Issues Impacting Sports and Leisure Risk
By Rene-Philippe Jobin, Manager, Property & Casualty Underwriting
Underwriters of Sports and Leisure programs are facing significantly increased levels of risk, and to manage these risks, an understanding of basic critical issues and trends is important. Below, we highlight a few of the most pressing issues facing this sector so that you can better evaluate your client’s exposures.
Above all else, Sporting Clubs, Organizations and/or Associations should all have clear, concise and easy to understand Liability Waivers in place. With the recent rise in public/media awareness of sports-related injuries, including landmark actions taken by former professional athletes against their respective leagues, amateur sports are becoming more vulnerable to injury-related claims and legal action. Small amateur clubs and associations need Liability Waivers not to keep their insurance premiums down, but rather to clearly indicate to all participants that they are inherently taking on risk by practicing a sport. This is basic Risk Management and although a Waiver doesn’t necessarily need to be reviewed by a lawyer, it should be clear in language, signed and dated. Contrary to popular belief, Waivers do serve a purpose and help to protect your client’s operation.
Pricing is also a serious issue with most S&L policies. More often than not the industry is confronted with High Risk/Low Premium scenarios. For example, an MMA outfit with only $10,000 in annual revenues and unpredictable memberships from year to year (as the sports trend expands/contracts). These risks, where there is heavy contact and significant risk of injury do not necessarily bring in enough revenue to cover the costs of an adequately rated account from an underwriting perspective. As owners understandably look for low premiums, the underwriters are confronted with the knowledge that 1 broken tooth claim can completely ruin an accounts Loss Ratio for years! A markets appetite and comfort level can vary drastically depending on certain types of sports, so it’s crucial for brokers to gain insight into presenting the right risk to the right company.
One way a broker can make their clients business more attractive to all Sports and Leisure marketplaces is by showing that there are protocols in place to address in-game/event or practice injuries. From “quiet rooms” for head injuries to First-Aid certification on coaches and team staff, every little bit helps when an underwriter is faced with risks ranging from the Sunday morning Karate Schools to Adult Recreational Hockey Leagues. Further to injury protocols, if the sport in question involves combat or physical contact, the use of adequate protective gear (even padded weapons for Martial Arts) goes a long way in getting an underwriter to qualify an operation as “Best in Class”. S&L accounts involve a lot of underwriting and work, so detailed submissions are crucial towards securing good terms and a proper understanding of the exposures presented in each unique case.
Another element of Sports and Leisure that doesn’t get much attention is the rise in facility-related injuries. With municipalities cutting costs, public fields and facilities are feeling the pinch of budget cuts and poor maintenance. It is not uncommon at all to see twisted ankle claims from a soccer risk due to a serious rut in the field! We see many types of injuries that could have been easily prevented with some basic public-works maintenance, and we urge that coaches and team volunteers give their playing surfaces and locker rooms a quick check to ensure that the risk of injury to their players is limited.
Sports and Leisure risks are unique, interesting and truly a niche market. After all, it’s one of the only business segments in the industry where underwriters knowingly accept that they are insuring people who will be punching each other in the head! That being said, we can still prevent some headaches for everyone by applying some basic Risk Management skills to these businesses, and making sure that participants can do what they love in the safest way possible.