As Euro 2004 kicks off, Thomas Trompetter looks at the insurability of professional footballers

Real Madrid star David Beckham's weekly wage is said to fall between £90,000 and £120,000 - about £5m per year, before bonuses. It is, perhaps, a small price to pay for the world's most famous footballer (and the rights to half his endorsement income), but when he is called up by England coach Sven-Goran Eriksson to play in the European Championships in Portugal, he will be England's pride and joy. Should an injury sustained during the tournament take him out of the action long enough that he misses games on Real Madrid's schedule, club President Florentino Perez will not see the loss as a patriotic duty. He will want compensation in hard cash.

Insurance for tournament organisers is the answer, of course, but a number of complications raise questions about the insurability of professional footballers when they participate in international events. Although very high risk of injury and extremely high sums insured are common in Germany, Spain, Portugal, UK, France and Italy, different rates, terms and conditions prevail in each country.

Claims study

In 2003, Converium (together with EMB Deutschland) published a study of temporary total disability claims for professional football players.

It examines the amount of time players in the German Football League's First Division were sidelined by injuries between 1999 and 2002, depending on each player's age, position and importance to his team. Some results were unsurprising - for example, older players are more likely to suffer injuries resulting in an uninterrupted playing absence of four games or more - but one did come as a surprise.

The study calculated an "importance factor' for each player based on the number of minutes played per game, excluding absences for sickness and injury. The study found that less-important players are 'put on the sick list' by their team doctor more frequently the older they get, even though they spend much less time on the pitch than more important players of the same age, who seem to be injured less frequently. For players over 30, the variance is enormous. Perhaps moral hazard is an influence.

The claims study helped Converium develop a pricing tool for individual and group disability insurance for football clubs. However, it is an altogether different matter to insure the organisers of international tournaments such as UEFA and FIFA against players' injuries. Directly transferring the conclusions of the claims study and the underwriting approach for individual clubs would not be effective. Meanwhile, discussions are heating up over football associations' liability to compensate individual clubs for injuries sustained by their players while on the pitch for a national team in a tournament organised by an association. Cover is in demand, but calculating the right price is a serious challenge.

Compensation claims

A high-profile injury and claim set off the debate in 2002. Midfield striker Sebastian Deisler was playing for Germany against Austria in May that year when he suffered a serious ligament injury to his knee. FC Bayern Munich, 2003 German league champions, had just bought Deisler from rival Hertha BSC Berlin, and had handed over the transfer fee only weeks before the injury. The team sought and received compensation for the sidelining of their new star player from Deutscher Fussball-Bund (DFB), the German football association. The payment was EUR550,000, according to some press reports, but other sources claim the compensation was much higher.

The Deisler claim prompted a renewed debate about whether organisations sponsoring international tournaments should pay compensation for players' injuries. Such a discussion is now underway between FIFA, the international association that organises the World Cup, and the countries that participate in its tournaments. As the debate continues, it is more likely that associations will seek suitable insurance cover from the international insurance market.

But to provide such cover, underwriters must first address the main differences between an international tournament and the league play which insurance for players and teams typically covers. Several key differences make the underwriting complicated.

Main differences

1. Individual medical or financial underwriting is not possible, since players on national teams are nominated shortly before a tournament commences.

Underwriters cannot know with confidence who will participate on national teams, and therefore do not know the health status or annual income of the individual players involved. Even their ages are unknown. When the players are eventually named, insufficient time remains for medical examinations, and even if more time was available, too many players are involved to complete the individual underwriting which would be used for a typical club group policy. The World Cup, for example, includes 32 teams of 23 players each, which would require nearly 750 medical examinations.

Clearly a solution that does not rely on individual underwriting is necessary, and pricing must incorporate average ages. Further, since the identity of the players is unknown and a medical assessment is not possible, an exclusion of all pre-existing conditions is essential. It may be appropriate to exclude all injuries treated during the preceding two or three years.

Many such clauses are currently used in various markets, one of which could be adopted as a crude substitute for individual underwriting. It is also necessary to exclude the oldest players, who have the greatest likelihood of injury. In World Cup tournaments, for example, some nations have put men in their forties on the field.

On the financial side, it is essential to limit sums insured according to annual salaries. These vary dramatically between the major European stars and minor players for the 'underdog' nations. In aggregate these limits will vary by tournament: some, like the World Cup, include relatively unsophisticated teams, which will drive down the average sum insured.

Others, such as UEFA's EURO 2004, involve national teams comprising mainly very high profile - and highly remunerated - players.

2. Many participants are from less familiar countries. This added complication may mean that medical histories are unavailable (whereas they can be downloaded from the internet for many European players), and that any claims arising may be based on disparate medical standards. These factors demand some measure of control over claims management and medical examinations. It may also be necessary to exclude certain infectious diseases, since serious communicable diseases will be more common in some players' home countries than others.

3. Only the best players are on the pitch. On the positive side, national teams select only the best-performing and fittest players. The clubs that employ them are naturally keen to have them on the active roster as soon as a tournament is completed, and the claims study shows that the most important players have a lower claims frequency despite their greater play time. These factors should have a positive impact on the frequency of claims related to tournament play.

4. More games are played. Offsetting the positive effect of players' superior health, fitness and importance could be the greater number of games played in a short period of time, which increases the exposure of the most important players (World Cup finalists will play seven games in just four weeks). Increased play naturally leads to an expected increase in claims frequency.

5. The timing of benefit payments is complicated by tournaments. Temporary total disability benefits are typically paid after an appropriate deductible period. However, when the injury has taken place during a tournament it is not clear when the deductible should begin and end. If an injury occurs on the first day of a tournament that lasts for another four weeks, insurers would be reluctant to pay a benefit for games missed while the tournament was underway. This aspect is more complicated because playing seasons in various countries start and end at different points in times.

6. Accumulation risk is multiplied when the world's best players congregate, especially since disability cover is usually accompanied by fatality coverage.

During international tournaments, several teams will be gathered in the same stadium, hotel, airport and other facilities at the same time, perhaps for several weeks. Some teams may use the same aircraft to travel to the host country. This obviously increases the accumulation risk arising from natural catastrophes, and especially from man-made events. In the past, terrorists have targeted sporting events, and players have been killed tragically in plane crashes.

Sports insurers face an additional accumulation risk when covering tournament organisers: the potential for double sums insured. As discussed above, the identity of the players involved in an international event will be unknown to the underwriters at the time when cover is granted. They may well include individuals already insured under individual or group policies issued by the organiser's insurers for the specific clubs that employ them.

Coverage essentials

Player temporary total disability insurance for tournament organisers is a new concept that requires insurers to reconsider all aspects of pricing, underwriting and wordings. Modifications to existing policies will be essential to take account of the lack of claims experience and the inability to underwrite on an individual basis. Incorporating security margins into pricing will be essential.

It is also critical for insurers to know what they are getting involved with. Converium for example, is a leading reinsurer of football teams in some European countries (our 2004 written premium for life and disability cover for professional soccer players in Germany will be about EUR1.2m), but we do not cover racing, boxing and rugby. We simply do not know enough about these sports and the typical injuries related to them to make sound underwriting decisions. In any sports-related disability insurance, it is essential to know the rules of the game, understand the business, and to conduct thorough medical underwriting and claims management.

- Thomas Trompetter is Head of Medical Underwriting and Claims Management at Converium Life & Health in Cologne. Converium's claims study, entitled Temporary Total Disability of Professional Football Players, can be downloaded from