Edition 02/2003
The
subject of insurance for sporting organisations features regularly in
the IEA Sport Monthly Update. In September 2002 Ernst and Young
was commissioned by the Australian Sports Commission to conduct an
insurance review and in this edition of our Monthly Update we
reproduce the Executive Summary (including recommendations) of their
report, which was released in late February 2003.
ASC
INSURANCE REPORT
The
Australian Sports Commission (ASC) commissioned Ernst & Young to
conduct an insurance review of the National Sporting Organisations
(NSOs) and National Sporting Organisations for people with a
disability (NSODs) which are funded by the ASC. The review
delved further into the insurance position for the NSOs and NSODs than
research previously conducted by the ASC and aimed to provide a
summary of the current position of the sports in relation to arranging
insurance, their experiences as well as commentary on the current and
proposed legal framework in each jurisdiction and factors to be
considered in respect of a group buying/pooling scheme.
Overall
we found that generally the sports were poorly informed as to their
insurances, level s of cover, exclusions etc. with many relying on
their brokers to determine the appropriate level of cover.
Whilst all sports have public liability cover only 69% of NSOs have
personal accident injury cover. As was expected a significant
number of organisations raised concerns as to the increasing costs of
coverage, although in all cases the sports had opted for increased
premiums rather than increased excesses which could result in
financial viability issues if a number of claims were made. It
is particularly concerning to find that 43% of sports noted that their
policies included a clause in relation to an exclusion for sports
participation risk and 27% of policies excluded member to member
liability (with a further 28% unable to determine whether it is
included or not).
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The
experiences noted by the sports are one of significant premium
increases, often more than the average for all industries. It is
believed that this is due to the industry being seen by insurers as
high risk, low return. Forecast
increases in excess of 20% are also forecast for all industries in
2003.
Whether
organisations packaged their insurances or arranged them on a national
basis does not appear to significantly affect their experiences.
Overall the results noted that packaged insurances and national
schemes had suffered lower increases than stand alone insurances and
national office only policies, however two sports in particular had
very high increases which has significantly affected the
averages. When these are removed from the sample, there is no
noticeable difference between increases based on how the insurances
are arranged.
Extensive
claims information proved difficult to obtain. However it was
noted that the number of organisations making claims had risen
dramatically over the last five years whilst the total number of
claims did not appear to have also risen.
This
report includes a summary of the current and proposed legislative
changes by state and territory. If all of these are enacted then
it is expected that there will be a reduction in both the incidence
and quantum of liability claims. This should in the medium to
longer term help keep premium increases down and hopefully install
more confidence in the market thereby increasing (or at least
maintaining) the number of active insurance companies in the market
place. The legislation should also
provide some degree of comfort for volunteers and whilst this is not
expected to impact on the premiums it should ensure that volunteers
remain within the sporting community. However legislative
changes alone will not solve the current crisis for sporting
organisations.
Continued
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