SBD/Issue 162/Leagues & Governing Bodies

MLB Teams Insure Long-Term Deals To Protect From Player Injury

Orioles Were Able To Recover $23.7M
Of Belle's $39M Contract In '01
HCC Specialty Underwriters, Inc. President Marc Idelson said that most MLB teams "insure their long-term deals, even though premiums can be as high as 10% of the contract's annual value," according to Jon Paul Morosi of the DETROIT FREE PRESS. Most insurance policies "cover three-year intervals and are renewable." Policy premiums are "linked to the comprehensiveness of the coverage," and Idelson said that "most policies cover between [50-80%] of a player's salary." The NBA and NHL have "league-wide plans for their clubs," and while MLB does not, most MLB teams "obtain some form of coverage for their stars." MLB teams are "only able to collect on a policy" if a player is on the DL. And while policies "generally require players to remain on the [DL] for 60 or 90 days before the payments begin," the deductible period -- like the amount of coverage -- "can be adjusted depending on what the club is willing to pay." But MLB and insurance industry sources indicated that policies "often exclude areas of the body that have been seriously injured before." Also, position players are "less expensive to insure than pitchers." ESPN's Steve Phillips said that two events in '01 "changed the baseball insurance" marketplace: the Orioles received a reported $27.3M claim on the remaining $39M of injured LF Albert Belle's contract, and the World Trade Center attacks on September 11 "precipitated large payouts throughout the insurance industry at large" (DETROIT FREE PRESS, 5/11).

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