In the weeks and months before the 2015 NFL Draft, industry experts mocked the first round of picks, estimating which amateur players would land with which professional teams. A select group of insurers did the same, but one to two years in advance and with millions of dollars on the line. They’re already hard at work on 2016 and beyond, as the next batch of potential policyholders – college sophomores and juniors – watch older teammates turn pro on primetime TV.
Yes, the players’ offseason is the insurers’ busy season.
“From now until training camp,” Hanleigh Insurance international wholesaler Kevin Bolin said. “Most athletes don’t want to be bothered with insurance during the season.”
Of course, college football players (as well as their peers in other sports) taking out disability insurance policies before the start of their careers is nothing new. Defensive lineman Ed Chester infamously paid insurance agent Keith Lerner $8,000, then collected $1 million after a senior season at the University of Florida in 1998 that saw him tear three ligaments and dislocate the cap of his right knee.
What has evolved over the years is the spectacle of the draft – coverage of the first round moved to its 8 p.m. ET home in 2010 – and, more pointedly, how insurers gauge the value of the student-athlete and his future.
Data Sources for NFL Athlete Insurers
It’s worth pointing out that the overwhelming emotions of draft night itself have never factored into insurers’ decisions. Like NFL talent evaluators and scouts, their work is done well in advance and partly informed by objective data.
“In the past, we had some manuals, and Mel Kiper [Jr.] was the go-to for us back in the day, when he published his [annual] report,” Jimmy Petersen, an account executive at Petersen International Underwriters said. “We used that as our main point of reference. With that, it wasn’t updated very often because it was in print.”
Nowadays, the underwriters at California-based Petersen International hire as many as three different scouting services, then averages the pick number each service recommends for a given player.
“Based off of that,” Petersen said, “we know what each position typically signs for, so that would give us the amount that we insure against.”
New Jersey-based Hanleigh Insurance takes a more holistic strategy, starting work on a complete, customizable profile for each potential client. It starts with basics like the student-athlete’s college production and professional projections. There are also comparisons made between him and players that were similar to him before they moved on to the NFL.
“Any website you use or are aware of, we use as well,” Bolin said when asked if Pro-Football-Reference was among his bookmarks. “We want as much data as possible.”
Not all of their research is into information so publicly accessible. Bolin and his company have established relationships with football’s top agents but wouldn’t go outside of a player’s camp, to a team or league executive for example, to add more subjective but significant data points.
Determining the Value of a Policy
As for determining the premium and value of a given policy, Bolin said the player’s age, injury history, policy exclusions (if any) and the position he play in his sport are of most importance.
A serious injury (such as a torn ACL in one’s knee) or a potentially dangerous hobby (motorcycle riding) could affect the premium or simply be excluded from the coverage altogether.
“Rates also tend to fluctuate based off of the time of the year that we’re quoting (and) in regards to competition,” Petersen said. “It’s constantly a moving target.”
This was, more or less, the process for the insurers making pitches to 2015 Draft entrants, even if they never met face to face with someone like Bolin or Petersen.
Recruiting an NFL Student Athlete as an Insurance Client
Like with all else in college sports, recruiting is involved, but the pitches are indirect.
“The final purchasing client – the athlete – is sometimes two, three people removed from us,” said Bolin, who finds himself tracking down family financial advisors. “We also do a lot of prospecting. We know the big names, and we know who to call. It’s a two-way street.”
From the insurers' perspective, financing of the policies is also accomplished indirectly. The athlete provides his insurance agent or financial advisor with a simple check (potentially signed by his school) as well as a completed policy application in his state’s licensing forms. These items are then handed off to the underwriter, putting the policy into effect immediately.
“It’s very important that the application is filled out correctly,” Bolin said, “and there’s no information withheld or omitted, whether accidentally or on purpose.”
Loss of Value Coverage
Lloyd’s, which declined to comment on the general topic of disability and loss of value coverage for this story, argued in fighting a lawsuit that one client – USC-turned-Jacksonville Jaguars 2014 draft pick Marqise Lee – didn’t disclose information relating to his health. It partners with companies or syndicates and underwriters like Hanleigh Insurance, Petersen International and Exceptional Risk Advisors. Each entity can alter the wording and quotes for very similar policies, known most commonly as temporary or permanent disability, loss of value and even “contractual bonus.”
Former University of Oregon cornerback Ifo Ekpre-Olomu could beat Lee to become the first successful claimant of loss of value, or “L-O-V,” coverage. Before the 2014 college season, Ekpre-Olomu’s insurer projected him to be the 2015 draft’s No. 12 pick. Then the Ducks cornerback tore the ACL in his knee in December, and he fell to the No. 241 pick (seventh round) on Sunday. That drop secured him a reported $3 million.
LOV is all the rage in college football, but it’s often misunderstood, Bolin said. First of all, it can only be purchased in conjunction with a disability policy, not by itself.
“It’s for the best of the best athletes,” Bolin said. “It is not a shelf product; it is not a product anyone can buy; it is extreme niche within a niche.”
Petersen and Bolin target potential first- and second-round NFL Draft picks, while the NCAA’s disability insurance, underwritten by HCC Specialty but not viewed as a competitor in the marketplace, is available to college football players projected to be picked in any of the first three rounds.