The sports insurance business is expected to reach $600 billion by 2025

The global expansion of the professional sports industry, combined with the different types of insurance they meet, has led to exponential growth in the sports insurance business in recent years.

SportsDBRS Morningstar projects the company will continue to grow and reach $600 billion in revenue by 2025. Currently, Lloyd’s has written over £150m in premiums for sport-related accident and health insurance policies alone.

In a recent statement, analysts from the rating agency emphasized the importance and necessity of sports insurance; Playing any sport involves risk, and only some of these risks can be covered by ordinary insurance policies.

Analysts said: “The insurance needs of professional players and teams are very demanding and require specialized covers, which are mainly provided by the Lloyd’s of London market and a limited number of P&C insurance companies.

“Professional athletes are mostly exposed to liability and accident risks that can be transferred to the insurance market. Sports venues, professional leagues, event organizers and clubs face additional risks including physical damage to infrastructure and equipment, general liability, liability of directors and officers, business interruption and event cancellation.”

Stratumn, from SIA Partners

Disability and accident insurance is a key risk management tool for professional athletes and teams who face significant loss of earnings in the event of injury.

Professional teams may provide key players with disability insurance to protect themselves financially, as they may be required to continue paying an injured player’s salary under a guaranteed contract. third parties, such as Major sponsors, for their insurable interest, may also purchase disability insurance for specific athletes, while players may purchase additional disability insurance to protect against a career-ending injury.

Business interruption insurance is also important protection for professional sporting events. For example, event cancellation insurance, which falls into this category, protects the insured against loss of income suffered by a business as a result of an insured peril that triggers a cessation of business.

Many cases throughout history have provided valuable insights for sports organizations trying to mitigate losses from event cancellations. Additionally, the insurance industry has the expertise and capital needed to provide sizable coverage for professional stadiums and arenas, as well as major events such as the Olympic Games and FIFA World Cups, analysts noted.

The rating agency added: “DBRS Morningstar expects business interruption and event cancellation insurance to attract increasing interest from professional sports organizations given the recent pandemic and its heavy financial burden from a concentrated number of venues.”

Lloyd’s syndicates have developed detailed models to calculate national team insurance values ​​and have used these to successfully predict the outcome of the last two FIFA World Cups. His forecast for Qatar 2022 sees England as the winner of the tournament.

Analysts said: “Calculating a footballer’s insured value involves a variety of metrics such as current and future wages, sponsorships, age and position on the field. With the support of the Center for Economics and Business Research, Lloyd’s successfully forecast the outcome of the 2014 and 2018 FIFA World Cups based on estimated collective insurance values ​​of the national teams participating in the tournament.

“The core logic supporting Lloyd’s predictions is that national teams with higher collective insurance values ​​have a better chance of winning the World Cup. The recent success of the model reveals the potential insurance companies to assess player performance based on financial value.”

At £3.17bn, England has the highest estimated insured value. The second and third largest national teams with the highest insured values ​​of the tournament are France at £2.66bn and Brazil at £2.56bn respectively.

The rating agency concluded: “DBRS Morningstar notes that Lloyd’s estimate of a player’s insured value, used for the World Cup prediction, is not necessarily linked to that particular player’s current insured value, but only an estimate of his potential earnings up to Retirement reflects on current salary, earnings growth potential, and advertising revenue. According to Lloyd’s, this is a good indicator of player and national team performance at the World Cup.”

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