We believe Contractual Bonus Insurance is heavily underutilised; the financial benefits it can bring, marketing opportunity, and fan engagement, are all reasons why sports players, sponsors, and teams should consider using it.
So, what is Contractual Bonus Insurance and how does it work? Let’s start by considering Contractual Bonuses themselves.
What is a Contractual Bonus?
A typical Contractual Bonus can be defined as:
‘A bonus which is stated to be contractual may be expressed as […] An entitlement to a certain amount of bonus, often in accordance with a specific bonus formula.’[1]
When we talk about Contractual Bonuses at McClarrons Sport, we are referring more specifically to performance-based incentive bonus payments, payable to sports individuals, teams, or associations.
What is Contractual Bonus Insurance and how does it work?
Such Contractual Bonus payments can create serious financial risks for a sponsor, association, or team (i.e. whoever is offering the bonus incentive), and as such, insurance can be a useful way to mitigate the financial exposure.
Using a Contractual Bonus Insurance policy means insurers take responsibility for these results-based bonus payments and, usually, the premium for one of these policies is a mere fraction of the cost of the overall exposure (bonus). As with a traditional bookmaker, the probability of a certain outcome being achieved is calculated, with a valuation put on this – ultimately, the insurance premium. With the premium often substantially less than the bonus payment, this might even mean you can offer a bigger prize than you originally thought possible.
How creative can you be with Contractual Bonus Insurance?
In short, pretty creative. Just take a look at some of the Contractual Bonuses we currently have on the go below.
The GoRacing in Yorkshire Wonderhorse
GoRacing in Yorkshire is offering a £100,000 bonus to the connections of any horse that wins at all 9 Yorkshire racecourses throughout 2022 and 2023 (between 26/3/22 and 31/12/23).
Read more about the sponsors involved and the bonus setup here.
2020ProTour
In golf, working closely with one of the founding members of the tour – Chris Hanson – McClarrons Sport is this year offering £10,000 to any player who wins at 2 of the 3 Majors in the 2022 season of the 2020protour.
The Northumberland CCI2*-S Challenge
This multi-faceted bonus offers horse and rider combinations entering the CCI2*-S at all three venues – Belsay International Horse Trials (2nd-5th June 2022), Alnwick Ford International Horse Trials (24th-26th June 2022), and Hambro Sport Horses Burgham International Horse Trials (29th-31st July 2022) – the opportunity to win cash bonuses as follows:
- Horse and rider combinations who achieve a top 3 placing in the CC12*-S at all three events will win a £3,000 bonus
- A horse and rider combination who wins the CCI2*-S at two of the three events will win a further £7,000 bonus, so a total of £10,000
- A horse and rider combination who wins the CCI2*-S at all three events will win a further bonus of £12,000, making an amazing total of £22,000.
Read more about this bonus in Horse & Hound magazine here.
Why consider using Contractual Bonus Insurance?
There are a number of reasons why Contractual Bonus Insurance may be of benefit to you:
- It can provide sponsorship opportunities for potential supporters that they will actually get excited about, and that will cost them less; this could mean a greater likelihood of securing sponsorship
- Opportunity for great exposure – by combating the financial exposure faced by offering such a bonus through use of insurance, the more exciting and impressive bonus you might be able to afford – this, naturally, can pique the interest and engagement of followers, providing you with a great deal of exposure. Not only this, you can differentiate yourself from the crowd, like those associations in the above examples have, gaining attention for your creative bonus incentive
- No financial risk – the bonus-payer is alleviated of all uncertainty around the bonus payment by paying a lesser premium and the insurer(s) taking any additional responsibility for the bonus payment itself.
What’s not to like?
If you think Contractual Bonus Insurance could be of benefit to you, your sponsor or an association or client you work with, contact us today!
Speak with our Associate Director, Tom Landale, on 07710 417127 or you can email him at tom.landale@mcclarronssport.com.
[1] ‘Bonus Disputes’, EM Law, https://emlaw.co.uk/employment-law-firm/bonus-disputes-solicitors/#:~:text=Contractual%20bonuses,with%20a%20specific%20bonus%20formula
