Well, it seems that finally someone is doing something about those
people that sell and purchase entries in violation of the race rules.
This has been an issue for some time and finally USAT is taking , in
my opinion , a very appropriate action to prevent this and send a
message at the same time. As the article clearly indicates, this is an
issue that affects us all and I will be glad to see the verdict.
Risk management: the fourth event
By Timothy Carlson
This report filed September 20, 2002
With the lawsuit filed against two San Francisco area men who
exchanged IDs to transfer an entry to the sold out 2001 Escape from
Alcatraz triathlon, USA Triathlon has declared a state of war to
preserve the sport from possible calamitous insurance increases.
USA Triathlon filed suit late last month in San Francisco Superior
Court against Dakin Ferris, a member of USA Triathlon who sold his
2001 Escape from Alcatraz entry to Charles Martin, who is not a
member. In the race, Martin was hit by a car, which illegally entered
the course, and suffered a broken clavicle and other injuries. Martin,
who obtained his entry by falsely presenting Ferris' identification,
later sued both the driver and Tri-California, the organization in
charge of the race, for injuries and damages. Tri-California is
insured through USA Triathlon, and any awards or costs to defend
Martin's lawsuit will be borne both by the insurance company and by
USA Triathlon members in the form of raised membership and race-entry
USA Triathlon attorney Howard Jacobs said that the normal athletes'
waiver required by race organizers "indemnifies the race organizers
against damage complaints in California courts. However, if the waiver
is forged, the waiver may not apply" and may ironically help the case
of the plaintiffs who have fraudulently entered the race.
Both Ferris and Martin are being sued for intentional
misrepresentation, negligent misrepresentation, contractual indemnity
and declaratory relief. Ferris is also being sued for breach of third
party beneficiary contract for selling the race entry.
"Lawsuits like [Martin's] could put our sport out of business," said
Steve Locke, USA Triathlon executive director. "That's why we must
work to keep people from buying and selling race entries and reprimand
those who do."
Locke said that the insurance picture for triathlon has been good
thanks to heightened safety awareness among race directors, but
increases are looming. USA Triathlon paid $500,000 in insurance
premiums in 2002, but that figure is likely to increase to $600,00 to
$800,000 in 2003. Locke said the loss ratio (payouts versus premiums
collected) have ranged from 5 to 15 percent in the past three years,
well below the threshold of other sports. But only a few lawsuits like
Martin's and other pending suits could turn those figures upside down.
In a worst-case scenario, says Locke, "Triathlon could lose its
insurance coverage altogether or have rates rise catastrophically."
To put the current situation in perspective, Mike Price, President of
ESIX (Entertainment Sports Insurance Experts) of Atlanta, the firm
that handles risk management for USA Triathlon and many other sports
such as cycling, gymnastics and volleyball, says the impending rate
increases arise from a combination of factors both inside and outside
"The World Trade Center attacks of 2001 have had a big effect on the
overall climate," said Price. "The insurance industry as a whole
offered $160 billion of coverage in the US. Estimates are that $60
billion of that coverage will be paid out for victims of the September
11 attacks, leaving $100 billion coverage available. That turns
insurance into a seller's market, with insurers being more selective
and raising rates across the board."
Price added that many sports are now facing 100- to 150-percent
increases in premiums. While triathlon has much better loss ratios
than those sports, he noted that one or two major lawsuits could push
triathlon over the 75-percent loss ratio threshold into a higher
In addition, said Price, the very rise in popularity of the sport has
increased the risk. First, the sheer numbers increase odds of payouts.
"And with more races selling out," said Price, "you see a lot more
impulse for bandits to try to sneak into races."