As the FIFA World Cup kicks off in Germany on Friday (9 June), leading football clubs throughout the world are hoping that their prized assets emerge from the tournament unscathed. Football has become a multi-billion pound business and injury during the course of an international tournament such as the World Cup has huge implications for the player’s football club.
As England breathes a sigh of relief that Rooney looks likely to be fit to play a part in the World Cup, bosses at Manchester United may not be so sure – a flare up in his condition which puts his recovery past the start of the new season could cost the club thousands.
Insuring footballers against injury is clearly the answer – but who pays the premiums?
International football governing body FIFA (Fédération Internationale de Football Association) has set up a trial self-insurance scheme which seeks to compensate clubs if their players are injured. Meanwhile, UK clubs have argued that the English Football Association should pay the wages of players who return injured from international duty until they are fit to play for their home teams.
Lloyd’s is one of the major players in this field. Bill Garside, Director of Aon Sport, says: “The Lloyd’s and London markets remain the home for professional sports cover and they contain a great deal of expertise in the sector.
“The fact is that you need an experienced and professional underwriter to lead your programme, and one who understands the medical risks to a player. This is key to getting the right insurance product.”
Football mania
Demand for insurance in the football world began in the1980s following renewed interest in the sport and has steadily increased as the commercial side of clubs has grown.
There are two main types of insurance bought by a club:
Permanent Total Disablement Cover – this is usually bought by a club to cover the whole team in the event of accidental death or a player’s career ending.
Temporary Disablement Cover - or what's commonly known as Wage Roll Protection - this covers a club in the event of a player being injured and having to find a replacement. With clubs such as Manchester United paying out £42.7 million in wages this year alone, it is not surprising that this type of cover is growing in popularity.
Developed by the Lloyd's market, this cover is often bought by clubs for their top players, with the cost of the insurance determined by the player’s age, health, injury record, medical treatment available and the motivation of the player.
With players becoming increasing aware that football is a relatively short term career, there has also been an increase in players insuring themselves. Previously, a body part injured by a player would be excluded from a disability policy. Lloyd’s underwriters are now developing a product that isolates problem areas to specific joints and muscles.
Cover for when things go wrong
Most players don’t need to call on their policies, but the case of Dean Richards shows just how important the right type of policy is. Dean Richards was told by specialists his career was over last spring. He was warned that to continue playing football would risk a brain hemorrhage.
Fortunately, the player had taken out a personal accident and sickness policy which was underwritten by a number of Lloyd’s syndicates. He has now been paid £2 million under the terms of the contract.
Danny Bossom, a sports insurance specialist at broker Alexander Forbes, says the increasing amount of cash involved in football has generated more interest from underwriters over the years. “The products are basically the same as they have been for the past 10 years, but the sums involved are far bigger and, as such, the interest in the sector has increased,” he said.
He added that, while insurers in Bermuda and Europe underwrite this type of risk, “the fact remains that they begin and end in both the Lloyd’s and London markets”.
Another big change in football is that medical advances have seen players recover from injuries which, even five years ago, would have been career ending.
“Players want to return because of the wages on offer in the game now,” Bossom said. “This means that, despite the levels of insurance cover, they will earn more money through club bonuses than through any insurance pay-outs, because the contracts are written on a net basis.”
