deductable. W/ $1.8 Million to spend, I&#39;d think that we have options. But w/ your head of risk management profiting from the status quo, how likely is he to even look into it?

The question asked re who even wanted FSCCA underscores the fact that the SCCA just should not be in the car business. Classes should be determined solely by what the members want to race, not what someone thinks might be profitable.

What is the status of the litigation?

[Andy Bettencourt]

Matt R. , Your right I have no interest in backrupting club racing and I certainly would not consider self insuring the club because I do believe the club has more than enough assets to protect. Those assets belong to the members that paid for them over the years. My concern is the proper division of expense and that the whole insurance process is being fairly put out for bid. from the information I do have we may be over covered in some areas but again I have no real issue with that as much as insurance costs get assigned to the proper areas of the club.
I will add this what we do need to ba able to do is question our elected leaders and expect reasonable answers in a reasonable time frame. We need to work hard to over come apathy of the membership and find qualified not just popular people to run this club. [/b]

I agree with this 100%. Well said. This is the kind of attitude it will take to get it done.

Insurance is a rip-off, a raquet, a bunch of BS - IF YOU NEVER USE IT. But you have in in case you need to use it. It&#39;s a neccessary evil we all live with every day and if I ever need it, I will be glad I have it. I guess Matt has no life insurance - he must be self-insuring himself and his family...ya right.

To visit our policies is always the right thing to make sure we are getting the most for our money but to self insure? :duh:

[Mattberg]

Yea... we need 37 officials at an event. Pay the workers. With $2 million you could do some real damage to that premise that no workers would show up. And what workers do you know that are targets for a personal injury atorney? You have no idea what you&#39;re talking about. THere&#39;s no attorney in his right mind that would attempt suing a judgement proof worker. What are you going to get? Your attitude is what fuels this over insurance. You gonna&#39; sue some guy for his 91 GMC van and mortgaged house? Good luck. How many of our workers are raking in a couple million a year? No offense but it just isn&#39;t realistic. So what. We lose all of the workers worth more than a couple of million dollars. Find me three.

The workers will be there. So will the officials, less of them without the big business and dollars ego trip. A good thing. Do you check to see if a grocery store is insured before you walk in? Do you check your church&#39;s insurance before volunteering to help with a fund raiser? Do you call your school board to check on the liability insurance before you let your kids particpate in a bake sale? You guys or absolutely nutso. Most workers could give two shits about it unless they were looking to collect on medical from a previous condition for which they were uninsured and I have news... from the claims, it looks like there are a lot of those. Another problem solved.

Save the $2M, put it in the bank and call it a day. If we get sued, we get sued. No one is going down individually.

[charrbq]

Another example of twisted logic. No one said anything about suing a worker or any other individual. Any officer of the club, whether national or local can be sued and held libel in the event of negligence. Making it stick is a whole &#39;nother subject.
Any worker, official, entrant, spectator, track owner, etc. can be injured at an event.

I don&#39;t check the policy of my grocery store, because I know it&#39;s in place in order for them to be in business. I don&#39;t work or run races at race tracks or for organizations that I know don&#39;t have policies in place.

[Mattberg]

Uhh...yea. Someone said without insurance no officials or workers would show up. Can you read?

[JohnRW]

So...we should only look at "successful" litigation against race organizations & participants ? Oh my...how naive.

The cost of defending yourself against "unsuccessful" litigation can be devastating. Our tort system here is not &#39;loser-pays&#39; , so YOU are on the hook to defend YOURSELF against any and all litigation, regardless of merit, regardless of whether it&#39;s successful or unsuccessful. Makes no difference whether you&#39;re a driver, a flagger, or a concession-stand vendor...unless you&#39;re covered under a blanket policy by an organizer or promotor or sanctioning body....YOU ARE ON THE HOOK.

So...how much could you be liable for ? Google "joint and several liability" and do a little reading. In many states that we race in, your own "1% responsibility for an incident" could translate into "100% liability for that incident".

It&#39;s juvenile to assert that we should just drop all liability coverage.

Do I have questions re: SCCA&#39;s current insurance arrangements ? Yes. Had them for a long time...raised questions about the "General Counsel/Insurance thing" with my RE years ago...never gotten a satisfactory (to me) response...but that doesn&#39;t mean that there is evil lurking. We should have some clarity on the issue.

[lateapex911]

Uhh...yea. Someone said without insurance no officials or workers would show up. Can you read? [/b]

Maybe he can, maybe not to your satisfaction, but as you&#39;re a chronic malcontent, I doubt anyone can...

At least he&#39;s not rude.

And you wonder why everyone thinks you&#39;re just not worth reading?

[Mattberg]

John,

Do you have a net worth of $2 million without your "house and horse"? That&#39;s what an attorney looks for. Making you spend money on a defense is something only corporations do when they want something non-monetary. I had two cases last year. Won both. Your making a case where there is none. No one is going to sue an SCCA official thinking about making money... You may hate the tort system and like to cry foul but I have fallen victim to it many times and still believe it works in the end. How many times have you been sued in the last five years? The small guy has little to worry about in most cases and is certainly safe from the type of frivilous litigation you&#39;re making reference too.

Conversely, you and others have been scared into that fear to the tune of $2 million a year (of other people&#39;s money) thinking there&#39;s a bigger risk than there is. It&#39;s unreasonable. The largest claim I can find on the books for an insurance claim (other than Fran Am) since 1998 is $35,000 in a single year (15 claims). And BTW, in the case of Fran Am? Joanne Jensen desrves to be individually liable. Our protecting her and the rest of the BoD who were in on it sickens me. She should be in jail. Carrying insurance to cover people like her only lets them act in the irresposible way she and the other BoD members did.

To my knowledge no individual has ever been sued. Another thing... I&#39;m not sure but perhaps there&#39;s someone out there that knows. I think your homeowner&#39;s insurance covers you personally. Don&#39;t own your home? You&#39;re really making a federal case out of nothing.

So...we should only look at "successful" litigation against race organizations & participants ? Oh my...how naive. [/b]

Yes. That&#39;s how you guage risk.

[charrbq]

Uhh...yea. Someone said without insurance no officials or workers would show up. Can you read?
[/b]

I&#39;m sorry, I don&#39;t always catch your logic or intent. I feel I&#39;m not alone in that problem. But what are you refering to, my previous post?

[JeffYoung]

Matt, enjoyed meeting you at Roebling a few years back. You were a good guy in person.

We just don&#39;t see this eye to eye so I&#39;ll leave it at that. No more posts from me. Good luck to you. While I disagree with a lot of what you say, I do think you think you are doing what is right.

Jeff

[Mattberg]

Would you pay $47,000 a year to insure your car?