Refunds and Insurance

There is a thread in Race Directors Hub that deserves more space than a Facebook thread allows – hence this long blog post.

The real question in the thread was if a race should use insurance to cover refunds, and that really depends on the brand the race wants to project. Here are some common alternatives we see:

  1. No Refunds. This is what most races do, however it may not be the best approach. There are typically relatively few people who want a refund more than 1 week before the race, and you can make someone pretty upset by refusing a refund, which can be bad karma for your race and impact your true customer relationship management. It is also useful to note that customers can request a chargeback from their credit card company, which is increasingly approved – so the race is losing out on the fees plus a $15-25 chargeback processing fee the banks charge. Meaning the no refund option is increasingly meaningless.
  2. Bob helps with two 1,000 person races each year. Our stated policy is no refunds and we explain that all proceeds go to the charities the races are being held for. If someone sends me an email, I give them a free coupon for next year’s race as a proactive measure instead of a refund. This has made people very happy and brings them back.  This is a great way to go for small to mid sized races.
  3. Vacation Races has very liberal refunds policies well before the race, which makes it safe for participants to sign up early and know they can get their money back or defer to next year. As you will see on their page if you click, they use RunSignup’s videos to help explain how to get refunds and deferrals. You will note that there are a variety of ways to produce income by charging fees when people get a refund or deferral. This is a great way to go for most any size race.
  4. Refund insurance. The nice thing about insurance is the “plausible deniability” to your race. If the insurance does not cover the refund (because they don’t accept the excuse of my cat ate a dime (true story about Bob’s cat), it is the bad insurance company not the bad race). Different vendors offer different approaches. As the thread stated IMAthlete bundles this (although they charge a higher processing fee to offset the cost), RunSignup offers Allianz as an option, and the race gets to keep 20% of the insurance fees collected, and other providers keep the revenue share from the insurance companies. The insurance typically has minimum fees, so this is a better option for higher cost races like Triathlons and marathons where there can be more injuries in the training leading up to a race.

As you can see, all choices have some validity for different situations.

Just to add, there are three types of insurance races should look at to see if they make sense for the race:

  1. Cancellation insurance – protects the race if there is something like a hurricane that causes your race to be cancelled.
  2. Liability Insurance – protects the race in case of a participant suing it for an injury for example. Provided by RRCA, USATF, USAT, and some emerging providers.
  3. Registration insurance – for participants to get a refund in case they are injured or a few other reasons depending on the insurance. Note, RunSignup offers Allianz to all races, and the race is able to earn 20% of the insurance fees as extra income to the race.

RunSignup has partnerships in all of these areas in our Marketplace under Insurance.

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