Youth Sports Liability Market in ‘Armageddon Mode’

Beset with massive rate increases, dramatic rejections of coverage, and severely dwindling market capacity, the current youth sports liability market is historically challenging, according to insurance professionals with expertise in the area.

“I feel like there’s been a massive shift that’s been happening,” said Tyrre Burks, founder and CEO of Players Health, a sports-centric insurance provider. “Especially within amateur sports in general, the market is probably the hardest that we’ve seen in history.”

Fewer Youth Sports Carriers

Burks said 30 carriers used to write youth sports insurance. That number has dwindled to “a little less than a handful,” over the course of just 10 years. Now, if organizations get two quotes “it’s a miracle,” Burks said.

Youth sports formerly had low-frequency, high-severity liability claims related to sexual abuse and molestation (SAM). In the past decade, though, frequency and severity have increased, Burks said, and the market is responding to the huge losses that came with settlements like the widely publicized USA Gymnastics and Boy Scouts of America class action lawsuits.

“The way that I see it is that you had these large, generalist carriers that had small sports books,” Burks explained, “and if those books run hot, they’re just going to move off them.” Sexual abuse presents long-tail liability, and there aren’t many carriers that want to have the reserve requirement for the changing risk.

Burks explained that in addition to SAM, assault and battery is an increasing risk in youth sports organizations. Many carriers are beginning to exclude the risk, though, as parents attack referees and “the environment becomes more competitive,” Burks said. “It’s a lot more toxic than it used to be.”

A specialty understanding of this risk is needed to write it long-term, Burks said. “And I think a lot of carriers started to see the legislative environment change and the liability environment change in terms of responsibilities that these organizations have. And they didn’t have the tools and the resources to help them manage their risks.”

National governing bodies used to be able to secure liability towers between $5 million and $20 million that included sexual abuse coverage. Today, Burks said national governing bodies are lucky to secure $1 million in coverage. This problem also exists at the club level. Players Health writes approximately 2,000 gymnastics clubs, and “they can’t get general liability with sexual abuse north of $25,000,” Burks said.

Liability capacity is “extremely scarce” in the marketplace, he said.

Chris Price, principal at ESP Specialty Insurance, explained that the sharpened focus on risk management and past claims data has led some carriers to reassess their offerings, particularly in sports perceived as high risk.

“This adjustment has made it crucial for us to prioritize scale and the diversification of sports premiums to maintain stability in coverage offerings,” he said.

“There’s a noticeable uptick in demand for comprehensive packages like general liability, including participant legal liability, and specific policies like sexual abuse and excess accident medical,” Price said. “Leagues and coaches are becoming more aware of the necessity for broader coverage, including directors and officers liability with an EPLI sub-limit.Additionally, there is an increasing demand for ancillary coverages such as equipment, crime and cyber protections.”

The market has seen rate increases and more restrictive terms, particularly concerning sexual abuse and brain injury coverages, he said. Still, he added that well-positioned brokers and MGAs “continue to navigate these challenges effectively. Technological advancements are also transforming purchasing habits, indicating a dynamic future for the industry.”

Risk Management: ‘Only Way They’re Going to Be Insured’

Burks explained that the climate hasn’t reached the point where organizations can’t get coverage, but the question has become: Can they afford the coverage they already have? An increase of half a million dollars on a million-dollar policy can strain youth sports organizations.

“We’ll be on this path for a while,” Burks said.

Players Health has developed a platform that combines athlete safety programs with insurance. Services available through that platform include coaching and staff credentialing, background checks, adjudication and adverse action. Education and training, incident reporting and investigative services and injury management are also accessible through the program.

“I think one of the things that we’re trying to do is we’re trying to give visibility on risk. We’re trying to actually make it more attractive for more carriers to want to write this risk. It’s not a good thing for us to have no competition and organizations seeing 50% rate increases.”

Burks said brokers who are experts and risk advisors are needed now more than ever, especially in the youth sports space. Players Health has focused on supporting its brokers by helping them be better risk advisors for their clients, he said — a necessary step in securing affordable coverage.

“The risk management is key,” Burks said. “It’s the only way they’re going to be insured long-term.”

When asked for examples of how league operators and coaches are better managing risks, Price said that as new volunteers cycle in, training and background checks mandated by state and federal laws, as well as carriers, are becoming more common.

“Leagues frequently seek guidance on implementing safety measures like heat exhaustion protocols and waiver recommendations, showing a proactive approach to risk management,” he added.

Every claim an organization has will have a dramatic effect on the next year’s premiums, which will impact budgets and ultimately the athletes’ parents and guardians, Burks said.

“These organizations need to know what they can do to prevent these claims from happening, and the more effective that they are going to be able to do that, the better their budgets are going to look next year,” Burks said.

“We’re in an Armageddon mode right now, in that you have to be that thoughtful about it.”