Tag Archives: NFL draft

Sports Disability Insurance

 

Attention has been focussed on sports disability insurance. This is due to a lawsuit against Lloyds of London by former University of Southern California Trojans receiver Marquise Lee.

Much of the interest is from sports agents who represent high-profile college players. Athletes who stay in school another year and wait for another draft want to protect their worth. Interest from potential clients reaches a climax at the time just before the draft.

Michael Owen, VP of Lockton’s Companies LLP, said there are plenty of insurance agents in the high-profile sports disability insurance market.

The amount of people writing sports insurance has increased. This has driven down rates and commissions.  However,  policies are growing in dollar amounts to cover increasingly high-earning athletes. NFL players on average earn $1.9 million per year, according to a report by Forbes.

Lloyds of London is being sued by Lee because it denied a $4.5 million insurance claim. Lloyds states that Lee misled them about his injury history. The policy was taken out in 2013. This is when Lee decided to remain playing college football for another year.  He opted out of the draft. The premium for this policy was
$94, 600. A business loan was obtained for that purpose. The policy guaranteed Lee the difference between his rookie NFL contract and a $9.6 million baseline. The Jacksonville Jaguars signed up Lee for fours at $5.1 million, making the difference of $4.5 million filed for in his claim.

Lee was diagnosed with a medial collateral ligament sprain as well as a bone contusion. Furthermore a posterior sprain and popliteal cyst in his left knee. As a result of the injuries, Lee did not perform well. He missed many games during the remainder of the 2013 football season.

Before his injury Lee had been viewed as a top first-round pick for the 2014 draft. He was only selected in the second round (39th) by the Jacksonville Jaguars in the 2014 draft. According to the lawsuit, this amounted to a multimillion dollar loss in the value of Lee’s rookie NFL contract.

In denying the claim, Lloyds argued that Lee did not disclose certain health information when applying for the sports disability insurance policy. An executive director of Aon’s entertainment group stated that from the start, disability policies require a lot of groundwork. The importance of policy wording is of paramount importance.

The understanding and expectations of the insured must be aligned with the understanding and expectations of the carrier. Not only is good communication amongst all parties key to a satisfactory sports disability insurance policy, but extremely good guesswork is required as to how much the player may be worth in the future.

Locktons reported that they have paid out sizeable sums, such as an $8 million claim in the NFL and a £6 million claim in the Premier Soccer League. Citing client confidentiality, Owen would not give names or details of payouts. Former Georgia Bulldog Todd Gurley and Ifo Ekpre-Olomu, an Oregon Duck cornerback, have reportedly been preparing to file claims after suffering season-ending injuries last year.