The Role Insurers Play to Cover Many Perils in the Sports Industry
There is a correlation between Sports and insurance companies. The article sheds light on the importance role that insurers play to migrate...
Insurance is one of the important guarantees and shields that impacts multiple areas in people’s lives. It is a result of the evolution of many systems that emerged and aimed to provide cover and security against life risks. For the sports industry, insurance became a key-player and indispensable requirement for all the stakeholders and relevant parties who are having a role in various fields of sport. Especially with the increasing number of violent acts and riots that may lead to several injuries and disabilities, besides the significant crises that many sports organizations are exposed to. Hence, many sports clubs find it essential to obtain insurance policies that cover any damage or loss that occurs whether to their athletes or entities. Whereas these clubs incur significant costs if one of their athletes sustains any injury, as the insured sum becomes payable by the occurrence of such an injury upon which the insurance company shall cover the costs of treating these athletes.
What Sports Insurance Covers?Sport insurance policies are designed to cover amateur and professional players, clubs, groups and associations, and organizations in the sports industry. So, if the athlete adds value for the club, the club will seek then to cover any risks that may occur to the athlete to protect this value. On the other hand, we may find some athletes procure insurance to cover some risks related to injuries that may occur while practicing the field of the sport they are involved in. For example, Some football players insured their body parts and they are worth millions of dollars. Football players are well aware of the injuries and career-ending injuries. Lionel Messi is currently ranked among the best footballers in the world. In 2018, the sports blog released the details of the most expensive insurance procured by football players, where Messi was on the top of this list as he insured his legs for (€750 million). Cristiano Ronaldo is also on that list where his legs insurance is valued for (€103 million).
The emerging risks facing the sports, entertainment, and events industries — from weather events and pandemic outbreaks, to data breaches and injured athletes or performers — can have serious implications for organizations’ finances, operations, and reputations. Much of what gives sports and entertainment events their appeal can also make them risky. As such, sports, entertainment, and events organizations must carefully take into consideration all available risk management and insurance solutions that can allow them to reduce their total cost of risk.
For instance, tens or even hundreds of thousands of fans can descend upon a single venue to witness athletes and entertainers showcase their talents — oftentimes in electrifying performances with palpable intensity or drama. Cast in a different light, however, those same events could also be portrayed as the perfect storm of crowds, confined spaces, and potential security breaches. And it’s easy to see how many sports, entertainment, or events organizations could be upended by a multitude of emerging risks, including:
- Pandemic outbreaks
- Terrorism and violence
- Technology advances
- Employment practices liability
- Injuries and illness among talent
So, sport and recreation organizations must protect their assets with adequate insurance.
Types of Specialized Sports Insurance Categories
There are many different types of specialized sports insurance categories, including business insurance packages or sports clients, which reflect typical business insurance types, plus additional categories. For instance, there is a policy that covers the sports club liability, also the entity can procure insurance to cover sporting equipment, and so on.
Nowadays, as the world witnesses this widespread pandemic the sports industry was affected economically and culturally due to the widespread cancellation of sporting events and other communal entertainment. To safeguard the health of athletes and others involved, most major sporting events at international, regional, and national levels have been canceled or postponed – from marathons to football tournaments, athletics championships to basketball games, handball to ice hockey, rugby, cricket, sailing, skiing, weightlifting to wrestling and more. In addition to economic repercussions, the cancellation of games also impacts many social benefits of global and regional sports events, which can cement social cohesion, contribute to the social and emotional excitement of fans, as well as their identification with athletes leading to greater physical activity of individuals.
With the occurrence of such an event, we can see the important role that Insurance can play by increasing financial liquidity in catastrophe affected areas and mitigating the effects and losses of such crises. As entities that hold an insurance policy covers the loss of this pandemic can use these policies to mitigate the economic negative impacts caused by this virus; the matter that will help these entities to cope with the challenges they witness nowadays.
The Most Common Claims
Practically, insurers can cover and indemnify significant losses as a result of such events. Event cancellations may be one of the common claims now which are raised to insurers for providing insurance coverage, as some large events (but certainly not all) have policies that may cover them even for epidemics or pandemics. The largest event taking place this year is the Tokyo Olympics where analysts estimate approximately $2bn of coverage.
It is also likely that the reinsurance sector will incur some of the brunts here, as insurers claim back the costs of cover from them over a certain threshold. One major global re-insurer, for example, has been quoted as having exposure of over 500 million euros should all events covered for pandemics be canceled.
Notably, procuring insurance for any sports organization is a vital and a key requirement for maintaining the sustainability of this organization under the fluctuations and risks that may emerge during the business. While the risks to the sports, entertainment, and events industries are numerous, so are the options for addressing these perils. This means organizations have ample opportunity to overcome today’s challenges and thrive in even the most complex risk environments.
At FTD Partners, we have ample experience in handling insurance claims, as we receive many requests in this field and manage to enable our clients to obtain the due coverage and mitigate any loss incurred. So, if you were a sports organization affected by this global pandemic and need to claim for the insurance coverage you procured against such perils and/or business interruption, then FTD Partners can help you in instituting your claim for coverage and seek the relief payable to you upon the policy wording.