Liability Insurance - So, Is There Any Sign Of Improvement Yet?  Cont...

1. To encourage sports to take a more active interest and hands-on approach to insurance requirements rather than assume that their brokers are adequately dealing with it;

2. To prepare guidelines as to what insurance and terms of policies the sport should have and to provide training and education in respect of insurance issues;

3. To encourage better communication with insurance companies;

4. Provide a source of expertise to encourage effective risk management programs on a whole of sport basis;

5. Develop a process in consultation with sport and insurance industries and develop a template to collate detailed claims data for all sports that can be actuarially analysed to determine whether a self-managed fund is feasible;

6. To ensure that all levels of organisations within sport have appropriate insurance cover, National Sporting Organisations are encouraged to consider the use of national schemes.

Demonstrated by the activities referred to above, obviously the availability and cost of liability insurance has been a significant issue for the sports industry.  So, is there any sign of improvement yet?  From the perspective of a specialist sports insurance broking company – little, if any.  And it seems others support our opinion, with the situation by no means being restricted to the sports industry.  An article in the Financial Review on 2^nd July 2003 includes the following: - 

“The turmoil in the insurance industry is continuing to hit the professions and business

Page  2

groups, which have been slugged with massive increases in premiums as the industry seeks to boost profitability.”

“The brokers were particularly critical of some insurers imposing tougher underwriting conditions on clients where the brokers believed the rises didn’t reflect the level of risk”, NIBA chief executive Noel Petterson said. “Brokers believe some insurers are over-pricing some risks.” (Note: NIBA is the National Insurance Broking Association – the peak body in Australia for general insurance brokers)

So little has changed with liability insurance availability or cost since those meetings back on 27^th March 2002.  Still very few insurers are prepared to even consider providing liability insurance protection for sporting organisations, and where cover is available prices are still increasing, albeit perhaps not to the same extent that we were witnessing 12 months ago.  In my opinion the legislative changes that have been implemented or are in the process have to be positive influences – they will eventually result in reduced claims cost to liability insurers which must be reflected in their premium charged, and the role of the ACCC is to ensure that is the case. 

The one issue that all contributors to the liability insurance debate agree on is the important role that risk management has to play in addressing the situation.  There is no doubt that insurers are now paying a lot more attention to the quality of the risk management program applying to a risk under consideration than they ever have in the past.  There is still room for considerable improvement from them in this regard, where premium rating is applied after thorough consideration and understanding of the residual risk remaining after implementation of the control strategies.  All sports administrators must understand that insurance will simply not be available without appropriate policies and procedures being in place that address physical, financial, legal and ethical risks.

Continued....