Over in the US, the World Baseball Classic wound up this week with the United States crowned champions – but behind the scenes there were championship-calibre insurance policies as well.
Large-scale sporting events are big business for insurers – often with providers clamouring to get involved. Whether it’s the Olympics, college sports tournaments, or professional leagues, there’s a lot that goes on in the background to make sure everyone and every eventually is covered.
A major event like the World Baseball Classic – which was run between America and South Korea –could easily have had $1 billion of capacity tied up in insurance, spread across numerous insurers.
Corey Cash, sports and entertainment program director at Safehold Special Risks, spoke with Insurance Business about the business of insuring a major sporting event.
“Any big tournament has a lot of capacity tied up in it … and a lot of risk management tied up in it, as well. There’s a lot that goes into a major event.
“It’s a high risk proposition, both in exposure and in limits, that’s being put on the table. And it’s by multiple, multiple carriers.”
A large national or international event will feature a lot of coverage, with different carriers and policies covering the sport association, the venue, the venue management company, security, emergency medical, liquor, concession vendors, the players individually, the players’ professional teams who have released them to compete in the tournament, and the international teams involved.
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“If you’re talking about any major sort of event that’s going to occur – the Super Bowl, basketball – generally the group or association putting that event together is the one that has that [principal] insurance for that particular event. Then they have all the invitees that come in also - and they’re going to come in with their own insurance for that event.”
The primary insurance lies with the association organising and running the event, Cash said. They rent the venue and take on the major liability, but the venue will also carry significant liability as well as the “ancillary type of stuff.”
“The association might have $100 million to $250 million tied up or insured,” Cash said. “The players themselves, if you’ve got big name players, there’s going to be another $10 million-$20-plus million tied up; the venue, if it’s a major venue, is going to have $50 million to $250 million tied up.
“So for a large event, you’re going to have a billion dollars of capacity tied up, at least.”
And beyond the liability around infrastructure and organisation of the event, players and teams are also insuring against injuries.
“If you take the Olympics for an example, the USOC [United States Olympic Committee] has policies in place. As an example, if you take hockey, they’ve got all these NHL [National Hockey League] guys and they’re there playing for Team USA, or Team Russia, or whoever. When they are playing for that particular group, representing that group, that group then has responsibility for any liability that’s associated with that [player].
“The [NHL] team, then, would maybe go out and purchase a policy that says: if my athlete gets hurt in this event then I stand to lose this many games and this much in possible revenue. It’s almost like an event-cancellation type of policy for the loss of the individual.
“And the individual may also buy a policy that says, look, if I go over here and I get hurt then I stand to lose this much this year in bonuses, this much this year in endorsements, etc., so he may buy a policy. And then you have Team USA which has a policy as well, that says, look, if this person gets hurt we have to pay his medical expenses, and so on and so forth, whatever it may be.
“So there may be three policies on that particular player, depending on who it is, when they go play in these particular events.”
And that injury cover is important. New York Islanders captain John Tavares got hurt skating for Team Canada at the 2014 Winter Olympics in Sochi. So that’s where the insurance for the teams and the player would kick in. Tavares missed the entire season.
One of the oft-cited reasons Major League Baseball teams offer for wanting their players to avoid the WBC is injury – because they do occur.
This year at the World Baseball Classic, several high-profile players have been hurt, including New York Yankees shortstop Didi Gregorius, while playing for the Netherlands, and Kansas City Royals catcher Salvador Perez, playing for Venezuela.
But that’s the beauty of event-wide coverage: while they may lose playing time, financially, those teams and players are covered.
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