An insured promotion transfers the tail risk of a large prize from the brand to a specialist underwriter. The brand pays a fixed premium; the underwriter carries the payout if the winning event occurs.
The premium is priced on expected value — probability of a win multiplied by prize size — plus a margin for administration and reserving. For most well-designed mechanics the premium is a small fraction of the headline prize.
The commercial effect is what matters: budgets stop being sized against a worst-case payout and start being sized against a marketing return. That is what unlocks the seven-figure prize promises audiences actually pay attention to.