National Hole-in-One Association to Warns Nonprofits Against Prize Insurance Fraud

DALLAS - March 17, 2014 - PRLog -- Hosting or playing in a charity golf tournament this spring? The explosive growth of charity golf tournaments used as fundraisers has increased the opportunity for fraud when it comes to prize promotions, such as hole-in-one contests. The National Hole-in-One Association (http://www.hio.com/) (NHIOA), the world’s oldest leading provider of golf event prize services, warns nonprofits and other corporations or agencies conducting golf tournaments this spring to ensure that their insurance provider for big prizes, such as a hole-in-one prize or other promotional offerings, is provided through a licensed carrier.  The company predicts the number of defrauding schemes to be on the rise in 2014.

"Golf does more for charity than any other sport or leisure time activity!" said John P. Everhart, founder of NHIOA. "Golf fundraisers have more than tripled over the past 20 years, according to a study done by the National Golf Foundation. It is important to us -- and our industry -- that licensed, credible operators are insuring prizes at these important events."

Making headlines in February was the sentencing of a Connecticut man, Kevin Kolenda, who pled guilty in Washington to three felony charges for selling insurance without a license and failing to pay hole-in-one awards he was contractually obligated to pay for prizes ranging from $10,000 to $50,000. He has been investigated or prosecuted for similar charges in 11 other states and had been in business since 1995, according to news reports. Kolenda was reportedly sentenced to 86 days with credit for time served and ordered to pay fines.

"This scheme is not significantly different than those of other white-collar criminals that have chosen to use the fountain pen to steal from the public," Everhart noted.

Though insurance regulations vary from state to state, NHIOA became concerned in the mid-1990s about unlicensed providers offering insurance. Surprisingly, some states do not consider prize indemnification a product of insurance. NHIOA aggressively pursued the idea of proper regulation within the industry, with only moderate success -- results that disappointed Everhart.

"The question today still remains, 'How can an insurance regulator enforce proper discipline over questionable providers without the threat of license suspension?’" Everhart stated.

For those organizations offering a big prize associated with a hole-in-one, or charity auction items, or any other insured promotion designed to raise awareness and funds, experts recommend doing research before contracting with an insurance provider, and even asking other credible, licensed insurance agents to recommend a reliable hole-in-one insurance provider. Trustworthy organizations, like NHIOA, act as a licensed managing general agent with primary companies that are highly rated by AM Best and also report all premiums collected to state insurance departments, where they are properly taxed.

"Golf is a powerful driver in fundraising today, and should continue to be," Everhart said. "The offering of big prizes can enhance additional sponsorship and fundraising for any successful tournament or silent auction. We need to continually assure the public that the companies offering these prizes have proper licensing and regulation. The nonprofits and others who look to our industry for help deserve that protection."

About National Hole-In-One Association

National Hole-In-One Association (NHIOA), with offices in Dallas and London, is the world’s oldest, leading  provider of golf event prize services benefiting thousands of charities and corporate golf events each year. NHIOA has successfully insured more than 350,000 events and paid out more than $60 million dollars in prizes and cash since its founding in 1981. As pioneers of the hole-in-one concept, NHIOA has provided civic groups, automobile dealers, country clubs, resorts, corporations, radio and television stations and thousands of charitable organizations with reliable hole-in-one prize coverage. NHIOA's certificate and prizes are internationally backed by The Republic Group of companies, and rated “excellent” by AM Best.Visit NHIOA at www.hio.com.