Every weekend, millions of people in Australia take to the sports fields to compete in professional and amateur competitions. But lurking in the shadow of every athletic pursuit is the sobering reality that each and every player is one very bad tackle away from not being able to work again.
by Stephanie Wanless
It is an incident that will be etched into the memory of many sports fans across Australia for ever more.
The 2014 NRL game between the Newcastle Knights and Melbourne Storm was approaching the half time mark when Knights’ 22-year-old second rower Alex McKinnon was the victim of an illegal spear tackle by the Storm’s Jordan McLean, leaving McKinnon with two fractured vertebrae (C4 and C5). His NRL career – and life as he knew it – was over; as a quadriplegic, he’s now confined to a wheelchair.
For McKinnon, the insurance the NRL had in place for ‘catastrophic injury’ left an awful lot to be desired, with a maximum payout of $500,000 relatively insignificant in a sport where good players earn that in a season. McKinnon’s immediate financial future was left in the hands of goodwill rather than his sport’s good planning, with a fundraising round and other charitable gestures needed to supplement the inadequate cover, while the prospect of legal action against the NRL was widely mooted.
Incidents such as this, thankfully, are few and far between. However, it brought microscopic attention to insurance in Australian sport – at both an elite level and an amateur level. Investigations revealed NRL’s maximum payout was around a third of what was in place for a rugby union player, and half of what an AFL player would have received.
THE IMPLICATIONS FOR THOSE INVOLVED IN SPORT
The McKinnon incident brought the implications of sports injuries into the wider conversation. If the cover that a professional game such as NRL fell short, what about that in placefor the millions involved in amateur sport across Australia every week?
SPORTS INSURANCE – WHAT TO TALK TO YOUR CLIENT ABOUT
- PUBLIC LIABILITY: To cover the financial cost of any legal liability that they may incur in the course of their activities.
- MANAGEMENT LIABILITY: The board or committee should also have management liability cover if the board/committee members are sued for things such as libel or selection issues.
- PROPERTY INSURANCE: If the association or club owns their own premises, they would need to have property insurance to cover the physical loss or damage to the premises and equipment within it.
- PERSONAL ACCIDENT COVER: Most associations will want to satisfy their duty of care by providing some sort of personal accident cover for their members, usually in a group scheme which provides specified benefits.
- INDIVIDUAL PERSONAL ACCIDENT COVER: Individual athletes will want to consider their own personal accident cover, as well as possibly loss of income, in the event that they are prevented from working by any injuries that they sustain.
- PROFESSIONAL INDEMNITY COVER: Coaches and trainers will want to have their own professional indemnity cover in the event that they are sued.
IN ADDITION…There are numerous other insurances that either organisations or individuals could take out, such as cancellation of events, non-appearance of specified athletes and travel, to name but a few.
According to its most recent report into the levels of participation in sport and physical recreation in Australia*, the Australian Bureau of Statistics states 5.2 million (26 per cent) of Australians aged over 15 played in organised sports teams, while a further 1.4 million (7.7 per cent) were involved in non-playing roles.
A report from the Australian Institute of Health and Welfare in 2011/12 revealed that, of those participants, around 36,000 a year end up hospitalised through injuries sustained while playing. And while there is a voluntary assumption of risk when taking part in sport (see breakout), the problems occur when the harm is caused by conduct outside the scope of the game, as opposed to outside of its rules.
This is serious – and big – business.
And as the McKinnon injury proved, if the correct levels of cover aren’t in place, it can spell trouble for all concerned.
SPORTS CLUBS – DON’T GET CAUGHT OFFSIDE
Quite simply, says Chris Nash, Managing Director of Sportscover, every person, club and organisation involved in sport – at both a professional and amateur level – needs sports insurance. However, as the financial pressures of running sports clubs grow, cheaper cover that isn’t up to the job can be taken, leaving the club, spectators and players at serious risk.
“As with all insurance, it’s not an issue until an accident or event occurs that requires insurance to respond,” says Nash.
There’s a limited market… in Australia, so you’re really relying on a small number of niche insurers or coverholders to cater for this type of insurance.
“As ridiculous as it sounds, I know of a rowing association overseas that had a liability policy that excluded any liability while on water.”
And while that may be an extreme example, it illustrates the dangers of sports organisations taking a general accident and health policy instead of a niche one.
“Within a specific sports policy, there are a number of specific inclusions for sports-related injuries and a quality sports product will be geared to the sport and have the appropriate level of benefit applied. For example, a good squash policy would include a higher benefit for loss of an eye, as this is an injury that can occur more frequently in squash.”
VOLUNTARY ASSUMPTION OF RISK
While injuries in contact sports are common, thankfully court cases are not. When they do happen, however, the voluntary assumption of risk (VAR) is a common defence.At common law, participation in an activity that involves the risk of physical contact invokes an implied acceptance of the consequent possibility of injury, where the activity is within the reasonably accepted bounds of the game. Even where the contact breaches the rules of the game, the infringer may still be relieved of liability.In order for VAR to succeed as a complete defence, the court must be satisfied that the person who suffered the injury consented to the eventuation of risk of injury which did in fact occur.
Tim Martin, Head of Accident & Health and Sports ATC Insurance Solutions, says the different risks that are inherent in different sports impact premium prices. For example, “golf and motor racing are very different sports and this is reflected in the pricing”, he says. And while some leagues and associations have their own policies in place, it’s important for individuals to assess their level of cover, and potentially top up what’s already there.
“There’s a limited market for this type of insurance in Australia, so you’re really relying on a small number of niche insurers or coverholders to cater for this type of insurance. In professional sport, with contracts becoming larger, sometimes the policies are falling short,” says Martin.
On the pro circuit, the level of cover is usually based on contract values, and the most commonly-purchased cover is permanent disability – covering career-ending injuries – while there’s also the option to cover sickness.
Insurance is critical from the clubs’ perspective too. If a player is permanently injured and entitled to have their contract paid up, a good sports policy can act as asset valuation protection for the club.
Other areas that are often not given the deserved attention include spectators watching the sport or people attending functions, as well as physical damage to property.
“For example”, says Nash, “most sports clubs will have a lot of volunteers who are not financial members of the club or association. Therefore they are usually uninsured under a non-specialist policy, whereas a specific sports policy will cover these volunteers”.
A quality sports product will be geared to the sport and have the appropriate level of benefit applied…
In addition, the growing number of fitness centres and gyms, as well as other ‘mass participation’ activities such as Park Run, all require their own individual insurance policies to cover the participants and organisers, and not a general policy.
“General accident and health cover excludes certain sporting activities that are regarded as hazardous,” says Nash. “It’s amazing how many popular sports that many people are engaged in on a daily basis could be ‘hazardous’ under these policies.”
Having the correct cover, and the appropriate level of cover for sporting clubs, associations and players is vital, regardless of the level of competition.
As the McKinnon case demonstrated, while the NRL had the correct policies in place, the level of cover wasn’t suitable to compensate the player for not only his loss of earnings, but also the permanent injury suffered.
McKinnon, in some respects, was fortunate that the NRL had some cover in place and his high-profile incident attracted the charity of others.
The average person playing weekend amateur sport might not be so lucky.
A serious injury and consequential inability to earn could very easily have incredibly damaging financial consequences for both the participant and the sporting club or association if the appropriate insurance isn’t in place.