The backbone of the insurance program for International Speedway Corp./NASCAR is the spectator/participant liability insurance policy.

Essentially a general liability policy specific to the motor sports industry, "this is the broadest liability policy that I've ever seen," said David A. Holcombe, ISC/NASCAR's risk manager. "It covers just about everybody for an event."

He ticks off the covered insureds: "As a track, we are required to name the sanctioning body as an additional insured. Not only do we cover the sanctioning body, but we cover every car driver, car owner, car sponsor, bike owner, bike rider, bike sponsor as an additional insured. We cover every sponsor of the event."

The policy also covers such exposures as product liability and coverage for selling food and beverages.

It also covers injuries to drivers who allege the injury arose from a rule infraction, "and even though the track didn't make the rule, it was NASCAR or AMA (American Motorcyclist Assn.) or whoever it happens to be, they're defended under the policy," Mr. Holcombe said.

"It's a huge policy that's almost like an umbrella that covers the whole event," the risk manager said. "We cover the municipalities that provide fire, rescue and police to us. We provide medical malpractice for the doctors and nurses who work out of our facilities."

This policy was developed because "it would be extremely difficult to try to control insurance coverages for each one of those individual entities," Mr. Holcombe explained. If they were all insured individually, "if something happens, everybody's going to start finger-pointing because they're separately insured," Mr. Holcombe said. "This way, everybody's insured by the same insurance company, and it just flows so much more smoothly."

That scope makes the "spectator/participant" policy decidedly unique, and not surprisingly, there's a very limited universe of insurers willing to provide the coverage. "Consequently, we are more susceptible to market swings, as any narrow niche in the market would be."

Obviously, given the importance of the coverage to an operation like ISC/

NASCAR and the potential volatility of the market, the state of the spectator/participant liability insurance market is a key concern for Mr. Holcombe.

"Part of my job is to nurture competition," Mr. Holcombe said. "The thing that has kept the rates reasonable and decreasing is obviously the overall market is soft. But, we have developed four very good, viable markets who compete with each other.

"There is real competition within the motor sports insurance field now, and part of my job is to make sure that continues," Mr. Holcombe said. "If somebody comes to me and says, 'I'd like to start up a new motor sports program,' if I think it's legitimate and has a chance, I'll do whatever I can to help them and make sure that it's a good product and a sound company."

The soft market, the presence of four viable markets for the spectator/participant liability coverage and Mr. Holcombe's aggressive approach to loss control have brought costs down dramatically.

Since 1988, for example, ISC's premiums for the coverage have been cut almost in half, while coverage terms have broadened.

"Obviously that has a lot to do with the overall market. Reinsurance is cheap," Mr. Holcombe said. "But also, there were only two markets when I came aboard in 1988, and now there are four, and they write national motor sports business. So I'm quite comfortable with the fact that some of that decrease is due to that competition."

ISC's spectator/participant liability insurance is underwritten by TIG Insurance Co., with excess layers written by RLI Insurance Co., Chubb Corp. and Gulf Insurance Group. The coverages are placed by K&K Insurance Group Inc. of Fort Wayne, Ind.

"It's a partnership when you're dealing with the product," he said. "I believe I bring some expertise to them to help them fine-tune their policy and keep up with the way race tracks are evolving."

Varied and diverse exposures at ISC/NASCAR are covered under the workers compensation program as well.

"That covers essentially everybody from International Speedway Corp., fire personnel that rescue drivers to ticket takers," Mr. Holcombe said. It also includes food service workers, clerical workers in the ISC office and others.

"From the NASCAR side we have the inspectors who stand out there and check the cars and stand out there every race and make sure rules are being adhered to," he said. "We've got pilots and boat captains."

Workers comp coverage for both ISC and NASCAR is underwritten by the Travelers Insurance Co., as are the two entities' automobile policies, and both are placed by Poe & Brown Inc. of Daytona Beach.

Employment practices liability, directors and officers and fiduciary liability coverage for both entities are with Chubb, also placed by Poe & Brown.

Poe & Brown also places both ISC's and NASCAR's property coverages, which are written by Gerling America Insurance Co.

"Overall, the property rates for most of your motor sports facilities are pretty low," Mr. Holcombe said. "They can approach HPR rates if it's a steel grandstand."

But, the Daytona Beach location of most of ISC's property, with

the Atlantic Ocean in view from the top of the Daytona International Speedway's Winston Tower, spells hurricane exposure for insurers, creating some concerns. "ISC has a little bit of a problem on our property exposure basis, because the vast majority of our property values are here," Mr. Holcombe said. "The biggest facility (is here); we have an interactive museum entertainment complex here, two large office complexes."

But overall, ISC's property portfolio benefits from its diversity, with tracks from Phoenix to Alabama to upstate New York. "Because they're all scattered around, it's not a difficult product to get right now," Mr. Holcombe said.

Last year, Mr. Holcombe successfully pressed an unusual property claim after the summer wildfires that raged through Florida prompted ISC to postpone its July 4 race at Daytona International Speedway.

The postponement cost ISC an estimated $1 million, but because civil authorities would have forced postponement of the race if ISC hadn't done so voluntarily, Mr. Holcombe sought coverage under the property policy's civil authority clause in its business income form.

Ultimately, after traveling to New York to meet face-to-face with underwriters and claims managers and months of discussion, the insurer paid ISC's claim.

NASCAR carries a contingent excess liability policy from Gerling that provides excess coverage above an individual track's coverage. Excess layers are written by Transcontinental Insurance Co., Great American Insurance Co. and Travelers.

The motor sports sanctioning body has an extensive aviation department, which includes seven planes and full hangar facilities in Daytona Beach and Charlotte, N.C. NASCAR also has several pleasure boats that are used for entertainment purposes.

NASCAR's aircraft coverage is with United States Aircraft Insurance Group, placed by Hilb, Rogal & Hamilton Co. The company's yachts are insured by Lloyd's of London syndicates, with the coverage placed by Poe & Brown.

Construction wrap-up coverage on the speedway ISC is building in Kansas City, Kan., is with CIGNA, placed by Marsh Inc. in Kansas City.

The coverage will be rolled over to cover construction of another new track to be built in Joliet, Ill., with that coverage handled through Marsh's Chicago office. Builders' risk coverage on the projects is with Reliance National Insurance Co.

Employee benefit programs for both entities are self-insured and self-administered, with stop-loss coverage that includes both specific and annual aggregate limits provided by Employers Reinsurance Corp.

Medical insurance for NASCAR race drivers is placed with Lloyd's syndicates by Naughton Insurance Agency. Claims are administered in-house through an operation known as the Competitor Liaison Bureau.

Typically, Mr. Holcombe places the ISC/NASCAR coverages out for bids every three years, except for the spectator/participant coverage, which is put out for bid every year. While this causes some "wailing and gnashing of teeth" by brokers, he considers it necessary to seek annual bids because "it's such a narrow market that swings can occur very quickly," he said.

Pricing for that cornerstone coverage of ISC/NASCAR's insurance program is currently relatively affordable, but Mr. Holcombe concedes that that situation could change.

"At some point down the road, let's face it, if we go back into a hard market, all the competition in the world isn't going to stop those rates from going through the roof," the risk manager said.

In anticipation of such a change, ISC/NASCAR has studied the possibility of forming a captive.

"We have looked at captive programs, done some groundwork for a captive down the road," Mr. Holcombe said. "I believe right now is not the time to be in a captive. It's the time to be ready to be in a captive.

"We'd have a good spread of risk, we know the business," the risk manager said. "So if the market got relatively tight, it would be relatively easy to put a captive in place.'