Specialty Lines Markets
Knowledge to win in amateur athletics
As the amateur sports world expands, so do the opportunities for agents
By Dave Willis
Amateur athletics and recreation continue to maintain a prominent place in the lives of American individuals and families. Providers are capitalizing on this interest in sports and fitness and are responding by offering facilities and activities for all age groups and all family members.
"Family centers—privately owned or community-built—are becoming more popular because they offer a one-stop shop for sports-related activities for all ages," explains Lindsey Burkle, program underwriting manager at Special Markets Insurance Consultants. "Facilities are being built in many communities, and they represent a good opportunity for agents to offer a variety of coverages, from participant accident insurance for amateur athletes to other protection for participants and property."
Traditional health clubs are part of the mix. "As clubs try to increase revenues, they're looking at alternatives, specifically those that can involve the entire family," explains Jennifer Urmston Lowe, national account manager at Sports & Fitness Corporation. "Lower participation in adult racquetball and other activities that required significant floor space is letting clubs repurpose space for open court activities, which expands the offerings for youth and teens."
Clubs with outdoor athletic fields are using them more, too. "Clubs are offering summer and weekend soccer camps, which lets them make money and stay busy during times when adults may be less likely to work out," Lowe adds. "Many have in-house athletics programs, but some lease them out to independent leagues."
She says clubs with broader offerings are generally better off financially. "Agents should target them, look at their coverages, and make sure they're protected for everything they offer," Lowe explains. "If they're not, get out and educate them, find a market that can address the risks, and be a hero to the club."
In addition to a greater family focus, insurance providers are seeing growth in other areas. "The amateur sports industry continues to grow across disciplines and age groups, despite the challenging economic climate," says Lorena Hatfield, marketing resources manager at K&K Insurance Group. "This offers potential for agents looking to add income to their agencies."
"Participation in traditional sporting events, such as soccer, basketball, baseball, and football, remain strong and relatively consistent," adds Nicole Pitney, special risk manager for Chubb's A&H business. "There's an increase in non- or less-traditional sports activities among youth and adults alike." She's seen accident and health submissions for Quidditch, Gaelic football, and fistball leagues.
"Insurance risks for these organizations track traditional sports," Pitney explains. "Agents can help these often younger organizations by discussing possible exposures. In addition to boosting revenue, it's a way for agents to diversify their books of business." According to Susan Bongard, senior underwriter at Special Markets Insurance Consultants, martial arts participation is growing, too.
Over the past year or so, Michael Dean, vice president, F.L. Dean & Associates, says his underwriters have witnessed significant growth in adventure racing—races that include an obstacle course. "This represents an underwriting challenge because each race is unique," he notes. Some have obstacles involving fire, while others may include a river crossing or other water-related exposures. Venues, usually forest preserves or park districts, require liability coverage, he adds.
"We anticipate almost 30% of all communities will conduct an event of this type," Dean says. "This offers agents a great opportunity for lead generation. Working with event planners on coverage requirements can lead to other opportunities, including personal lines, as well as commercial."
He says producers can demonstrate expertise by helping event planners understand which types of obstacles could increase—or decrease—premium costs. "By communicating with underwriters while listening to client needs, agents can help establish the correct balance for these events," Dean adds.
John Sadler JD, CIC, president of Sadler Sports Insurance, says there are more travel teams for elite athletes. "We're seeing more combines and showcases, where these athletes can demonstrate their skills for college recruiters," he explains. "Participant injury exposures are higher for travel teams than for teams in local league competitions."
Competition is more intense, too, he adds, plus travel teams have added exposures, such as greater risk of auto accidents during travel and the perils of motel downtime. "We continually hear of drownings or near-drownings at motel swimming pools, due to lack of sufficient supervision," Sadler notes. "In addition, overnight motel stays present exposures for sex abuse and molestation incidents."
He says travel team coverage is readily available, but minimum premiums may pose problems for individual teams. "It may help to tap into a risk purchasing group or other association program to circumvent this minimum premium issue," he advises.
His company also is fielding more requests for individual instructors and trainers involved in everything from baseball, softball and soccer to tennis, golf and overall fitness. These individuals could face lawsuits alleging lack of supervision or lack of instruction, he says.
Jeff Ladd, president of Sports Insurance Specialists, is seeing strong interest across a broad range of amateur sports. "In addition, there's significant interest in Internet-driven programs," he adds. "These programs save agents and brokers time when they're looking to cover a wide variety of smaller amateur events." His firm's Web-based facility encompasses camps, clinics, short-term events, youth baseball, and various sporting tournaments and events.
"An Internet program can let agents choose desired coverage limits, pay for the coverage and print the needed certificates of insurance, all online, from start to finish, within a couple of minutes," Ladd adds.
Hatfield is seeing similar interest. "E-commerce Web sites can provide complete online processing functionality, including the ability to immediately quote, bind and earn commission," she says. "In addition, agents representing large amateur sports organizations should choose a sports insurance expert that can offer experienced underwriting and, as important, knowledgeable claims handlers who can respond quickly and efficiently."
Addressing the risks
As the amateur sports world continues to grow, so do the risks. Sexual abuse and molestation is of primary concern. "Sexual abuse and molestation (SAM) coverage has not always gotten the attention it deserves, although that's changed in recent months," explains Burkle. "Coverage is offered in many package programs offered through large sport organizations, but sometimes smaller teams, leagues and camps don't have it."
"Leagues and facilities are addressing this," adds Lowe. "Background checks are a minimum requirement. And agents need to make sure the policy has sufficient coverage. Some cap it at $100,000, even though the occurrence limit is $1 million. Check that—because some carriers offer policies that exclude or limit the SAM."
Hatfield says, "The spotlight on due diligence by sports organizations responsible for the safety of youth participants is greater than ever. So is the need for proactive steps to protect the athletes and the organizations." she says, "In addition to implementing an abuse prevention plan, groups should consider adding SAM coverage specifically developed to protect sports organizations."
According to Sadler, agents and brokers should expect to see more underwriting controls around SAM. "Before, minimal due diligence—running criminal background checks—was enough," he says, "but it's feared that only a small percentage of potential sexual predators have a criminal background that could be discovered when running such checks."
He says sports organizations should require administrator and staff education, written policies and procedures to reduce the likelihood of an incident, and a written allegation response plan, including a requirement to notify law enforcement. His firm offers resources and templates that help sports groups meet these requirements.
Associations and organization headquarters staff offer guidelines, too, says Hatfield. "Another source of information is the Centers for Disease Control and Prevention Web site, www.cdc.gov," she adds. It offers a packet of information titled "Preventing Child Sexual Abuse Within Youth-Serving Organizations: Getting Started on Policies and Procedures," that addresses several areas of concern.
Concussions represent another highly visible concern. "This is very troubling to the sports insurance industry, due to its high severity potential and the possible opening of floodgates," explains Sadler. "Sports general liability carriers fear possible class-action lawsuits going back many years, which could trigger coverage under prior occurrence policy forms. Look for carriers to limit their risks with new participant liability aggregates."
Other injury risks exist, too. "There is increased awareness of the exposure for injuries during sports play and practice," says Pitney. "These run the broad spectrum from pulled muscles and broken ankles to torn ACLs and MCLs. The range of medical costs associated with treatment is equally broad."
"Participant accident coverage can help cover costs associated with these," explains Nora Stransky, CIC, CPIW, president and underwriting manager at Special Markets Insurance Consultants. "The coverage lets parents incur minor out-of-pocket expenses, if any, for medical bills. It offers an extra layer of protection agents sometimes overlook and can be a savior to policyholders looking to avoid potential lawsuits from injuries." Stransky reminds agents to be especially diligent when talking to organizers of some of the newer sports because they may not be aware of the risks—or protection available.
Adds Pitney: "Offering accident medical coverage for players can help mitigate the financial impact of injuries. Accident and health insurance can play an especially valuable role for players with no primary health care coverage or a high-deductible plan."
Beyond injury, amateur sports groups have other exposures. "Sports organizations face cyber threats from hackers who may break into Web sites or servers and steal confidential personal and financial information," explains Sadler. Laws govern these incidents; fines and penalties may apply, in addition to notification expenses and an obligation to provide credit monitoring.
Another risk involves social media. "Sports organizations frequently post or let others post on their Web sites, Facebook or Twitter," he explains. "Such postings may include defamatory information, which can result in libel lawsuits or may inadvertently include confidential information that results in an actionable invasion of privacy lawsuit."
Coach professional liability is another concern. "We see the occasional lawsuit, where a parent sues a coach, alleging that improper coaching instruction or the benching of their child resulted in the loss of a college scholarship or a professional career," Sadler explains. "Of course, these lawsuits are ridiculous, but legal defense can be expensive."
Equipment coverage is sometimes overlooked. "Teams and leagues have invested significant dollars in their equipment," explains Bongard, "and to have to replace it without coverage could cripple a league."
Learning from the past
If experience is the best teacher, agents can learn a lot from where others went wrong. "One mistake agents make is requesting spectator liability only when sports are involved," explains Bongard. "They really need participant legal liability, which isn't provided in spectator policies."
Adds Burkle, "Another mistake is not knowing all of the various types of available coverages. Amateur athletics coverage is a niche market; having expertise can help agents provide a well-rounded package to their clients."
According to Stransky, "The biggest mistake is not going to the experts in this market to really provide their client with the best coverage possible."
"Choosing price over coverage can backfire, particularly when dealing with the unusual exposures sports organizations encounter," says Hatfield. "An experienced underwriter can help agents recommend coverage unique to sports risks and provide accurate pricing based on industry-specific historical data."
According to Lowe, "Waiting until the last minute on renewals is one of the biggest things we see. Some of the more complicated risks require a little more underwriting time. For instance, getting documentation that the background checks are being done can delay the process."
Inefficiency is another challenge. "These are often small accounts, so the key is to be deadly efficient," explains Sadler. "Using a totally automated system for smaller accounts can streamline the process."
Dean says, "We often witness producers who fail to communicate the importance of excess liability limits to their clients. Limits required by venues may be a minimum standard, while exposure is actually much higher." He says premiums for higher excess liability limits may bring 'sticker shock,' but the benefits outweigh the costs in the event of a catastrophic incident. Dean recommends $1 million be the starting point, not the finishing.
Sadler warns of possible E&O exposures. "Many agents don't understand how certain common exclusions can impact a sports organization," he says. "Customized policy forms can minimize such exclusions, and knowledgeable providers can explain to agents the impact of exclusions."
Pitney has seen some agents miss out on opportunities to add value by overlooking data. "Agents and brokers, together with amateur sports organizations, can work with their insurance carriers and use data to drive risk management programs," she says. "For example, injury statistics from publications or an organization's own history can show the types of injuries most common within a sport or for a particular team or league."
This information can lead to discussions on how best to protect players. "Solutions can be simple, such as ensuring players are well hydrated before a summer soccer game in Texas, for instance," Pitney explains. Or they can be more comprehensive, like creating league rules on upkeep for football fields and protective equipment.
"Agents who use this data to work with amateur athletic organizations demonstrate their commitment to the partnership, as well as their industry expertise," she concludes.