According to Lee Hilsabeck, assistant vice president of Chubb Accident & Health, “Groups purchasing accident medical/AD&D are those that desire to provide accident protection for members of groups or associations participating in sponsored and /or supervised athletic events or activities.”

A number of companies offer this coverage. Chubb, Chartis, ACE and Nationwide are a few that offer it on an admitted basis while certain underwriters at Lloyds offer it on a non-admitted basis.

John M. Sadler, Jr., president of Sadler Sports & Recreation Insurance, sees three distinct reasons groups purchase this coverage. He says, “First, their general liability carriers may require it as a precondition of coverage. Second, some sports organizations may want to include accident insurance as a member benefit in order to attract and retain new members. And third, some organizations feel a moral obligation to help pay the medical bills whenever a participant is injured during a sanctioned activity.”

Groups other than the teams themselves are purchasing this coverage, according to Grace Cunningham, managing underwriter at R.B. Jones. She says, “Organizations that hold events with many volunteer workers or athletic participants and the general liability policy excludes medical payments coverage to them are one group. Sports complexes that want to keep their general liability premiums down by purchases AD&D coverages as a first layer of inexpensive protection are another. A third group is sports teams with minor participants or participants in the “mature adult” age range. The parents of the minors and/or the adult participants may be willing to purchase coverage through the team, especially in the absence of health, disability or life insurance coverage.”

According to Mr. Hilsabeck, “Claim frequency varies by sport, with youth soccer having one of the highest incidences of loss.” Mr. Sadler says, “Naturally, contact sports like tackle football have a higher frequency and severity when compared to non-contact sports, such as baseball.” Both point out that deductibles impact frequency, observing that the higher the deductible, the lower the frequency. Another important point is whether or not the participant had underlying health insurance.

“Football, soccer, lacrosse, rugby and basketball tend to have larger claims,” according to Mr. Hilsabeck, “because of injuries to knees, shoulders and heads.” An unusual source of severity comes from off-the- field activities, according to Mr. Sadler. He says, “Surprisingly, many of the largest claims experienced by our clients over the past 20 years arose out of non-sport extracurricular activities, such as back yard cookouts, swimming parties, and auto accidents.”

Ms. Cunningham explains, “P&C carriers, such as Lloyd’s, generally do not write AD&D coverage on a monoline basis. It is usually written in conjunction with a general liability program or policy. When purchased under these circumstances, AD&D coverage most likely applies only to the activities or events the general liability program or policy covers. This lessens the need for extensive AD&D underwriting because information gathered to underwrite the general liability exposures mirrors the information needed to underwrite the AD&D.”

Mr. Sadler and Mr. Hilsabeck provide several key underwriting criteria. Type of sport, age of participant, safety rules, number of games and practices, length of season, and frequency and severity loss history top the list. The design of the plan itself is an important underwriting consideration. Differences in plans include items such as mandatory versus optional participation, size of deductibles, limits of medical coverage, excess versus primary coverage, and payout limits.

Mr. Hilsabeck lists accident medical expense, expanded medical coverage, accidental death and dismemberment, and paralysis as key coverage recommendations. Mr. Sadler suggests referring to his website where a summary of minimum insurance standards is provided in a checklist form for use by any purchaser in evaluating and comparing plans.

Important details can be hidden in the fine print. Ms. Cunningham recommends making sure that the AD&D pay “in addition to” rather than “excess of” other collectible insurance. Other features are coverage for counseling and continued education for a surviving spouse. She also recommends looking for policies that provide additional coverage when seat belts are used and double indemnity when an accident occurs when public transportation is used.

Mr. Sadler states that the definition of covered persons can cause a major coverage gap. He explains, “Many coverage forms get too specific and don’t cover all staff positions in addition to the players. Instead, they try to ‘piecemeal’ the staff by naming specific positions such as coach, manager, umpires, etc. Unfortunately, a position such as assistant coach or concession worker may be left out. This can create a huge problem if there is a serious injury to an uninsured staff person who later files a lawsuit, especially if the general liability policy has an endorsement that voids coverage unless accident insurance is carried on all participants.“

According to all of our experts, the good news is that most coverage gaps are readily filled and many coverage options are available to develop excellent products to fit the needs of particular groups.

Pricing in this class has remained relatively stable over the years. However, more people purchased this coverage in the past year who did not have underlying employer-provided health and life plans, and this has increased losses. In addition, the medical trending has increased over the past 18 to 24 months, meaning that premium increases will be needed. However, Mr. Sadler states that he has seen some carriers buy business on large accounts with ridiculously low pricing, despite this negative trend. Mr. Hilsabeck believes that downward pressure on rates and premiums will continue because of new carriers entering the market.

This is not a one-size-fits-all product. Many options are available, and the particulars of the specific group should be carefully considered when making recommendations. What might be right for a cheerleading squad may not be right for the scout pack or a flag football league.