Claims II: Sport injury: Hitting hard

Fear is stalking the highly specialised world of insurance for professional sportspeople. England cricketer James Taylor, forced to retire two years ago at the age of 26 after a near fatal heart attack linked to an underlying condition, has used his biography Cut Short to throw a harsh spotlight on the inadequacy of the cover put in place for him.

Taylor slams both the level of permanent disability cover and the exclusions in critical illness policies taken out by the Professional Cricketers Association and the England and Wales Cricket Board.

“When it came to the crunch, the combined value of the PCA and the ECB’s insurance policies bore no relation to the modern game. The insurance added up to little or no more than my previous year’s earnings,” he says. “Look at how much an international cricketer earns now compared to a quarter of a century ago. It was as if I was playing in 1990. No one had made a claim of this nature and complexity for three decades and so policies hadn’t been updated.”

It wasn’t just the level of cover that shocked Taylor. The exclusions in some of the policies hit him hard too.

“We were looking at policies that, while paid in full, came nowhere near to offering me much security – especially since I was being told I wouldn’t be receiving a critical illness cover payout. My ARVC [arrhythmogenic right ventricular cardiomyopathy] didn’t qualify for it. I couldn’t believe what I was hearing. ARVC had all but killed me. Around 80% of the time, it’s discovered post-mortem. If that’s not critical, I don’t know what is. I had done pretty much everything but die, and yet I didn’t qualify for the policy.”

These criticisms come at a time when underwriters are looking nervously at the growing litigation in sport. They fear the sort of class actions being taken out against the National Football League in the US, where players have alleged that the governing body ignored evidence about the long-term effects of repeated head injuries. This has become a major issue for contact sports such as rugby and boxing, as well as equestrian sports and even football, with new studies being carried out into the long-term effects of heading footballs.

There is already one case focusing on head injuries in rugby union with former Sale Sharks player Cillian Willis suing the club for alleged clinical negligence over a career-ending concussion. Willis was twice treated for a head injury in a game with Saracens in March 2013 but was allowed to keep playing. This case is still sub judice, although one lawyer not involved in it warned it could open the floodgates.

“That is the first. It will not be the last because players are not being looked after properly on a week-by-week basis,” says David Spencer, partner at BLM.

An earlier case involving former Tottenham footballer David Howells, who retired from the game in 2000 with a persistent knee injury, tested the exclusions in policies that he and his final club, Southampton, took out with IGI and Avon Insurance. These contained exclusion clauses that allowed insurers to decline claims for permanent total disablement. While the insurers won the cases Howells and the club took out against them, judges were very critical of the poorly drafted exclusion clauses.

Taylor considered taking legal action but abandoned the idea because he feared the complexity and stress. He eventually received an apology and unspecified additional support from the ECB.

It is a combination of all these issues that has underwriters in this field running scared. Most of the leading insurers in this area, including Beazley, Munich Re (Syndicate 457 at Lloyd’s) and Chaucer, stonewalled all requests for comment. They likely fear being drawn into making comments that could be quoted back to them in a courtroom as they struggle to bring their policies into line with the modern demands of professional sport and the people who play it.

One underwriter who was prepared to go on the record was Johan Häggö, a senior underwriter with Markel International. He says that governing bodies as well as insurers are having to focus their attention on head injuries, especially the difficulty of providing cover for the long-term effects of repetitive injuries.

“Of course, we are all aware of the issues that contact sports have had regarding concussions and it is something that is now high on the agenda of certain sports. The problem is that without drastically changing the laws of the game and in effect the very spirit, it can be very difficult to tackle this problem. Not all concussions are caused by direct head collisions but any impact that causes a shaking of the brain can have devastating effects.

“It is hard to predict what effect the concussion situation will have on insurance as most policies require a sudden and unexpected event that occurs at an identifiable time and the most serious problems are due to repetitive injury.”

Types of cover

The most common covers are accidental death and permanent or temporary total disablement.

Accidental death policies can have various beneficiaries, typically a club or agent or next of kin.

Permanent total disablement offers a degree of cover in case of a career-ending injury. The policyholder could be anyone with an insurable interest, including the player or their club.

Temporary total disablement can protect a club for the costs involved with paying the salary of an injured player while also having to draft in an additional player. It could also provide cover for the players themselves in case their contract is not guaranteed during a spell on the sidelines. This can also be provided through a permanent health insurance policy.

Critical illness cover can pay out if a serious long-term condition prevents someone from pursuing their normal occupation.

Focus of concern

It is this lack of cover for the consequences of repetitive ‘wear and tear’ injuries that is becoming the focus of concern about the limitations of insurance cover for professional sportspeople.

When it comes to the levels of cover available, Häggö says policies can be more generous than the one that limited Taylor to one year’s earnings: “We look for an insurable interest. Once that is established, there has to be a justification of the sum insured. Depending on the sport and the overall remuneration package, we would be willing to look at all streams of income and how they could be jeopardised in the eventuality that a career is cut short on a temporary or permanent basis.”

Other underwriters take into account the previous five years’ earnings from the player’s sport, although with some caps for the top earners.

The governing bodies are tight-lipped when it comes to discussing the details of the policies they have in place.

The ECB grudgingly acknowledges that there are issues it needs to address but offers no details: “We continue to work closely with the PCA to ensure that England players continue to receive the best possible cover. We do not disclose the full nature of these policies publicly. They form part of the England player contract, which is confidential between the Board and the PCA,” says Andrew Walpole, head of corporate communications.

Rugby too is predictably cautious, although a little more forthcoming: “There is a joint professional players’ insurance scheme for professional rugby players playing in the Premiership and contracted England Sevens players,” says a spokesperson for the Rugby Football Union. “This is funded by the RFU, Premiership Rugby and the Rugby Players’ Association and managed by a sub-group of rugby’s Professional Game Board.

“The RFU also has a policy covering catastrophic injury for grassroots and professional rugby. A JPPI-equivalent scheme is in place for England Women and England Women Sevens players.

“The JPPI is a bespoke policy that has been significantly developed by the stakeholders. It covers injuries that force a player to end their career. Successful claimants would receive a lump sum with the amount based on an age-related sliding scale.”

Smaller sports face problems

Governing bodies and players’ unions may be working hard to improve the cover available to players in some of the major sports but participants in smaller sports struggle to find decent cover, says Rebecca Skirrow, a solicitor with Minster Law and a member of the GB whitewater kayaking team: “It is almost impossible for me to take out cover for what I do.”

There is insurance in place for the teams, including catastrophic travel cover and group life cover but the team members are left to find their own income replacement cover and this is not easy, says Skirrow.

“I cannot get payment protection for mortgages for any injury or death from sports. I had to accept that my mortgage is not covered if I am injured in an accident involving kayaking.”

This problem faces a lot of participants in Olympic sports where full-time professionals are few and far between and people have to combine their sport with another career. Skirrow argues that it is very harsh as the athletes are fit people: “My risk in other areas will be far lower.”

Insurers are also very secretive about the reasons why they won’t insure people in minority sports: “What they aren’t prepared to talk about is the amount of cover they decline.”

Skirrow also believes insurers are indirectly discriminating against women as several sports, including kayaking, suffer a drop in female participation once they have dependents: “If I had children, I would have to justify to myself what I am doing because if anything happened to me while kayaking, they would be left at a disadvantage.”

Range of schemes

Ian Thomas, director of development and welfare at the Professional Cricketers Association since January 2017, is sympathetic to the issues raised by Taylor: “You have a young lad at the pinnacle of his career and he has lost out on a lot of potential earnings. There are a lot of ifs and buts around how a career might develop but anyone playing sport for a living should have good cover.”

He says the PCA helps put a range of income protection and total permanent disablement schemes in place through Kerry London and that some of these include top-up options that players can take out themselves, although the take-up for these is low.

He says some players have faced problems with insurers, especially when it comes to claims around wear and tear injuries that have ended careers: “They get ripped off and lose confidence in what insurance can do.

“It is very important that sports work closely with the insurance industry to avoid these problems. The fact we have got insurance for players allows them to apply for mortgages and lead a normal life.”

Duncan Fraser, head of sport, media and entertainment at JLT Specialty, says underwriters still have a strong appetite for professional sports, although there are signs of nervousness creeping in: “We have seen some challenges around providing concussion cover for American sports, especially the NFL.”

In Europe, the focus has been on head injuries in rugby and this is being monitored closely by insurers.
Thomas notes the mix of earnings from playing a sport at the top level, with sponsorship and media rights, means it can be tricky to get the right amount of cover in place.

But Fraser says it is possible to put together packages that offer generous levels of cover: “People have a lot of earnings from different sources and insurance will look at all of them. Generally insurers are comfortable with five times annual earnings. This means for a permanent disablement, a player will receive a lump sum to keep themselves going while they retrain for another a career.”

Among lawyers the main focus is on the potential for head injuries and long-term conditions associated with them to crowd in on contact sports.

Spencer says: “I am not sure there will be the scale of the NFL fallout either in terms of player numbers or financial impact, but it may cause clubs, schools and unions to consider the policy wordings of employer and public liability policies rather more carefully. We may see interest being piqued, and more noise around that topic as we approach the 2019 Rugby World Cup.”

Samantha Holland, partner at Gowling, fears this might lead to another asbestosis for insurers.

“So far as head injuries sustained during sport are concerned, one of the most pressing matters that the insurance industry is getting to grips with is the latency of this type of injury. Where certainty is required – and this is a must where insurers are concerned in order to manage their exposure – the injury itself is less of an issue than the point at which any deterioration of the brain commences.

“The difficulty lies in pinpointing with any accuracy whether the injury was caused directly by an isolated incident, or whether other non-related incidences throughout someone’s life time have caused or contributed to the injury in some way. This in turn leads to uncertainty as to whether an injury falls within the scope of a policy or not.

“This uncertainty means that unfortunately, so far as the insurance market is concerned, concussion may prove to be the new asbestosis and it may take another 20 or 30 years until the extent of the insurance market’s exposure to claims can be properly appreciated.”

Spencer agrees this issue is haunting the market: “Insurers want clarity and want to know how much it is going to cost them. They want to know what the bottom line is going to be. They need to be able to reserve and price properly.”

Taylor’s trenchant criticisms of the level of cover he was offered and the tough exclusions in his critical illness policy have left the market playing off the back foot just as it is looking fearfully at the head injury bouncers hurtling through the courts. It seems racked with fear.

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By the end of this article, readers will:

• Gain awareness of upcoming claims
• Become familiar with exclusions

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