The caste of athletes is as old as history. So is the caste of insurance salesmen: in ancient Babylonia, merchants underwrote the caravans through loans that were paid back when the goods arrived. Only in recent years, however, have the two broad industries of insurance and sport recognized the financial opportunities that each provides for the other. Today they are so closely mated that every kick, dribble, stroke, wheel and lace of sport is insured against life's impending dooms.
Dooms are everywhere, of course, and they range from oversudsing to earthquakes. Perhaps the most impending of them all in the mind of the sports fan—or sports executive—is a plane crash in which a whole athletic team would perish. Humans have an inborn fear of flying. Nearly every comedian has a routine about it. And it was an acknowledgment of this fear, coupled, perhaps, with the fear of going broke, that prompted the owners of professional baseball and football teams to adopt disaster plans whereby, through insurance, a ball club could be restocked with players in the event of a crash.
The National Football League has a plan which allows the owner of any team lost through an air disaster to collect $2.25 million from the insurance underwriters. Half of that sum would serve to help a team immediately purchase proven talent from the remaining squads in the league; the balance would be working capital for the future. The premium costs $1,342.85 per club. In baseball the American League has what it prefers to call a "rehabilitation plan." Under any name, the plan provides a $1,875,000 policy for the purpose of restocking a club—at $75,000 a player—after it has lost seven or more players through a crash. The premium costs about $50,000 for the three-year period and is prorated among the 10 American League teams.
The National League has no such disaster plan, but the league does provide a $50,000 traveling policy for every individual player and coach. The league bears the entire cost of the premiums, which total about $10,000 per year. In the event of a disaster, President Warren Giles says an emergency meeting of owners would be called and a club restocked. "We feel you can deal better and more generously when a man is in trouble than if you have a prearranged plan," says Giles. He said something very much like this before his team owners stocked the Mets.
Baseball takes the precaution to insure itself against a lot of other things besides plane crashes. It worries about public liability, property, fire, theft and—sometimes—a wild throw or a wicked foul. The clubs do not insure their superheroes against sore arms and chipped bones (the players have their own policies), nor do they insure themselves against the loss of revenue in case a superstar gets hurt ("I wish we could," says Yankee Publicity Man Bob Fishel). However, the clubs are protected if a ball park collapses, gets flooded, burns down or if a spectator breaks a leg chasing a foul.
Athletes who break legs and other as sorted limbs accidentally are equally covered as insurance weaves its web around sports. A professional golfer, for only $350 a year, can collect $500 to $15,000 for hitting a tree root with his club, depending on how hard he hits it and on how long his wrist or hand or arm suffers from the impact. Professional football players are insured against flying tackles just as pro baseball players are insured against flying Coke bottles. Jockeys are insured against broken bones if a Thoroughbred bucks them off, and Thoroughbred owners are insured against accidents to their horses. Among the amateurs, the NCAA offers each member school a policy for its intercollegiate athletes covering everything from a stubbed toe on a baseball field to a fatal crash of the team bus. Skiers are insured against faulty chair lifts, and ski lodges are insured against fallible skiers. Aspen, for example, carries $200,000 for individual liability, with maximum payment by the insurance company of $1 million for any one accident. Nobody can insure against a lack of success in sports, but anyone can insure against not being able to try.
The business of insuring, i.e., setting the odds on, an athlete's survival has brought into the field some bold, new sportsmen. They are not to be found on the sports pages of the newspapers, because they make forward passes with quick smiles instead of footballs, and they only race their Jaguars to the banks. These are the men who sell sports insurance and, like the fine print in their contracts, they are everywhere.
The best place to find them is in that ponderous market for calculated risks known as Lloyd's of London. Since the 17th century, the underwriters who sit in a vast hall known as The Room at Lloyd's have been prepared to provide insurance of every conceivable kind. It was through Lloyd's that Actress Bette Davis insured her waistline, that a department store in Sydney, Australia covered its employees against accidental death caused by a Russian satellite circling the earth, that the odds on a mother giving birth to twins were figured (at 23 to 1) before the fourth month of pregnancy. And, naturally, it was at Lloyd's that nearly all of the peculiar types of sports insurance began.
Most of the underwriters at Lloyd's look like distinguished bankers. They can evaluate the laws of probability and set the rate for every human fear. Said one of the Lloyd's brokers recently, "Underwriting is a sort of controlled gamble where you set the odds on a situation and think you will win. You always walk a tightrope, and the trick is not to slip too often."
One broker at Lloyd's who almost never slips is Peter Nottage, the lanky, austere director of a firm that deals primarily in what are known as contingency risks. "Lloyd's dealings in sport come largely under three headings," explains Nottage. "First, there is coverage for the abandonment of events for any reason, the chief one being the weather. Second, Lloyd's insurance covers disability or death of any sportsman, and third, there is insurance to cover receipts of U.S. theaters handling closed-circuit TV in case there is a breakdown in the broadcast or an inability to pick up the signal." Lloyd's closed-circuit coverage for boxing includes only heavyweight world championships. The promoters of both Patterson-Liston fights took out $1 million against breakdown. As for boxing's other weight divisions, Nottage says, "The underwriters feel that below the heavyweight level the moral hazard in boxing is too great a risk."
Disability and death insurance for individual athletes are placed at Lloyd's in varying amounts. Arnold Palmer has a $500,000 policy that costs him $7,500 per year. This is one of the bigger policies, with one of the fatter premiums—though the rate is not high considering the payment involved. A much higher rate is the one levied against pre-and postseason college football games, of which Lloyd's is very wary. One all-star game has developed such a reputation for injuries that the sponsors must now pay a premium of $100 per man to cover injuries, with a maximum payoff of a mere $1,200 on any single player.
Besides these more or less standard policies, Lloyd's brokers have placed insurance on every aspect of sports from Irish Sweepstakes tickets (a ticket holder insures against his horse not starting the race) to mountain climbing. Jim Whittaker, a member of the U.S. Mount Everest climbing team, wanted extended coverage on the expedition, and Lloyd's was the only place he could get it. "I had liability insurance when I was a guide on Mount Rainier," Whittaker says, "but on expeditions, no. However, for Everest, I wanted more. Lloyd's insured me, and several others, for six months. The premium was $100 for $10,000. I took out $500 worth." It was life insurance only and did not cover accidents unless a climber lost a whole foot or arm. "They were pretty smart," Whittaker adds. "Fingers and toes lost from frostbite didn't count. As it turned out, two members of the expedition were frostbitten and lost all of their toes."
Overall, says Lloyd's Peter Nottage, the insurance record with sports is fairly good and getting better all the time.
One reason the overall payment record has been good for the brokers is that they have improved their knowledge of the odds through painful experience. A risk that caused considerable woe to the underwriters was their much-publicized hole-in-one guarantee. The sponsors of the Palm Springs Golf Classic offered a bonus of $50,000 to any professional who scored an ace on any hole during the tournament. The sponsors then got Lloyd's to insure the tournament for the full amount against any hole in one. For three years running, an ace was scored, and Lloyd's underwriters had to pay up the full amount each time. Now the coverage is restricted to a specific hole named before the tournament begins, because the brokers insisted they deserved a "more sporting chance."
The hole-in-one payoffs, however, were a long way from being the largest that Lloyd's has faced in sports. That distinction still is held by the amount handed over to Edgehill Farms, Incorporated and the Turfland Corporation, the owners of Bally Ache, the 1960 winner of the Preakness. After his victory, Bally Ache was a doomed horse. First, he suffered a wind puff and was sent to pasture to rest. When he returned to racing, he fractured a bone. He was placed in a cast and given antibiotics. Eventually Bally Ache developed acute colitis, of which he finally died. The owners received $1 million.
This was not the only grief Lloyd's has suffered from racehorses. The underwriters once went into horse breeding. They had insured a California Thoroughbred named Your Host, owned by Film Producer William Goetz, for $250,000. Not long after, the horse broke its right foreleg, and Goetz feared that his animal would have to be destroyed. Lloyd's, however, paid off the full mortality to Goetz and then, after checking with American veterinary experts, the underwriters kept him as a stallion. But they did not keep him long enough. After Lloyd's sold Your Host to a syndicate for $140,000, he sired Kelso, racing's second biggest money winner.
In the U.S. the organization that has derived the most profit and pain from racehorses is the Animal Insurance Company of America. AICA has carried insurance on many of the best-known Thoroughbreds—Carry Back, Tom Fool and Turn-to—and even paid out $100,000 on Bally Ache. Originally, the company had written the policy on Bally Ache but had fortunately laid off the bulk of it with Lloyd's. AICA has also written insurance on cattle, dogs and cats. They started writing policies on animals six years ago because, as one executive put it, "Horses, dogs and cats have become members of the American family." The flat rate for dog insurance is $10 per $100, the maximum being $15,000. And no dog over 9 years old is insurable with AICA.
"This is not cut-and-dried insurance," the executive continued. "Only people who really love animals can be in this line of work. We have to be able to conjure up a picture of what the animal is like, so we have an identification that carried through with the clients. You take Bally Ache. He was the kind of horse you could really love." Despite this happy affair with animals, two months ago the company saw more profit in insuring people and has abandoned its four-legged friends.
In Chicago, meanwhile, a young executive named Paul Copello is plunging more deeply into sports insurance each day. Only 33, Copello is already the insurance expert for skiing. Copello now writes commercial liability insurance for 160 ski areas in the U.S., covering everything from a creaky chair lift to a biting dog. The annual premiums range from $300 to $16,000, varying according to location of the area, its size, types of ski lifts, experience and quality of management. Copello is now attempting to write a package plan that will cover everything an area owns and a few things it never wants—like a year with no snow. He has already written a one-year policy covering the U.S. Olympic team during the full training program and the actual Olympic Games. The plan will cost $14.25 per person to insure everyone on the team against any accident at any ski site. Copello also writes blanket medical policies ($2,000) on all members of the U.S. Ski Association. "But that's a losing proposition," he insists. "Over the last five years payments are averaging $1.35 for every $1 taken in." Copello's largest payment was $26,200; it was due to an off-season accident at a ski resort when a sightseer was knocked off a chair-lift platform onto the rocks below.
Paul Copello is a first-class skier himself, as is his wife, and he has been specializing in ski coverage for four years. "We get requests for various modifications and types of ski insurance, like avalanches and forest fires. And especially since so many lodges are diversifying with pastimes like swimming, skating, fish ponds, riding and dog sleds. We've had one request from a place which wanted to insure a helicopter to fly the skiers from the main location to a higher peak. We will insure against dogs biting guests in a sled, but we will never insure skiers flying in helicopters."
The biggest problem confronting the writers of ski insurance is that too many skiers today are sue-happy. "If they crash into a tree," says one insurance man, "they sue the operator because the tree shouldn't be there." They can sue, but they may not collect any damages. A few years ago a U.S. District Court ruled that the owner of a ski trail was not liable if a skier tripped on a tree stump that was too thinly covered with snow. In his opinion, the judge said, "the skier who takes part in such a dangerous sport is not seeking a retreat for meditation, but faces its dangers open-eyedly. If he is timorous, he should stay at home." Hitting another skier? Well, that can be a pretty slippery business. In Germany in 1959 a judge decided in favor of an elderly skier who was rammed by a young schussboomer. "The skier commits an offense if he doesn't control his speed so as to be able to stop before collision," said the judge, awarding damages. Aside from the vistas of ski liability insurance that the case may have opened, it conjured up mental pictures of hillside police and radar traps in the snow.
Golfers, too, have been awarded judgments for being hit by the errant shots of other golfers. And the players on the professional tour, though they are in little danger from stray shots, have been outstandingly successful in picking up fat insurance payoffs for other calamities. A few years ago an extraordinary number of pros were inadvertently hitting tree roots with long irons and collecting disability. The man who made possible this bizarre bonanza was a nattily dressed executive in Dallas named James Hereford. In one giant swoop seven years ago Hereford went out on the tour and sold insurance to 250 pros. He was able to do it because he knew a lot of the golfers, both by name and by psychology.
A five-handicap player himself, Hereford knew that the self-sympathetic moaning of golfers had always been as much a part of the game as unrepaired divots. He knew too that the game's greatest moaners, pound for pound, were the greatest shotmakers—the touring pros. The pros have a firm belief that the player among them who is sick or injured will win a tournament or a big purse in the same week that he has been bitten by an alligator shoe and nearly strangled by a crawling alpaca sweater. Jimmy Hereford's idea was that the pros had talked themselves into being the most accident-prone athletes in the non-perilous sports field. They were pushovers for his inexpensive ($350) policy.
The thing that not even Hereford realized was that the pros really are almost as accident-prone as paratroopers. More than $200,000 in claims have now been paid out. The claims have run so high that Hereford has had to place the business in three different places. Even Lloyd's of London surrendered it.
"It's not that the boys have tried to get to anybody," says Hereford. "They're just unlucky."
They might be unlucky at having accidents, but they are lucky to have Hereford. Doug Sanders, for example, was leading the Colombian Open in 1958 when he tore some ligaments in his right ankle while attempting to hit a shot from behind a tree. He did not win the tournament, but he got $4,000 on a claim—which was more than first money. Since then Sanders' daughter has slammed a motel door on his finger, he has slipped down in a rowboat and he has been jolted from behind in an automobile while waiting for a signal light to change. "Old Doug hasn't always collected," says Hereford, "but he still may be golf insurance's leading money winner."
Julius Boros, the 1963 U.S. Open champion, has fallen off a sofa and broken his toe, and he has had his other foot injured when his small son jumped on it (he collected both times for a total of $3,000). Australian Bruce Crampton tumbled down an unlighted stairway and smashed his arm through a window glass ($1,800). Tony Lema, long before he began drinking champagne, was flipped by a throw rug ($1,200). And Jack Burke is the leading hitter of tree roots, with $3,000 in claims.
The injuries are constant to the pros, and Jimmy Hereford's files reveal that more than 50 of them have received payments for temporary disability, which range from Gardner Dickinson's aching back ($15,000) to Mike Fetchick's blistering heel ($800). The basic rule is that the golfer's injury, on or off the fairway, must result in an accidental physical handicap and not in a psychosomatic spell of three-putting.