Professional sports are facing a perfect storm of emerging risks which require an increasingly innovative response from insurers.
David Griffiths and Alex Mendis, account managers in the sports and entertainment division at broker Miller Insurance said athletes and professional sports clubs face the fallout from the pandemic coupled with the impact of the current geopolitical issues and a fundamental change in the way in which professional sports careers now develop.
Griffiths said the COVID pandemic had impacted sports organisations given the need to postpone events coupled with an immediate move by insurers to exclude COVID and communicable diseases from event cancellation policies.
“We saw a high number of claims in 2020 and some successful claims around tennis and golf were well publicised in the media,” he added.
Going forward Griffiths said that the broker has encountered many attempts to place COVID exclusions into combined liability and personal accident policies.
“There has been a concern from insurers over the potential for COVID to, in effect, end an athlete’s career but we are yet to see evidence that it can do so,” he explained. “We have had attempts by insurers to exclude COVID from personal accident covers but we have pushed back on behalf of our clients and continue to do so.”
The pandemic has also seen a short-term shift in interest from the major career ending events to the financial impact of soft tissue injuries.
“During the pandemic the way athletes trained changed,” said Mendis. “They were in bubbles and as such they were not always able to access the full support systems that professional organisations have in place. We saw an impact on soft tissue injuries, and that became an area of interest from clients. However, as the training regimes return to normal with an easing of restrictions we do not see this as being a long term concern.”
He added: “In sports organisations there is two distinct areas. The business and back office, and the performance side of the sport itself. These need to be managed in very different ways.
“These sports clubs or organisations have the same risks as any other business in the public eye and have gone through the same issues during the pandemic. On the playing side, in terms of the sport itself, the athletes and training add to the complexity of the risks they face.”
While the sector has seen rates harden alongside the rest of the risk classes, areas such as D&O and cyber has seen rate hikes in excess of those in other areas of the market.
“The high profile nature of sport has seen pressure on some of the liability and cyber risks,” said Griffiths. “Sport entities are seen as high profile so risks such as ransomware attacks are seen as a significant threat.”
COVID has and continues to take a toll on athletes who have been forced into bubbles to ensure they are fit to compete.
“There have been issues around the mental strain that the isolation has created due to the bubbles that athletes needed to place themselves in,” said Griffiths.
Looking to the future Mendis said the way in which athletes plan their careers had also changed.
He cited the example of cricket. With the rise in the franchise competitions such as the Indian Premier League and the Australian Big Bash, cricketers were no longer on a single contract, rather now on fragmented contracts for the various competitions. While the amount of money that can be earned is significantly higher, the nature of the contracts creates less career stability.
“We have the situation where athletes are earning money and looking to retire earlier and may well already have the support system working on how they earn money when they end their sporting career,” said Griffiths. “They may look to use their profile to become a content generator and seek sponsorship deals.”
However, the growing use of media and social media creates new challenges for athletes.
“The profile of athletes is becoming ever more important,” added Griffiths. “They are now under intense media scrutiny both from the traditional media and social media.
“It only takes one tweet or mistimed comment and their reputation can be badly damaged.”
With the changing risk profile the pair said that the industry needed to react and create new covers that better reflect the changing risk profiles.
“As brokers we need to engage with the stakeholders and athletes to understand the changing risks they face, so we can influence markets ” said Griffiths. “There is a requirement for innovation The products are changing as they need to, in particular around the media space where activity is ever growing.
“Risk are getting more complex and they require an increasingly specialised response.”