Golf insurer happy with 'minimal' fine

A Norwalk company that insures hole-in-one contests managed to avoid the rough - that is about $80,000 in fines proposed by the state Insurance Department for allegedly operating without a license.

Instead, Golf Marketing Worldwide L.L.C. and its President Kevin Kolenda received fines of $7,000

"We're elated," said Kolenda. "We're really happy with the decision, especially considering at one point they were seeking close to $90,000 in fines and penalties. $9,000 is a minimal fine."

Golf Marketing's clients are typically organizers of promotional events such as hole-in-one contests and other sports challenges where large cash prizes or automobiles are at stake. The company charges a premium based on the number of players, the value of the promotional prize and the yardage to the hole. Should a participating golfer make a hole-in-one, Golf Marketing pays the value of the prize to the participant or the event sponsor.

Anthony Caporale, counsel for the state Insurance Department, said the agency started to investigate Golf Marketing after it received a consumer complaint and an alert from other states where Golf Marketing had done business.

In September 2001, Insurance Commissioner Susan F. Cogswell issued an order directing the company to "immediately cease and desist from acting as an insurer, transacting an insurance business in Connecticut."

The department sought to throw the book at Kolenda and Golf Marketing by seeking penalties for the company's full 14-year history of doing business in the state.

Caporale said hearing officer Mark R. Franklin did not order the $88,500 in fines the department had called for because he "found some extenuating circumstances and that led him to rule on a more limited number of violations."

"It was due to a blunder by the Insurance Department in 1995 when they told me I didn't need a license. The also told me that in 2000," according to Kolenda.

In fact, both the Insurance Department and the state attorney general received complaints in 1995 that accused Golf Marketing of not paying when contestants sunk their shots. The complaints were settled, but neither office conducted further investigations of the company's practices.

Franklin wrote that the six-year gap between complaints without "formal regulatory action" was a factor in his decision to limit the fines.

The second factor was the distinction that a significant portion of Golf Marketing's business involved the award of travel packages the company received at no cost to contest winners.

"Those transactions are not insurance under the statutory definition because there is no assumption of a risk of loss in arranging for fire promotional packages as prizes," Franklin wrote.

"Basically in the hearing, they said this has been a gray area disputed by scholars over the years. It's an ongoing debate as to whether a company like mine even needs to be licensed," said Kolenda.

License dispute

However, Caporale said the insurance commissioner's cease and desist order remains in effect: "He (Kolenda) has to stop doing business and pay the fine."

Kolenda claimed he was issued an insurance license 48 hours after the ruling came down, but Caporale said he has no record that a license for Golf Marketing has been issued.

Meanwhile, Golf Marketing defends itself in court proceedings in Stamford and in California against claim that it left event organizers and promoters holding the bag.

In May 2000, Woody Harford sunk a 100-foot putt in New York City's Central Park for $1 million at the launch party for the now defunct Maximum Golf magazine.

Golf Marketing disputes the logistics of the shot, and did not pay Harford his prize.

News America, the magazines parent, filed a lawsuit in Stamford Superior Court seeking $1 million in damages plus an additional $5,300 for an alleged overpayment of the policy premium.

However, Golf Marketing claims that the magazine failed to pay the $13,000 premium in full, failed to properly verify their claim or conduct the contest within the requirements of the contract.