The Impact of Concussion Risks on Insurance Coverage for Sports Organizations
In 2011, we saw the start of concussion litigation in the National Football League (NFL) after the first case of brain disease was reported in a former player in 2005. This set forth a rapidly evolving movement by the science community to better understand, diagnosis and treat head trauma. As such, measures have been taken to improve the safety of athletes. Unlike other injuries such as a torn ACL or a separated shoulder, the effects of a sports-related concussion are more latent and could show up later on in a person’s life. Such discoveries have had a strong impact on risk management practices and insurance needs for sports teams, sports leagues and athletic departments.
ESPN’s Outside the Lines reported that as of January 2019, the NFL no longer has general liability insurance covering head trauma and only one carrier is willing to provide workers’ compensation insurance for teams. Pop Warner Little Scholars was also forced to switch carriers to receive coverage for neurological injuries. Beyond football, insurers are viewing all sports associated with head trauma with caution, which affects athletic departments at public and private schools at the collegiate and K-12 levels.
Prior to the explosion of head trauma on the sports scene, most general liability (GL) insurance policies protected against athlete, participant or spectator injury and property damage resulting from negligence by the league or organization… including concussions and/or head trauma. However, due to certainty surrounding these injuries, underwriters are now putting in exclusions for these policies for head trauma and neurological issues that could develop later.
Why is this happening? In the insurance industry, traumatic brain injury is considered a “long-tail claim” – one that takes years to develop. The insurance injury was rocked by the link between lung disease and asbestos in the construction industry in the mid-1960s. After 50 years of litigation, about $1.8 billion is still paid annually in asbestos-related claims. James Lynch, chief actuary for the Insurance Information Institute (III) told Outside the Lines that there are parallels between the two cases, even though the documented cases and pool of potential victims of Chronic Traumatic Encephalopathy (CTE) are much smaller. As a result, many insurers learned from the asbestos issue by employing these “exclusions.”
It’s important for sports leagues, teams, athletic departments and organizations to know what is going on in the market and to make sure that they purchase insurance coverage that does not exclude high-risk injuries like concussions or head trauma. While more expensive, they will be more valuable long term. Working with a trusted risk advisor with experience and knowledge of insurance coverage and sports industry risk management can help make the best, well-informed decisions.
Rose & Kiernan, Inc. has extensive experience is a leader in helping businesses anticipate, understand and manage risk. If you are a private school, public school district, college, university or other sports organization looking for help (or if you have any questions) you can contact us here or by calling 800-242-2433.