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The threat of terrorism pushes up insurance costs for sports stadiums nationwide and puts some carriers out of the market altogether. Raymond James Stadium is dropped and needs to find a new insurer within two months; Tropicana Field has seen its costs for coverage skyrocket.
By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times, published August 27, 2002
TAMPA -- Raymond James Stadium, home of the Tampa Bay Buccaneers and onetime Super Bowl host, is paying a steep price for its high profile in an era of heightened terrorism concerns.
The stadium is being dropped by its property insurer.
Stunned by receiving a nonrenewal notice this month, operators of Raymond James Stadium are scrambling to find replacement coverage for the 65,000-seat landmark within two months.
An independent insurance consultant hired by the Tampa Sports Authority, the stadium owner/operator, was blunt about the likely scenario: at least a 30 percent jump in premiums under a new insurer and no guarantee that terrorism attacks will be covered.
"It's a tough bind to be in," said Henry Saavedra, TSA's executive director.
Raymond James isn't the only sports venue caught in the fallout of Sept. 11.
The city of St. Petersburg is paying about $1-million to insure Tropicana Field, or five times more than last year when the domed building was included in a blanket policy with other city buildings. And Tropicana's new policy doesn't cover acts of terrorism.
Elsewhere, Royal Insurance Co. of America in June refused to renew a $500-million property policy that the Maryland government bought to protect state property, including Camden Yards baseball stadium.
And those places that have found coverage are paying mightily. According to Stadia magazine, a national trade publication, baseball's Milwaukee Brewers are paying $2.25-million for coverage that includes terrorism, up from $255,000 last year.
"Stadiums have been some of the most severely affected structures post-9/11," said Bob Hartwig, chief economist with the Insurance Information Institute.
He noted that sports and entertainment venues are viewed "among the most attractive targets" to terrorists because they combine high property values with tens of thousands of people congregating in a small area.
It's difficult to assess the full impact of the insurance crisis on the sports world.
"There are some teams that haven't said what has happened" with insurance coverage, Hartwig said. "There's no list because no one wants to broadcast this."
Indeed, the Bucs were reluctant to discuss their insurance status in the months after the Sept. 11 terrorist attacks. Reached late Monday, Bucs spokesman Jeff Kamis said he did not have enough information about the insurance issue to comment on the implications for the team.
Congress has waded slowly into the terrorism insurance morass. The House and Senate passed separate measures to help insure against terrorism losses. But there is no guarantee of passing a package that will ease the burden on sports stadiums.
As of now, there are no easy answers.
Some venues, such as the Ice Palace in Tampa, have gone the self-insured route. Detroit billionaire William Davidson, who runs the Ice Palace and Tampa Bay Lightning, for years has coordinated financing to cover his plants around the world as well as his entertainment holdings.
But self-insurance is hardly a panacea, particularly if there are severe damages.
Post-Sept. 11, some property owners have considered pooling their risks into a single policy, although that option has yet to catch on.
Raymond James Stadium could opt to go without coverage, known as "going bare," but experts warn that is the most perilous route of all.
In case of a catastrophe, not just the sports authority but also the Bucs, area governments and any entity with even a tangential financial link to the stadium could be at risk of being sued.
Lawsuits "wouldn't stop at the owners of the facility," Hartwig said. "They could name police, private security, everyone. ... The costs could be blinding."
The city of St. Petersburg is well aware of its looming financial liability if terrorists strike Tropicana Field. City officials said they tried to find an insurer to cover terrorism but couldn't.
"This terrorism stuff was never, ever contemplated by the insurance companies. They just never dreamed of it and never priced it," said John McCoy, risk management analyst with the city.
McCoy said the city was lucky to find the property insurance it did, even though it was forced to break out Tropicana Field as a separate policy, limit coverage and pay five times more.
Brown & Brown, a general insurer helping the city, put the package together just before Tropicana Field's existing coverage expired April 1.
"It was a struggle. It was ugly," McCoy said.
In Florida, state regulators have rejected attempts by property insurers to exclude terrorism as part of their coverage. But the Florida Department of Insurance does not regulate so-called trophy properties such as landmarks, sports arenas and skyscrapers. They're on their own to negotiate policies.
"The unregulated market cuts both ways," said Kevin McCarty, Florida deputy insurance commissioner.
"In prosperous times in the mid 1990s ... that really translated into cheap insurance for commercial risk, particularly for large commercial risks. But in hard markets, they're at the other end of the extreme."
The property insurance market has been facing spiraling costs for more than a year.
"We were scared this time last year even before Sept. 11," said Saavedra of the Tampa Sports Authority.
The sports authority paid $266,167 in premiums this year for property, liability and auto insurance at Raymond James and three area golf courses it manages, documents show. That's up 30 percent from the 2000-2001 season. Since 1998, the vast majority of its claims have been small liability issues, mainly from errant golf balls that hit auto windshields.
The $170-million stadium has had the same insurance set-up since it opened in 1998. K&K Insurance Group, based in Fort Wayne, Ind., is the managing general underwriter for the stadium, shifting most of the risk to TIG Insurance in Dallas.
Bill Pondrom of TIG said his company was in an exclusive arrangement to handle all of K&K's sports and entertainment insurance business. K&K this year decided to sever the contract after TIG's insurance rating dipped slightly, Pondrom said.
A K&K spokesman could not be reached for comment.
According to Otto Henderson, a local insurance consultant hired by the Tampa Sports Authority to find replacement coverage, K&K merely said in a letter that it was withdrawing from the stadium business and didn't have the capacity to handle it.
"If the authority had a bad loss ratio, they might have put it in there, but we've had very (mild) losses," Henderson said.
The stadium's current policy expires Oct. 1, but the Tampa Sports Authority contends it should have an extension until Nov. 7 because it wasn't given a required 45-day notice before being dropped.
None of the alternatives comes cheap. Henderson expects to pay 30 percent to 40 percent more for a new policy that would provide less coverage and may not cover terrorist attacks.
The stadium has been insured at full replacement value. But Henderson is hoping that the authority will be satisfied with a policy that provides partial replacement value, perhaps as low as 60 percent.
"Because nobody's going to blow up the whole stadium," Henderson reasons. "There's going to be something left there."
-- Times researcher John Martin contributed to this report. Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.
RAYMOND JAMES STADIUM
The Tampa Sports Authority paid $266,167 in premiums this year for property, liability and auto insurance at the stadium and three area golf courses it manages, documents show. A new policy is expected to cost about 30 percent more, with no guarantee that terrorism would be covered.
TROPICANA FIELD
St. Petersburg is paying about $1-million to insure the home of the Devil Rays, or five times more than last year when the dome was included in a blanket policy. Acts of terrorism are not covered.
CAMDEN YARDS
Royal Insurance Co. of America has refused to renew a $500-million property policy that the Maryland government bought to protect state property, including Camden Yards, home of the Baltimore Orioles.
MILLER PARK
The Milwaukee Brewers are paying $2.25-million for coverage that includes terrorism, up from $255,000 last year, according to Stadia magazine.