Do you love sports?
Do you enjoy being a part of a vibrant community youth activity? Do you want to increase your revenue at the same time that you provide important coverage? If so, you should seriously consider writing coverage for amateur athletics. This industry is growing rapidly and the market is relatively soft. Your community amateur athletics need properly written coverage for liability and accident and disability and you could be the one to provide it!
GAME ON: INSURING AMATEUR ATHLETICS
Safety and product knowledge are key to success in this growing market
By Dave Willis
"Competitive." "Soft." These words come up frequently when talking about today's insurance market for amateur athletics and sports. However, there's one seemingly universal caveat in each discussion: "concussion."
"The rates are holding steady in the current marketplace, with the exception of high-risk concussion sports where carriers are looking to limit risk and get rate increases," explains John Sadler, JD, CIC, president of Sadler & Company.
Adds A.J. Morgan, area senior vice president for RPS Bollinger Sports & Leisure, "If you are paying attention to the media these days, concussions are the hot-button topic in the world of sports, and therefore in sports insurance."
According to Brad Hogan, underwriting manager for NSM Insurance Group's Sports & Fitness Division, "Concussion and CTE (Chronic Traumatic Encephalopathy) are of concern to underwriters due to the tail liability and the potential for class action." CTE is a progressive degenerative disease of the brain found in athletes and others with a history of repetitive brain trauma, including multiple concussions.
Apart from concussions and a few other exceptions, market competition is strong. "There are several competitors and it seems new ones emerge each year, even as some others exit," says Kent Lynch, chief executive officer of Specialty Risk Underwriters. "In my 30 years in this space, rarely have I seen an extended hard market for our products."
"Rates have been relatively constant for the past three years," adds Morgan, "but some underwriting changes are taking place. For instance, underwriters are much more cautious about a lot of the adult sports." Hogan concurs. "The market for amateur athletics and sports organizations continues to be soft; however, rates for some segments, such as contact sports and adult sports, justifiably have moved higher based on loss experience."
Nora Stransky, CIC, CPIW, president and underwriting manager at Special Markets Insurance Consultants, cites the emergence of new risks and challenges. "We're seeing things like mud runs, with electrical stimuli, and events that test the stamina of participants far beyond past events," she says. "As losses have occurred, underwriters are reviewing obstacles in much greater detail and are carving out coverages to minimize risk."
Lynch points out that sexual abuse and molestation continues to be on underwriters' radar. Hogan adds, "Underwriting is increasingly more disciplined in addressing exposures and controls. In particular, underwriting has tightened for exposures with potential for severity claims such as abuse and molestation and brain injury."
Insurers are working to address concussion-related exposures. "Carriers are seeking to limit brain injury risk by withdrawing from the market, using total brain injury exclusions, capping 'each occurrence' exposure at $1 million, including defense inside limits, and reducing aggregate limits," explains Sadler.
"Some carriers are changing their programs to exclude coverage for concussions or to limit coverage when a concussion is involved," Stransky observes. "Others are targeting specific sports they will no longer cover, like youth tackle football."
Many insured organizations are aware of their exposures to loss and are more proactive in implementing controls to mitigate potential exposures. "In particular," says Hogan, "we rarely see an insured with a higher than average concussion exposure not have a concussion program in place. The availability of free resources, such as AIG's aHead of the Game® and HEADS UP from the Centers for Disease Control and Prevention, have certainly aided in the effort to bring awareness to prevention measures."
He points out that insureds are adapting to these concerns. "More and more teams, leagues and governing bodies are adopting strict concussion protocols and providing comprehensive training to coaches and staff," he notes.
Morgan expects two things to happen in the near future as a result of class action lawsuits that are being filed on an almost monthly basis. "First, I think sports liability insurance rates will increase and the market will harden a bit," he remarks. "But perhaps more important, and we are seeing it already, carriers will tighten up safety and risk management guidelines and possibly combine that initiative with the limitation of coverage through sublimits on head injury claims."
A win for agents
A number of opportunities exist for agents and brokers who want to serve the amateur athletics and sports arena. "The largest segment of the market is local, community-based youth teams and leagues," explains Sadler. "This segment offers many more prospects as compared to school-related teams, college or the pros."
Lynch concurs. "Opportunities exist with affiliates of national governing body organizations, K-12 school districts that offer interscholastic athletics, and youth sports organizations that manage camps, clinics and recreational activities," he notes.
"Youth sports is the easiest segment to write," Stransky observes. "Many more companies are offering programs for youth than for adults. Youth business is predictable; the leagues all function relatively the same."
She points out that teams and leagues exist in almost every town and city in the United States. "The agent who builds a good reputation in the youth sports arena becomes known in the community," she says, "and that opens doors to school athletic programs."
Stransky says that improved training for coaches has led to more informed choices and much greater awareness of potential risks. "Public awareness also has increased dramatically, leading to much better informed and more involved parents," she adds. "In addition, equipment standards continue to improve."
She notices more teams and leagues hosting camps, clinics and tournaments outside of normal league play.
Other opportunities exist. "Outside of the major sports, participation is growing in rugby, indoor soccer, lacrosse, field hockey, and adventure races, such as mud runs," Hogan observes. "Additionally, water sports, such as kite surfing, paddle boarding and swim schools, are becoming increasingly popular."
"Sports facilities are still growing like wildfire," adds Morgan. "We are seeing demand increasing every day for facilities as small as 5,000 square feet-for speed and agility training, cardio and weight workouts, CrossFit, and more."
Large sports facilities also continue to be built at a steady pace, he notes, "but the smaller facilities seem to be popping up everywhere." Facilities are more traditional from a P&C broker's perspective. "They need GL, property, business personal property, business income with extra expense-all the coverages that you'd find in a standard P&C risk-so this is a good area to target and keep an eye out for," he comments.
Morgan reminds agents and brokers of the importance of insurance in amateur sports: "Sadly, there are almost no more 'accidents.' Nearly every injury is someone's fault. And every decision a sports organization makes is under scrutiny."
He continues, "I'm not sure how our society reached this point, but running a sports organization these days is fraught with pitfalls, and almost every coverage you can think of that's necessary for a normal business operation has its own version in the world of sports."
Hogan points out that, while sports accounts are primarily general liability driven, "agents should look for opportunities to round out accounts with accident and health, property, crime, cyber, auto, workers comp and umbrella."
He adds, "Excess accident and health often is a requirement of general liability coverage, so agents can look to build a sports book with that. Cross-selling accident and health coverage can help protect the loss ratio of an agent's general liability book."
D&O and EPLI also can come into play, Morgan adds, "as can foreign GL and kidnap and ransom for sports groups that take trips overseas. There are just so many exposures these days."
According to Stransky, "The ability to write an entire package of coverage, all in one place, still holds the most appeal. From the accident medical to the general liability, coupled with the crime, equipment, sexual abuse and molestation, and directors and officers coverage, the savvy agent can be a one-stop-shop."
"We all have a responsibility to share information and promote training and proper procedures and protocols," Lynch remarks. "Safe sport guidelines, an effective waiver and release process, and fair third-party contracts are all components of good business. Also, identifying where claims are occurring and addressing those with risk management, point-of-service evaluation and structure of policy benefits all help to maintain a manageable, long-term, stable insurance program."
"Brokers must be familiar with the effective use of waiver and release forms, as well as exposures and risk management responses for sex abuse and molestation and concussions and brain injury," says Sadler. "Agents can find educational content in the risk management section of our website to build knowledge of the niche." The firm also provides a searchable blog that offers information on research, safety equipment, a comparison of different kinds of criminal background checks and more.
Knowledge of concussion-related issues is paramount. "There is an incredible amount of information on the web about baseline testing and protocols to use when a possible concussion occurs," Stransky explains. "It's critical to know as much as possible about it, as well as which policies will cover treatment of the injury and whether the liability policy includes claims as the result of a concussion."
Morgan also stresses the importance of education. "Agents and brokers who want to focus on this business need to learn the nuances of the sports-specific GL coverage, such as participant legal liability, liability waivers-why they're necessary but not always particularly helpful-and sports accident coverage," he says. "Learning all aspects of our little niche world will make them indispensable to their clients."
Hogan encourages agents and brokers to be aware of any policy exclusions or sublimits pertaining to athletic participant liability. "Many commercial insurers exclude athletic participant liability, leaving the insured bare if injury occurs during a sanctioned athletic practice, game, tournament or event," he notes.
Agents and brokers looking to grow their business can find resources willing to help. "As a managing general underwriter, we have access to more markets," explains Stransky. "We can custom-tailor programs to meet needs at a price insureds can afford. Our sales team is 100% devoted to working with agents and brokers to help them develop their portfolio of coverages."
"Many sports-related transactions are small, and agents will lose money if they're not deadly efficient," Sadler says. "That's why we built a simple online quote/pay/print platform. Plus, we offer best-in-industry educational and risk management tools that can often prevent the injury or lawsuit from becoming an insurance claim."
"Our program is a one-stop sports and fitness market providing the needed coverage and underwriting expertise to address the exposure concerns of agents and insureds," says Hogan. "Our underwriting staff writes only sports- and fitness-related accounts, and we pride ourselves on delivering results and expertise to our agents."
"Specialty Risk Underwriters is a full-service managing general agent with 30 years of industry experience as employees of insurance companies and managing general underwriters," Lynch says. "Our carrier relationships are with A-rated admitted insurers, and we're 100% committed to the sports, leisure and entertainment industry."
"With more than 50 years in the sports insurance business, there's very little we haven't seen," Morgan says. "Our goal is to get agents and brokers up to speed with coverage needs within the sports world and then turn them into experts for their clients as quickly as possible."
Dave Willis is a New Hampshire-based freelance insurance writer and regular Rough Notes magazine contributor.