Warren Buffet's $1 billion March Madness bracket contest: Insured against odds

　
Warren Buffet’s $1 billion March Madness perfect bracket contest has spiked a lot of interest online today. Anyone can win $1 billion if they pick all 64 March Madness winning teams for the NCAA Men’s College Basketball Tournament that starts in March, according to the Bloomberg Personal Finance News on Jan. 22. If by chance there is a winner, who is paying out the hefty sum of a billion dollars?
Fox News live on Wednesday reports that there is no record of anyone doing this before, picking all 64 winning teams. Warren Buffet has partnered up with Quicken Loans to offer this contest, which is open to any U.S. citizen for free. What happens if the money is won, will Buffet and Quicken Loans have to pay out of pocket?
No, Quicken Loans has paid an undisclosed premium to Warren Buffet’s Berkshire Hathaway Inc. (BRK/A) who are basically insuring the contest win. The chances of anyone picking all 64 team wins successfully are one in 4,294,967,296. With odds like that the hefty insurance premium paid to Berkshire will most likely be pure profit, unless of course some lucky person happens to hit it, which would be against the odds.
Berkshire is an insurance company that specializes in unusual risks. Berkshire, like some other insurance companies do this. When you see someone win a car after getting a hole-in-one at a golf tournament, which is a rare occurrence, the same type of thing occurs. An insurance company, like Buffet’s Berkshire, has insured the win, so it is the insurance company that pays for the price of the car.
The same thing happens in the big fishing tournaments around the world when a fish is tagged for a million dollar prize if you happen to catch it. Like the bluefish tournament that is held along the Connecticut shore. A fish is tagged and let go in Long Island Sound.
If someone who entered the tournament happens to catch it, they win a million bucks. That million is coming from the insurance company that has been paid a big premium to insure the fish. In this case it’s like taking a life insurance policy out on one tagged fish!
The insurance companies that specialize in insuring these almost impossible feats make the big bucks. This is because the desired outcome for the contestant of catching the tagged fish, getting a hole in one and in this case picking 64 correct NCAA teams for March Madness rarely happens.
The insurance companies make the big bucks off the high premiums, with having to pay once in a blue moon if someone happens to win against all odds!
Buffet’s $1 Billion March Madness perfect bracket contest starts with signing up between Monday, March 3, 2014 and Wednesday March, 16, 2014. You can't fill in your brackets until Sunday, March 16, 2014. The contest is calling this date "Selection Sunday." The contest is open for the first 10 million people who sign up.
If more than one person wins, they will split the $1 billion prize. It is free to enter, but only one entry per household is allowed. The $1 billion will be paid in 40 annual installments of $25 million each year. You can opt for a lump-sum cash prize of $500 million. You need to be a U.S. resident to play this contest.
Source The Examiner