Knowing Buffett likes baseball, junk food and favorable contest probabilities, I'm betting Berkshire is the insurer behind this promotion ;-)
IRVINE, Calif., Oct. 22 /PRNewswire/ -- World Series batters who step up to the plate and knock one out of the park will have the chance to create a feeding frenzy across the country. Taco Bell Corp. ("Taco Bell"), the company that encourages Americans to "Think Outside The Bun," today announced an "outside the park" offer. During the games in San Francisco, if any player from the Giants or Anaheim Angels hits a home run and strikes Taco Bell's 15-foot floating "Free Taco Here" target in San Francisco Bay's McCovey Cove, every American resident will have the opportunity to feast on a free Crunchy Beef Taco.
"What better way to celebrate America's favorite national pastime than with America's favorite taco," said Greg Creed, chief marketing officer, Taco Bell Corp. "Only one team will win the Series, but with our 'Think Outside the Park' offer, everyone can win."
Taco Bell has purchased an insurance policy to cover the anticipated cost of the free taco redemption should a home run make the mark. If a home run hits the target, every person in the U.S. will have an opportunity to obtain a free Crunchy Beef Taco at participating Taco Bell� restaurants in the United States. YUM ;-)
You've got to figure that a small proportion of the total population would take Taco Bell up on the offer, but let's say it's around 100 million people (which is probably still too high). They all get a free taco, which probably has a cost of materials and labor of 25 to 50 cents (just a guess). So we're only talking about a $25 - $50 million risk here. I wonder how much the premium was?
And yes, it's HIGHLY likely that Buffett wrote this weird policy!
They did the same thing with the Mir crash landing in 2000. They anchored a square target out in the ocean like 1200 miles away from the splash down zone. The policy htey took out was only like 1 million. I wrote a letter to WEB asking if we (National Indemity) had the policy. He did not answer the question but did send my autograph which i asked for.
Oh, Baby, you just like baseball analogies don'tcha!?
You know what bothers me about these "hole in one" policies? Insurance works by spreading the risk and taking a premium for your troubles. How many wacky deals are there to enable the insurer to spread the risk? "Hole in one" insurance has been around a while, but some of these creative things just might go wrong on a company.
And it's to the buyer's advantage to understate the degree of risk (to get a smaller premium) while at the same time he actually wants to have it happen (so's the insurer picks up the tab for all those free tacos!) So the person who designs the stunt is in the position of advising on the degree of risk, and he's conflicted.
I just don't know 'bout this insurance biz.
(Plus, it's in CALIFORNIA, for cryin' out loud. Seems like more wacky things happen in California ...)