Insuring the productivity of sports figures might seem to be a glamorous niche business, but it is also a risky one involving big bucks for its players–those brokers and underwriters on the hook if a highly-paid star comes up lame. Indeed, such exposures have soared thanks to skyrocketing salaries and endorsement deals.
Besides the exploding costs of salaries for star (and even relatively mediocre) players, and the competition to get a high-profile athlete to endorse your product, outside factors now enter into the equation. For example, the tightening of the Lloyd's reinsurance market in this niche has to a great extent reduced capacity, experts say.
As a result, carriers have forced more discipline on their underwriters, such as making certain the length of time they insure the ability of an athlete to perform is explicit, according to one industry broker.
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