Redemption Games / Over Redemption
A total number of units are sent out, and persons are able to redeem prizes within a specific period of time. You are underwriting the fact that the winner may be lost or that the prizes will not be redeemed in time, such as finding the $1,000,000 M & M package, finding a winning bottle cap. Over redemption is coverage in which you hope that the insured does not receive more than the expected number of coupons redeemed causing a large monetary burden to the insured. Companies will put out millions of dollars in coupons, such as $100,000,000, although the actual redemption rate is expected at $1,000,000, the insured may elect to insure the next $1 or 2,000,000 just in case their redemption calculation is wrong.