Business Insurance - July 2016

Athletes play hardball over concussions

  - Increased litigation may lead to cuts in coverage

By: Stephanie Goldberg

July 31, 2016

Increased awareness about the long-term effects of concussions could lead some insurers to exclude head trauma from policies for professional athletes, experts say.

Additionally, as a fresh wave of concussion-related litigation hit several professional sports leagues last month, pricing for professional athletes' insurance could rise, they say.

While the 3rd U.S. Circuit Court of Appeals in Philadelphia approved a class action settlement in April that could cost the National Football League $1 billion for allegedly failing to protect players from health risks associated with head injuries, retired NFL players in mid-July also sued Riddell Inc. for allegedly failing to warn them that company's helmets wouldn't prevent brain injuries.

Former professional wrestlers also sued World Wrestling Entertainment Inc. in July for head injuries they sustained during matches, and a Carolina Panthers player who suffered a career-ending concussion in 2013 filed suit to collect benefits under his professional athlete insurance policy.

Meanwhile, a federal judge ordered the National Hockey League's workers compensation insurer, Chubb Ltd., to share redacted independent medical exams related to head trauma claims with retired players who allege the league didn't adequately protect them from concussions.

“Insurance companies should reasonably be concerned about providing insurance to individuals that play contact sports with head-to-head contact or repeated contact between a ball and one's head,” said Marc Edelman, a law professor and sports law expert at Baruch College's Zicklin School of Business in New York. “Unless the NFL decides to substantially change the nature of the sport, the risk portfolio for insuring professional football players will begin to look more like the risk portfolio for insuring professional boxers.”

That means “substantially elevated premiums,” Mr. Edelman said.

Sports-related brain injuries are a top emerging insurance claim in the U.S. and the U.K., but “effective emerging risk management” by insurers can prevent such claims from becoming as costly as asbestos-related claims, Standard & Poor's Corp. said last week in an analysis.

“U.S. insurers have learned from their experience of asbestos-related claims, and are increasingly drafting exclusion clauses for concussion claims and capping concussion lawsuit payouts,” S&P said. U.K. insurers also should take steps to reduce their potential exposures, according to the rating agency's London analysts.

There's only so much an insurer can charge for a policy that excludes “what could be, and likely will become, the No. 1 career-ending injury” among professional football players, said John W. Schryber, a partner at law firm Reed Smith L.L.P. in Washington.

“You can't exclude your way to profits,” added Mr. Schryber, who represents Haruki Nakamura, the Carolina Panthers player suing underwriters at Lloyd's of London for not honoring his $1 million career-ending injury policy.

Although two physicians said Mr. Nakamura was permanently disabled after suffering a concussion during a preseason game, an insurer-appointed medical examiner said he can continue to play football but urged him to consider the “probable long-term effects of repetitive concussions,” according to the complaint.

While some underwriters have started excluding cumulative head trauma from their coverage, Pro Financial Services, LLC (PFS) will not take that path, said Dan Burns, president of the Chicago-based specialty risk underwriter.

Some insurers will even “pull out of the class because of what they consider unknown future exposure,” he said. The fact that more players are sitting out for extended periods of time or retiring early as a result of head trauma does have “to be factored into the way we rate our products.”

The increased awareness generated by recent lawsuits — namely the class action suit against the NFL — is likely to spur lawsuits from athletes in other sports, experts say. Whether that means more billion-dollar settlements remains to be seen....

-- You can find the original article in its entirety on the Business Insurance website here.

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