In the Loupe
In the Loupe
When It Snows, You Win: Inside the World of Prize Indemnity Insurance ft. Tokio Marine HCC
Prize indemnity insurance might sound like a dry financial topic, but Robin Lang from Tokio Marine HCC reveals it's actually one of the most exciting marketing tools available to jewelers today. We discuss how retailers can offer customers full refunds on purchases if certain events occur – like six inches of snow on New Year's Day, or a Safety during the Super Bowl – while paying just a fraction of the potential cost themselves.
Robin walks us through the mechanics of these promotions, explaining how her team of actuaries analyzes decades of historical data to calculate the odds of specific weather events or sports outcomes.
Learn more about Prize Indemnity with Tokio Marine HCC: https://www.tmhcc.com/en-us/products/contingency/prize-indemnity
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Welcome to In the Loop, or if it rains on your wedding day promotions and things like that, where you get your money back on your purchases or the retailer pays out purchases If it has some specialty event. That's probably low percentage, but it does happen and it's these really cool promotions. I feel like that really change up the marketing landscape for a store a little bit and we talk about how those events happen and how they are able to calculate the odds so that their business doesn't go under if you know, a blizzard surprisingly happens or something like that. It's a cool conversation. Maybe that's something that you'd want to try out for your store and if you're interested, their information is in the show notes below. Thanks and enjoy.
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Speaker 1:And now back to the show show. What is up everybody? My name is Michael Burpo. I'm speaking with Robin Lang from Tokyo Marine HCC. How are you doing today?
Speaker 3:Robin, I'm great, thank you. Thanks for having me.
Speaker 1:I'm so excited to get a chance to speak with you. I've heard a lot about these. You know promotions and you know very commonly referred to as like blizzard promotions or rain on your wedding day promotions, things like that. Can you sort of set up for the audience what it is that Tokyo Marine does?
Speaker 3:Sure, in this specific category, it's what we call prize indemnity and weather promotions, and essentially I mean it is insurance. So it may sound boring, however it's the exciting insurance I like to call it. And prize indemnity is really a marketing tool, a way for companies to offer, you know, these large prizes but really pay just a fraction of the cost. So, you know, keeping very mindful of their balance sheet and and, like I said, offering like a million dollars, $10 million, you know, full refunds and, but the insurance policy is paying off and so they're really only paying a fraction of that price.
Speaker 1:Very cool and it's usually tied to some type of event. Are you guys very like statistic or data driven, in that we know exactly what the likelihood an event is going to be, because I imagine where I'm at it's snowing right now, so it's going to snow no matter what versus. You know, maybe in the South it's a half of a percent of a chance. Is that something you guys are running like, so that you know what the likelihood of an outcome is going to be?
Speaker 3:Yeah, absolutely, you're spot on. It really is a numbers game for us, even the weather, which is completely unpredictable, as we say, but we try to make it as predictable at least a numbers standpoint as possible. So that's not just weather. So we do a lot of other types of promotions, like online promotions and probability type promotions, sports, statistical promotions, and with weather it's the same way. What we're doing is we're basically looking at the number of times that this particular threshold hits, and so it becomes a numbers game, and we look at 30 years in the past days around it, and so it's just really a pure calculation for us.
Speaker 1:Really interesting. So, to give an idea, could you set up, for example, what one promotion might look like? So, for example, how far ahead of time is someone contacting you to set up something, and then what is it? Is it usually around a holiday or a time of the year?
Speaker 3:Yeah, oftentimes I say for jewelers the most popular time is during the holidays. So they'll say, you know, come in and make a purchase from Black Friday until Christmas Eve, and if it snows six inches on New Year's Day, you get your purchase for free. And so, really, timing standpoint, people will start planning maybe October or so. But we always say, you know, what you want to do is plan ahead. Give yourself enough time to be able to market this properly, get the word out about your promotion. That way you can start to, you know, generate interest and generate awareness and really be prepared, you know, not only for yourself but training your employees so that they understand the promotion.
Speaker 3:And one of the biggest really recommendation that we say too, is make your promotion believable, because if you say, you know you're on upstate New York and so six inches of snow, oh easy, that's totally believable. Same for us, and we're from Boston. But if you said you know, if it's no six inches at LAX, no one's going to believe that. So I mean, who knows? But yes, you definitely want to make it, you know, simple, easy to understand and believable, because because that's what's going to, you know, generate the interest and that's going to give people the incentive to be like, yeah, that definitely can happen. So why wouldn't I buy, you know, my jewelry from the store?
Speaker 1:So that's kind of like the buy now reasoning is that you should go with this business and spend your money with them because you have a whatever 5% chance that you get a full refund. Is it usually a full refund or are there more customizable terms Like what have you heard in the past for different stores?
Speaker 3:We typically will see full refunds, just because that's that's easier to communicate. Um, however, really we'd leave it up to the stores so they can, they can pick whatever they want. You know, maybe it's you get, um, you know, a thousand dollars back, or or you can get something else, but, um, but really it's again easy to communicate, you just get a full refund on your purchase.
Speaker 1:And we can get into results later on the episode. But if you don't want me asking what percentage of events actually have to pay out, do you have any statistics around?
Speaker 3:that Um, I? It's a hard question to answer. We absolutely have paid out, for sure, um, but because it's kind of a you know, it's all statistical in nature, like if you run it for a long time, then eventually it's going to happen, um, and so I can't say, like every five promotions we pay out. But all I can say is that we absolutely do pay out, um, and it just, you know, just like with the lottery, there's maybe the odds are long, but it could happen, there's still a chance to happen, and so you know, I can't give a definite number, but statistically speaking it's going to happen.
Speaker 1:Yeah, and so we've talked about, you know, rain on your wedding day. That's one that I've seen before. I've seen snow on I think it's on Christmas, and that amount, I guess, matters a little bit less because it's dependent on the location One of the ones I've heard about but this isn't related to jewelry, even in the slightest but my mom growing up in Syracuse, the Syracuse University team, the men's basketball team, if they scored over I think it was over like 75 points or something in a game, then you would get free like five chicken nuggets or something from like a local place. Is that something you've seen?
Speaker 3:like sports related to promotion events Definitely, and that's probably one of our more popular promotions to ensure too. So we do. You know all sorts whatever you can tie a number to. We insure. So we insure a large furniture retailer out in Massachusetts and they have an endorsement deal with the Red Sox and so oftentimes when you have these endorsement deals, they're expensive and so you're always looking for ways to monetize that investment, get your return on investment. So they run a promotion, you know, around the Red Sox, and you know sometimes it's if they win the world series, it's a no hitter.
Speaker 3:And we are like we have a team of actuaries looking at this and so we're like, oh, how often does this happen? And does it make a difference if it's American league or national league? And and you know, it doesn't make a difference if it's before All-Star break or after All-Star break? And so, yeah, we're always crunching numbers and you know sports, it could be, you know, a certain feat to happen. But it could also be, you know, for we ensured a promotion, pretty sizable one for a billion dollars, where if somebody predicted the perfect lineup during opening weekend of the NFL, then they win a billion dollars. So that in that aspect, we're not looking at really statistics and yes, we are, but we're looking at results from past contests that they ran and we're looking at, like, well, how many people you'll probably have the average. The average person is probably going to be maybe 90 percent of the population that that submits an entry, but then you're also going to have people who are like office pools or like polluting, you know so. So we have to take that into consideration too, and so so it really is like a number crunching analytical process that we go through.
Speaker 1:Yeah, Wow, what a really neat kind of concept and it keeps us sort of fun. But, like with the Red Sox and a side note boo, we hate the Red Sox, we love the Red Sox able to use, for example, like Red Sox, assets in their marketing pretty much all year round essentially, or all season, I guess being able to promote and say like, oh yes, we work with the Red Sox, blah, blah, blah. Like if, uh, if they score over 10 runs in a game, then, uh, you get 10% off your purchase, whatever. And being, how often do they score over 10 runs? It's like I guess that doesn't really matter, but they're able to use that promotion material so often that it's, uh, it probably pays for itself, I imagine.
Speaker 3:Yeah, right, right, and that that is the ultimate goal is to, you know, create sales and and boost your sales, um, and so you're getting your return on investment in that aspect.
Speaker 1:Really neat, Robin. We're going to take a quick break and when we come back I'd love to talk a little bit more about what the payout process would be like if this was to happen. So everybody, stay with us.
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Speaker 1:And now back to the show. What is up everybody? I'm still speaking with Robinin lang from tokyo marine hcc and we're talking about uh, I keep saying, weather-based promotions, but I'm learning that's not the name for this episode, it's more like how, how do you categorize it?
Speaker 1:promotions okay, yeah, and shake promotions yeah so let's, we were just talking about some of these long shot events like a billion dollars in case someone hits this crazy. It's almost like a parlay, but I'm assuming some of them probably have shorter odds than that and probably smaller payouts. So what is the the actual payout process look like? Let's say it's if it snows over one inch on Christmas day and it does. How do you because I'm sure that immediately, people who bought their jewelry from a jewelry store during a certain promotion period are immediately looking for their money back and they're anxious and they want to make sure it's real how are you communicating with the customer, retailer and, of course, your, your business?
Speaker 3:yeah. So with if there is a payout, the policy holder is usually the store, and so we'll actually pay the store, which, and it doesn't take very long, depending on the limit. Um, we say 30 days, give us 30 days, but usually it's much, much faster than that. And so we say, in the terms and conditions for the, for the store just say, you know, maybe it's six to eight weeks or something, um, to give yourself a little bit of a buffer. Uh, but what we always encourage too is to have the stores, you know, run this VIP event, Um, so again, we're paying the store and the store pays the consumer.
Speaker 3:Um, so, run this, run this, um, you know big VIP, you know wine and cheese, and have a special sale for these people come in to collect your money Um and off. And actually we talked to a store this past weekend at the show and they're like well, we give cash, you know we pay, we give their refund back in cash, because you know you're not going to let that money burn a hole in your pocket, you know you're going to actually use it and spend it right back into the store, which is great. And you know, usually with that too comes a lot of press. You know you'll get interviewed by local channels and one of our stores that we insured got interviewed by Today Show and yeah. So it's great press and you get a lot of excitement around it and you know people start talking about you and really you get known for the promotion and so every year they're, you know, very eagerly anticipating and waiting for that sales period to come up and they'll, and it gives you a competitive advantage as well.
Speaker 1:It's really quite interesting because you're totally right, it like becomes like a jackpot, which is so funny because, like they're not even the ones that like won, it's like they are the ones that are just like the intermediaries or the beneficiaries of it all, but uh, yeah absolutely.
Speaker 1:It's so fascinating though. So, um, I've heard of other events, um like with national rarities. They do these um estate buying events and when someone gets their money they actually offer yeah like um a percent increase or something if they sign the check back over to the to the business. But I, yeah like a percent increase or something if they sign the check back over to the to the business. But I, yeah like paying in cash and having, like you know, kind of like a making a to-do out of it is definitely something that sounds like it would be really beneficial to do.
Speaker 3:Yeah, for sure. Yeah, and it's worked out pretty well and it's. It's so exciting for the stores and even for us to see that you know like it can, because good publicity for them is good publicity for us. So, um, it really is a win-win and so I guess it.
Speaker 1:I'm assuming that is like a net positive event for the store. Um, is that something then they are going to? They just build it into their marketing calendar. Are you seeing stores that like, like you said, doing this year after year? Is this something? Do they usually keep the goalposts the same so that they can speak about it more regularly, or is it? Are they changing it? What do you find?
Speaker 3:We find that, yeah, usually they'll run it around the same time and people who have run it once usually do run it again because, again, consumers love it.
Speaker 3:And so they, they really want they're anticipating them to run the promotion again every year around that time. That said, too, we we have stores that will run it multiple times, so not only the holiday season, but we have a store that runs it if it hits a hundred degrees on July 4th. So, yeah, so it's, it's really flexible, the product at least, and so you can really cater it to whatever time that you need. And oftentimes we'll say, like, if there's a, a lull, and say and saw the sales there, maybe, you know, I don't know, like April it might be a downtime, and so they want to try to boost up sales during a lower, lower revenue generating time. Um, then you know, run the promotion then, because, uh, the promotion is theoretically supposed to boost sales, uh, and so you know, come in and during April, and if it's um, if it rains an inch on mother's day, uh, for example, um, so it's super flexible, um, so we can really cater and customize the promotion to to whatever the stores need.
Speaker 1:And you guys are in IJO, I believe correct. Yeah, We've been members for 21 years. Wow. So being a member of IJO.
Speaker 3:are you specifically working mostly with jewelers? Yeah, being in IJO.
Speaker 1:yes, I always that like networking effect I always see, especially with IJO. They're constantly always like working together and like sharing ideas and I can only imagine what like the buzz would be if you know someone hits on you know one of these promotions because it's just like, yeah, like that money kind of frees back up with the customer. And I could personally I would never let that money just sit in my pocket. I would have to go buy matching earrings now, you know that kind of thing.
Speaker 3:Obviously you have to. Yeah, and it's really great Cause I do like, the members are like family, you know, and so, um, and they're not like directly competing too, they're just, you know, they're jewelers from all over the country and so, um, everybody shares ideas and everybody, you know like, and there obviously are some things that don't work, and so they will share that too, like try instead of doing this, you know, maybe try this instead, or this promotion works great for us, and this is what we did, and so everybody is, you know, collaborating and sharing ideas and brainstorming, and so it really is wonderful to see, and, and anytime that you know we've had a hit or or or a store is like, well, you know, if anybody wants to know about the promotion, tell them to contact me, and we're, like, we're so appreciative of that support.
Speaker 1:Mm-hmm, and so if someone is interested in starting one of these, would they be able to approach you and just say like, hey, we have like a local sports team or something like that? Or is there like a vetting process? Because I know, like, for example, vegas, when it comes to setting lines and gambling and stuff like that, they sometimes don't take like amateur events because it's too uno, um unofficial. Do you guys have like oh, it has to be like a, like a either the weather or a professional team, or could you do this for like your local I don't know high school team or something like that?
Speaker 3:Um, so it gets. It's a bit more difficult with high school just because there's no stats. You know there's no stats that we can can run Um, but, uh, you know, like we usually call D1 schools, we can, there's a lot of stats around them. So it's it really is. If we can research it and find information and numbers, then we can ensure it, Um, but I mean no, no promotion is too small or too great for us, Um, and you know we, even if you don't uh, purchase the insurance, like, just call us, you know, we're happy to talk to you, we're happy to brainstorm Um, because we don't, we, although we are insurance geeks, we are marketing people too and we love talking to people.
Speaker 3:We love, um, we love create, getting creative and, um, and you know, if also, budget is always, uh, you know, a concern, is always, you know, a concern, and so you know we're really sensitive to that. And so we can back into budgets too, Like if they say, well, really, my budget is, you know, $5,000. That's it, that's max what I can spend. So we say, OK, sure, no problem, Well, why don't we do this? We'll back into that $5,000. And these are the ideas that you can do. So we love, we love, you know, we love customizing these promotion. That's what we do on a daily basis. I mean, there's, there's nothing that's cookie cutter for us, and we always love to think outside of the box too. So it's, it's. It's a fun, it's a fun.
Speaker 1:It sounds like an awesome, awesome niche to be in, because it's like a mixture of marketing data and statistics and also like gambling.
Speaker 3:It sounds like someone would be.
Speaker 1:This is exactly someone's cup of tea. That sounds very cool.
Speaker 3:Yeah, it's a lot of fun. We see something different every day.
Speaker 1:Now, Robin, if someone wanted to reach out and they were interested in running one of these events, what would the process be like and how can they get ahold of you?
Speaker 3:Yeah, probably the easiest way is to go to our website, which is wwwtmhcccom, so tokyomarinehcccom and then go to the prize indemnity section. My contact information is on there, or you can shoot us an email. Promotion, I think it's promotion ins. That's uh, H C, T, M H C, Ccom. Um, but I'm happy to talk to anybody. Um, this is uh. I love talking to people. I love, like, as I mentioned, I love getting creative and and uh, just spit balling, brainstorming. So uh, uh, anytime.
Speaker 1:And if anybody does one of these events and it does hit and it's like a cool, like crazy event, I would love to hear about that. That sounds really, really interesting, especially some of the stuff around local sports teams, just that that kind of stuff just integrates you so much more with the, with the community and the scene and stuff like that. That it's a layer beyond just like marketing. So I really, um, now I'm like thinking of as many ideas as possible, so it sounds like a really cool time.
Speaker 3:It is, and I'll have one, one short story for you. We uh insured a promotion for this jeweler Um, and he just like I don't know, I had really good at uh and really lucky, and so he ran a promotion around like the safety a safety happening during the Super Bowl. This is years back, um, and uh, he's a big Alabama guy, so it was an Alabama Auburn game, um, you know, if they shut out the other team and like he just had this string of of, it actually happened. And so the latest one was there was a safety. It was like first play of the game, um, and so I shot him a text and I'm like, okay, you're cut off, jokingly, of course, but yeah, he had a good run with the promotions and it was a lot of fun to see.
Speaker 1:The guy needs to stop being a business owner and become a full time gambler because, like that kind of stuff.
Speaker 1:I feel like that would pay out pretty good. Good for him. Wow. Thank you so much, Robin. I really appreciate your time. It's a really cool concept I love doing, having people do something different. You know, something that stands out a little bit more and, like you said, I could definitely see how this would be something someone would become like known for or something like that. So it's a really cool concept. I'm glad you guys are doing it.
Speaker 3:Yeah, thank you for having me. This is a lot of fun.
Speaker 1:Cool, everybody. We'll be back next week, tuesday, with another episode. Cheers Bye. All right, everybody. That's the show. Thanks so much for listening. My guest this week was Robin Lang with Tokyo Marine HTC. If you're interested in hosting one of these events, you can learn more in the show notes below. This episode was brought to you by Punchmark and produced and hosted by me, michael Burpo. This episode was edited by Paul Suarez with music by Ross Cochran. Don't forget to rate the podcast on Spotify and Apple Podcasts and subscribe for more weekly episodes and leave us feedback on punchmarkcom. Slash loop. That's L-O-U-P-E. Thanks. We'll be back next week, tuesday, with another episode. Cheers Bye.
