By John M. Sadler
John Sadler of Sadler Sports Insurance was interviewed by California Youth Football Alliance on Chain Crew Podcast entitled “Show # 2: Is Football Insurance Dying?” The topics covered include the current state of the insurance industry as it relates to youth tackle football, the ESPN article claiming that lack of insurance will end tackle football, what football leagues need to do to maintain their insurance, and which types of insurance policies are needed. Below is the interview script, which was conducted by Steve Famiano and Ron White of CYFA.
Question: Tell us about you and your company?
Answer: I joined Sadler & Company Insurance after graduating from law school in 1986. I became president in 1989 and absolutely fell in love with our Dixie Baseball/Softball account. We used that as a springboard and received a number of referrals and quickly began to specialize in the sport and recreation insurance niche. We now insure over 30 national sports organizations, including American Youth Football, and over 15,000 local sports associations. In addition to insurance, our main specialty area is designing volunteer friendly risk management programs that are easy to implement, yet effective. You can find out all you need to know about what we offer in the way of my qualifications, insurance, and risk management services by visiting our website at sadlersports.com.
Q: Please discuss the current state of the insurance industry as it relates to youth tackle football market.
A: Despite what you may have heard in the media, there are still a number of insurance carriers willing to write General Liability including brain injury coverage.
It is true that some carriers, such as Philadelphia and AIG, were hit with heavy losses in high-risk concussion sports, such as soccer and football, and decided to exclude all brain injury coverage in these sports.
But, there are five or more carriers freely writing the coverage with brain injury for youth tackle football, including Scottsdale, National Casualty, Atlantic Specialty and HCC, among others. Just do a Google search for youth tackle football insurance and you will get a lot of hits. And my agency will insure youth tackle football including brain injury all day long.
I recently had a discussion with a senior manager at one of the carriers that continues to write the coverage, and he said that they have no plans on pulling back and that they have not seen an uptick in brain injury claims over the past three years. He mentioned that they prevailed in all of the lawsuits and have not had to settle or pay an adverse jury verdict, but that legal defense has been expensive.
As far as Accident insurance goes, in youth tackle football, we find that brain injury claims do represent about 16% of all claims by frequency, but overall Accident claims are falling. And the average concussion claim is not particularly expensive and is usually less expensive than a broken arm, for example.
Q: What are some recent and significant changes you have seen within the sport that has impacted the way insurance companies do business and their ability to offer products and services?
A: Clearly, the biggest issues right now that keeps the insurance carrier underwriters up at night are child abuse/molestation and brain injury. The carriers want to see proactive risk management on both.
The carriers writing General Liability in the concussion-prone sports demand concussion risk management programs similar to what is required under state law and by governing bodies. These programs should key in on training for staff, parents, and players on the basics of concussions; how to recognize a concussion, mandatory removal from play, mandatory treatment, and gradual return-to-play protocols. They would also like to see specific training on how to remove the head from the tackle and practice contact restrictions. We provide a free brain injury risk management program that covers all of these elements for our football clients.
And these risk management programs have been successful in preventing second-impact syndrome lawsuits to a great degree. Now that second-impact syndrome has been contained, the activists are now turning their attention to CTE. And, I don’t think that the CTE issue is going to be concluded either way anytime soon. But the intelligent response to CTE is practice contact restrictions such as the ones advocated by your organization. The Datalys Study which was commissioned by USA Football, in my opinion, clearly showed that practice restrictions played an even larger role in reducing concussions than removing the head from the tackle.
The carriers that do provide brain injury coverage want to limit their overall risk. There are several ways to do this. Some carriers will put a separate, lower aggregate cap on brain injury lawsuits to reduce their maximum exposure from multiple lawsuits over an entire policy year. Others will only cover brain injury lawsuits where injury both occurs and evidences itself within a single policy year. This eliminates coverage for injuries such as CTE or other neurological conditions where symptoms may only occur years later.
Recently, with the publicity from USA Gymnastics and Larry Nassar over sex abuse, the carriers have actually put brain injury on the back burner to child abuse. We also have the new federal Safe Sport Act which has upped the risk management requirements for preventing child abuse.
But, surprisingly, on our book of youth tackle football business we are not seeing many claims from either brain injury or child abuse. We’re seeing most of our claims dollars being paid out on routine spectator slips/trips/falls and on player injuries other than brain injury.
Two of our larger claims have actually been falls off of parade floats. You just never know where the claims are going to come from. Many of the larger claims come from outside of playing the sport itself.
We did have a large heat illness death claim which required us to update our heat illness risk management program. What we learned is that heat index is out and web bulb globe temperature is in as the new standard for decision making. And by the way, wet bulb meters cost over $100, but you can buy a $1.00 Weather FX smart phone app that provides a mathematical estimation of web bulb globe temperature. And youth tackle football teams must have cold-water immersion tubs on location. These don’t have to be expensive, they can be a Rubbermaid container or a kiddie pool.
So, what I’m saying is that there is plenty of traditional risk in youth tackle football outside of brain injury and the carriers have to collect a sufficient premium to pay for these traditional losses.
Q: What are your thoughts on the recent ESPN insurance article and the way it characterized potential risk in the sport of football and the insurance industry?
A: My opinion is that the article is agenda driven and over dramatized.
I think that a lot of the media and some researchers need tackle football to be very, very dangerous because it is good for business. The media likes to tout the bad science studies that are either anecdotal, are based on small numbers, have selection bias, or are not peer reviewed. But of course, they ignore or downplay the science-based studies.
I disagree with the notion that lack of brain injury insurance will be the end of youth tackle football.
First of all, trying to connect the dots between the NFL’s insurance problems and how they may trickle down to youth football is ridiculous. Most of the article was about the NFL only having a single source for voluntary Workers Compensation, which, by the way, is no-fault insurance where the claimant does not even need to prove negligence. But they weren’t clear and acted like General Liability only had a single source as well. And I can tell you, youth tackle football does not purchase Workers Comp. We’ve already established that there are five or more carriers that are writing General Liability with brain injury coverage for youth tackle football.
Second, there is no comparison between the risk of brain injury in pro football versus youth football. Pro football has an exponentially larger exposure to concussions and repeated brain impacts, and a significant percentage of NFL players have other lifestyle issues.
And even if the brain injury claims do end up being much worse than currently anticipated, and if all the carriers start to exclude brain injury, I still don’t think it is the end of youth tackle football, at least not on the local level.
It’s true that certain national organizations such as USA Football and Pop Warner could have problems operating without brain injury insurance. But, in my opinion, they’ve brought a lot of the problems on themselves by trying to reassure mothers in their marketing materials. The pleadings in a recent class-action lawsuit in which both were involved allege overreaching statements about tackle football being safe, that they teach safe tackling, or that all the coaches are trained. In my opinion, it is a mistake to claim that any sport or activity is safe. It is better to acknowledge that the sport entails risks, but that the benefits outweigh the risks.
From the point of view of the local league, even if they lose brain injury, they will still be able to buy General Liability without brain injury coverage. That’s important because they at least carry Liability insurance which protects against piercing the corporate veil in a lawsuit and tapping into personal assets.
There are other sources of insurance that would be available.
The older league General Liability policies that were in force, which included brain injury, would still respond to claims arising from past exposure to concussions or contact. As a matter of fact, the aggregate limits from these annual policies can be stacked on top of each other, which could provide a huge funding source.
And the individual administrators and staff members can look towards their Homeowners Liability and Personal Umbrella policies. Most don’t have exclusions for being a volunteer in a sports league.
And there is incorporation, which can protect the personal assets of administrators and volunteers from their passive negligence, the federal Volunteer Protection Act and similar state acts which grant immunity to volunteers of nonprofit organizations except in cases of gross negligence, and waiver/release agreements, which can be strengthened to specifically address brain injury.
In addition, you could see state legislatures pass immunity legislation as many have done for skating rinks or ski slopes.
What I’ve learned is that attorneys don’t really want to go after association assets or personal assets. They want to go after insurance carrier assets. And if the insurance company assets are not available, and the feeding source is cut off, they may lose interest in litigation.
I can remember in the early 2000s, I insured a large block of builders. The insurance industry added a construction defect exclusion to the General Liability policies. I thought it would be the end for the builders as no one would operate without this insurance. I was wrong. It was a deterrent to litigation. Fifteen years later, only one client came out of pocket with business assets to pay for a claim.
Q: Looking forward, what can youth tackle football organizations do to maintain insurance coverage at the best possible rates?
A: Youth tackle football needs to be more serious about implementing formal risk management programs. Insurance rates are a function of claims payouts and the best way to limit payouts is to concentrate on eliminating or reducing severity claims from brain injury, child abuse/molestation, heat illness, and from group transportation.
But the problem is that our volunteer administrators and coaches only have so much time. There are a lot of sources out there to get risk management training, but most require watching a lot of time-consuming videos that don’t cover all the severity risks. And I think we know if you make something too difficult or time consuming, it’s not going to happen.
That’s why at Sadler we developed fast, simple and effective, document-based risk management training on brain injury, child abuse/molestation, and general risk management awareness training on the other severity risks that arise from lack of supervision and instruction, facilities problems, equipment problems, improper sport injury care, and group transportation. An organization simply has to adopt, implement and then distribute our templates to its administrators and staff and get their wet or electronic signature that they have reviewed and will follow the policies.
Risk management doesn’t need to be complicated or include an onerous long checklist of items that must be addressed or else. It is simply a matter of raising awareness of risk, recognizing risk, and appropriately responding to risk.
Q: Besides General Liability and Accident coverage, what other policies do you recommend for Youth Tackle football organization to carry and why?
A: First, it’s not enough just to have General Liability and Accident in place. You need policies with high limits, with dangerous policy exclusions removed, and that have some customized coverages added for the sports niche. A lot of the policies that are being sold in the sports niche are of inferior quality. For example, they may exclude abuse/molestation, brain injury, or punitive damages. Or they may not include coverage for non-owned and hired auto liability. And those problems are just the tip of the iceberg. It is difficult for a layperson, such as a league administrator, to read a 100-page insurance policy to determine if they have quality insurance. We provide educational tools and checklists that make this process pretty easy. You can even require your agent to complete our checklist and this transfers all the work to that agent.
But other than Accident and General Liability, it is important to have a Directors & Officers Liability policy. It covers certain lawsuits that are not covered by General Liability. Examples are discrimination based on race, sex, age, or handicap; failure to follow your own rules or bylaws when making an administrative decision, and wrongful suspension or termination of league personnel or players.
There is also Crime insurance which protects against insider embezzlement or use of credit cards to pay personal expenses. It also covers outsider theft of money such as a grab and run of registration or gate receipts.
And finally, many leagues buy Equipment insurance to protect their sports equipment, field maintenance equipment, concession equipment, fences, light poles, and scoreboards against loss due to fire, wind, theft or vandalism.
Those are the big five policies, but some leagues that own buildings or autos or pay employees need other policies.