Seahawks shutout costs car dealer $420,000

This is awesome, such a long shot, but the bettors(contestants) win.

http://profootballtalk.nbcsports.com/2013/12/16/car-dealership-paying-out-420000-after-seahawks-shutout/

Nope.

It cost an INSURANCE COMPANY that much.

It cost the car dealership only $7,000.

It's a good thing they took out insurance, $7,000, it said. That's $7,000 not to pay $420,000, which is effectively a potential savings of $413,000. The insurance company basically laid 58:1 against a shutout, so I think the car dealership probably had the best of that one.

I believe that roughly 2% of NFL games involve a shutout in the first place, now throw in that the Giants have the NFC's worst performing offense, and second or third worst in the NFL combined with the Seattle defense now being the stingiest in the NFL and second or third going into the week.

I have to kind of scoff at the insurance company that they would make such a terrible lay. PMing the Wizard to see if he agrees with me. I think a fair lay would have been about 40:1.

I see from the week 15 contest lines that the Giants were a 7-point underdog and the over/under was 41. Doing a little algebra the expected points for each team would have been Giants 17 -- Seattle 24. Let me do number crunching to get at a fair price for that insurance policy...

Quote: Mission146

It's a good thing they took out insurance, $7,000, it said. That's $7,000 not to pay $420,000, which is effectively a potential savings of $413,000. The insurance company basically laid 58:1 against a shutout, so I think the car dealership probably had the best of that one.

I believe that roughly 2% of NFL games involve a shutout in the first place, now throw in that the Giants have the NFC's worst performing offense, and second or third worst in the NFL combined with the Seattle defense now being the stingiest in the NFL and second or third going into the week.

I have to kind of scoff at the insurance company that they would make such a terrible lay. PMing the Wizard to see if he agrees with me. I think a fair lay would have been about 40:1.

Trust me when I tell you the Insurance Company wins on these "wagers" also. I was in the Insurance business for 13 years. Insurance Companies provide this type of insurance for all sorts of events. Hole in one golf events, half time half court shots, etc, etc. They always win in the long run, just as Casinos always win in the long run. Someone eventually wins and most of the time everyone loses.


ZCore13

The last shut-out of the Giants at home was Jan. 8th 2005 by Carolina in the Playoffs (Score was 23-0).

The following table shows how often a team scored zero point according to the estimated number of points it would score, based on the point spread and total. Data is based on the 1983 to 2012 seasons, inclusive.

Estimated Points	Number in Sample	Total Zero Points	Ratio
10	10	1	10.0%
10.25	7	0	0.0%
10.5	14	2	14.3%
10.75	7	1	14.3%
11	13	1	7.7%
11.25	21	1	4.8%
11.5	22	3	13.6%
11.75	23	1	4.3%
12	34	2	5.9%
12.25	36	7	19.4%
12.5	41	3	7.3%
12.75	39	4	10.3%
13	55	1	1.8%
13.25	58	5	8.6%
13.5	78	1	1.3%
13.75	89	5	5.6%
14	92	4	4.3%
14.25	108	7	6.5%
14.5	117	8	6.8%
14.75	141	7	5.0%
15	160	7	4.4%
15.25	160	7	4.4%
15.5	213	7	3.3%
15.75	198	11	5.6%
16	206	6	2.9%
16.25	221	12	5.4%
16.5	241	10	4.1%
16.75	273	7	2.6%
17	306	8	2.6%
17.25	305	8	2.6%
17.5	306	10	3.3%
17.75	323	4	1.2%
18	299	8	2.7%
18.25	332	8	2.4%
18.5	309	9	2.9%
18.75	307	7	2.3%
19	356	8	2.2%
19.25	389	5	1.3%
19.5	361	5	1.4%
19.75	343	6	1.7%
20	402	8	2.0%
20.25	379	6	1.6%
20.5	359	3	0.8%
20.75	353	5	1.4%
21	344	1	0.3%
21.25	317	3	0.9%
21.5	341	2	0.6%
21.75	331	1	0.3%
22	369	1	0.3%
22.25	336	0	0.0%
22.5	316	2	0.6%
22.75	280	3	1.1%
23	311	1	0.3%
23.25	290	3	1.0%
23.5	279	1	0.4%
23.75	255	1	0.4%
24	246	1	0.4%
24.25	219	0	0.0%
24.5	230	2	0.9%
24.75	230	1	0.4%
25	212	2	0.9%
25.25	207	0	0.0%
25.5	176	1	0.6%
25.75	154	0	0.0%
26	154	1	0.6%
26.25	113	0	0.0%
26.5	137	0	0.0%
26.75	122	0	0.0%
27	95	0	0.0%
27.25	98	0	0.0%
27.5	83	0	0.0%
27.75	81	0	0.0%
28	82	0	0.0%
28.25	55	1	1.8%
28.5	56	0	0.0%
28.75	51	0	0.0%
29	48	0	0.0%
29.25	34	0	0.0%
29.5	24	0	0.0%
29.75	25	0	0.0%
30	24	0	0.0%

Overall, a team will score zero points 1.79% of the time.

Using logistic regression, I find:

Probability zero points = exp(x)/(1+exp(x)),

where:

x = 1.562545 + -0.302485 * y
y = estimated points

As mentioned in my last post, the total in that game was 41, and the Seahawks were a 7-point favorite. Doing a little algebra we see the estimated points by the Giants is 17 and Seahawks is 24.

So, in this case y=17 and x = -3.579706.

The probability the Giants score zero points is thus exp(-3.579706)/(1+exp(-3.579706)) = 2.71%.

Given that the policy had a face value of 12 * $35,000 = $420,000, the fair cost should have been 2.71% * $420,000 = $11,384.

Thus, the dealership got a great bargain paying only $7,000! Normally, insurance companies that insure oddball stuff like this charge double the expected cost. In this case, I would have charged $22,768 for that policy.

If I were the mathematician that calculated that premium I'd be pretty nervous this morning, hoping the boss doesn't review the math, which he probably will considering he will have to write a check for $420,000.

Quote: Wizard

The following table shows how often a team scored zero point according to the estimated number of points it would score, based on the point spread and total. Data is based on the 1983 to 2012 seasons, inclusive.

Estimated Points	Number in Sample	Total Zero Points	Ratio
10	10	1	10.0%
10.25	7	0	0.0%
10.5	14	2	14.3%
10.75	7	1	14.3%
11	13	1	7.7%
11.25	21	1	4.8%
11.5	22	3	13.6%
11.75	23	1	4.3%
12	34	2	5.9%
12.25	36	7	19.4%
12.5	41	3	7.3%
12.75	39	4	10.3%
13	55	1	1.8%
13.25	58	5	8.6%
13.5	78	1	1.3%
13.75	89	5	5.6%
14	92	4	4.3%
14.25	108	7	6.5%
14.5	117	8	6.8%
14.75	141	7	5.0%
15	160	7	4.4%
15.25	160	7	4.4%
15.5	213	7	3.3%
15.75	198	11	5.6%
16	206	6	2.9%
16.25	221	12	5.4%
16.5	241	10	4.1%
16.75	273	7	2.6%
17	306	8	2.6%
17.25	305	8	2.6%
17.5	306	10	3.3%
17.75	323	4	1.2%
18	299	8	2.7%
18.25	332	8	2.4%
18.5	309	9	2.9%
18.75	307	7	2.3%
19	356	8	2.2%
19.25	389	5	1.3%
19.5	361	5	1.4%
19.75	343	6	1.7%
20	402	8	2.0%
20.25	379	6	1.6%
20.5	359	3	0.8%
20.75	353	5	1.4%
21	344	1	0.3%
21.25	317	3	0.9%
21.5	341	2	0.6%
21.75	331	1	0.3%
22	369	1	0.3%
22.25	336	0	0.0%
22.5	316	2	0.6%
22.75	280	3	1.1%
23	311	1	0.3%
23.25	290	3	1.0%
23.5	279	1	0.4%
23.75	255	1	0.4%
24	246	1	0.4%
24.25	219	0	0.0%
24.5	230	2	0.9%
24.75	230	1	0.4%
25	212	2	0.9%
25.25	207	0	0.0%
25.5	176	1	0.6%
25.75	154	0	0.0%
26	154	1	0.6%
26.25	113	0	0.0%
26.5	137	0	0.0%
26.75	122	0	0.0%
27	95	0	0.0%
27.25	98	0	0.0%
27.5	83	0	0.0%
27.75	81	0	0.0%
28	82	0	0.0%
28.25	55	1	1.8%
28.5	56	0	0.0%
28.75	51	0	0.0%
29	48	0	0.0%
29.25	34	0	0.0%
29.5	24	0	0.0%
29.75	25	0	0.0%
30	24	0	0.0%

Overall, a team will score zero points 1.79% of the time.

Using logistic regression, I find:

Probability zero points = exp(x)/(1+exp(x)),

where:

x = 1.562545 + -0.302485 * y
y = estimated points

As mentioned in my last post, the total in that game was 41, and the Seahawks were a 7-point favorite. Doing a little algebra we see the estimated points by the Giants is 17 and Seahawks is 24.

So, in this case y=17 and x = -3.579706.

The probability the Giants score zero points is thus exp(-3.579706)/(1+exp(-3.579706)) = 2.71%.

Given that the policy had a face value of 12 * $35,000 = $420,000, the fair cost should have been 2.71% * $420,000 = $11,384.

Thus, the dealership got a great bargain paying only $7,000! Normally, insurance companies that insure oddball stuff like this charge double the expected cost. In this case, I would have charged $22,768 for that policy.

If I were the mathematician that calculated that premium I'd be pretty nervous this morning, hoping the boss doesn't review the math, which he probably will considering he will have to write a check for $420,000.

Hope the BOSS does not see this!!!!!!!!!!!

Quote: DJTeddyBear

Nope.
It cost an INSURANCE COMPANY that much.
It cost the car dealership only $7,000.

Nope.... Insurance companies lay off their action in the re-insurance market. So one insurance company gets the publicity and is primary payor but other companies have to contribute.

Quote: FleaStiff

Nope.... Insurance companies lay off their action in the re-insurance market. So one insurance company gets the publicity and is primary payor but other companies have to contribute.

This is getting out of my area, but I think insurance companies only lay off risk they are too small to assume. For example, a small insurance company might not be comfortable writing a 20-million dollar life insurance policy, so they re-insure it with a bigger insurance company. Anybody in the insurance business should be able to fork over $420,000 on their own. Not to mention that I doubt re-insurance companies dabble in promotional risks like this.

Quote:

Hope the BOSS does not see this!!!!!!!!!!!

If he does, I hope he'll keep me in mind if my income continues to decline, and I need to find a real job.