Making a hole-in-one in a golf tournament is a win for a golfer, but for event sponsors that have to pay out significant prize money, these wins can be costly.
Key Details
- Hitting a hole-in-one during certain fund-raising golf tournaments means the player will receive significant prize money—paid for by the host or the event sponsor.
- Amateur golfers have about a 1 in 12,500 chance of hitting a hole-in-one, so the prizes are enticing—new luxury cars, cash prices, or even vacations, The Hustle reports.
- Often, these massive prizes are too much for the event sponsor to cover, resulting in the need for hole-in-one insurance.
Why it’s news
Big prizes at fund-raising golf tournaments lure in players and help generate more money for the charity. Rarely do players hit a hole-in-one, but when they do, the payout is significant.
Hole-in-one insurance is a secret industry behind the world of golf that brings in significant revenue every year. Like many other forms of insurance, hole-in-one insurers collect a regular payment from clients but have to pay out with less frequency.
Pro golfers may only have a 1 in 3,000 chance of hitting a hole-in-one, but golfers in the U.S. play around 450 million rounds of golf each year, The Hustle reports. With so many golfers, holes-in-one are scored daily—an estimated 128,000 annually.
There are around two dozen liability companies that event sponsors can choose from. Typically, golf event organizers will partner with a sponsor like Volkswagen. The company will offer a prize, such as a new car, for any player who makes a hole-in-one.
The sponsor will then reach out to an insurer like Hole In One International, one of the oldest hole-in-one insurers in the U.S. The company then calculates a fee per golfer based on several factors determining the likelihood of a hole-in-one during the tournament.
Costs can vary greatly. For example, if insured by Hole In One International, a $3,000 Hawaiian vacation prize could cost a sponsor $150 for up to 144 players. A $60,000 Mercedes-Benz E550 prize, however, can cost anywhere from $865 for 72 players to $1,686 per player for 144 players.
Hole In One International insures around 15,000 events annually and pays for hundreds of holes-in-one—occasionally very costly ones.
In 2021, for example, three players scored a hole-in-one during the women’s LPGA tournament. Each player was awarded a year-long lease on a Lamborghini. Hole In One International owner Mark Gilmartin says the company had to pay around $300,000, The Hustle reports.
Each year, the company pays anywhere from $2 million to $4 million in insurance claims, but Gilmartin says the insurance company always ends the year with a profit.