Andrew Holt explains how high earning football players can cover themselves for injury on and off the pitch
David Beckham may lose a ball or two, but that isn't a worry. A club like Real Madrid can take the hit of replacing footballs. The big concern is if he suffers an injury, and this is where Lloyd's comes in.
Lloyd's can deal with the cover, liabilities and problems your average multi-millionaire footballer may have the misfortune of suffering. Momentum Underwriting Management underwrites top footballers in the English Premiership, Spanish La Liga, Italian Serie A and German Bundesliga.
It offers three types of policies: accidental death, permanent total disablement and temporary total disablement. The first covers accidents, or even death, on the pitch. The second covers a player who has a career ending injury.
"The two beneficiaries for this are the club for the loss of the value of the player and the player himself, who can be paid five times his salary for loss of earnings," says Peter Thompson, senior sports underwriter at Momentum, sports consortium 9264.
Exclusions can be incorporated in this policy, but this depends on the age of the player and the player's injury history.
Recently, former Spurs star Dean Richards received the highest pay-out ever given to a professional footballer in the UK after being warned to quit the game or face suffering potentially lethal bleeding on the brain.
He was warned that to continue playing would risk a brain hemorrhage.
Having taken out a personal accident and sickness policy, which was underwritten by a number of Lloyd's syndicates he was duly paid £2m.
It is on temporary total disablement, that Momentum offers a relatively new product. This covers the player when he is out of the game in excess of 30 days, but will return to the game.
The player's club benefits with compensation being paid for the period of the player being sidelined. "When Djibril Cisse was out last season with a compound fracture, Liverpool received compensation while the player was in rehabilitation," says Thompson.
The temporary total disablement policy is relatively new in Britain, having being pioneered on the Continent. "Historically, European players were paid more and European clubs wanted to cover themselves, when a player was out. But this is now applicable to the Premiership," says Thompson.
Surprisingly only two Premiership teams have taken out this cover. "We are currently promoting the advantages of a club taking out this insurance," adds Thompson.
Demand for insurance in football began in the 1980s following renewed interest in the sport and has steadily increased. Today, it is big business.
Last year the combined income of the top five European clubs was more than EUR1.2bn (£831m).
As an example,Thompson says premiums are currently 0.5% of a club's value. Even though Thompson says such a rate is "under priced". If you are looking at the richest club in the world, Real Madrid, at a worth of EUR275m this amounts to a cool EUR1.35m.
But if you are David Bruce, divisional head of speciality at Hiscox Syndicate 33, you are looking at even more lolly. He is not prepared to go below a premium rate of 2.5%. "If you want something cheaper that is not us. You pay for our expertise and capacity," he says firmly.
Hiscox offers permanent total disablement and accident and death cover to "most" of the clubs and players in the Premiership, as well as in Italy and Spain. "We are happy to insure any club or player, but they will have to pay for it," says Bruce.
Hiscox can offer a lifestyle policy that takes into account not just the footballer being injured but also home, contents, and fine arts cover.
"When you are as well paid as some the Premiership players you want to be fully covered. And when you are a big football club paying a player a hundred grand a week, you should be looking at cover," says Bruce.
But what about players outside the elite of the world's top leagues?
"We are open to insuring any player in any league. If the club or player approaches us, we can accommodate them. We don't rule out lower division clubs or players," says Thompson.
With football, the underwriter and broker need to be experts on the requirements of the sport and the individual circumstances and needs of the players.
Yet the glamour associated with football underwriting attracted companies and individuals to the market who were not focused on the risks involved and have since bitten the dust.
"Some have come into this area because they have seen it as glamorous and failed. You need to know why you are in this market and assess the risks properly, "says Thompson. This has helped put Lloyd's in an even stronger position, as it shows the value of Lloyd's expertise in complex risks.
Giles Allen, head of the accident and health team in global markets, international, at Willis, agrees. "Although footballers do receive a large amount of media attention, the real risks involved for insurers remain on the pitch. Underwriters examine medical information very carefully and one of the aspects of our role as a broker is to ensure our clients enjoy a policy with as few exclusions as possible."
Although it is a limited market, not all underwriters want to insure football players. "Although there is good capacity in the London market," says Allen. And there are accumulation risks for top teams throughout Europe.
"We often place catastrophe policies due to large accumulations of sums insured with players travelling together," says Allen.
"The media has been known to state that the legs or feet of one footballer or another are insured for a certain figure, but in reality it is the whole body of that footballer that is insured for that sum.
"It is merely more likely that a serious injury to a part of the leg/foot has a greater chance of ending a career than an injury elsewhere." So Beckham's balls are safe.
