Sanctioning/governing associations are responsible for wide range of insurance decisions
The directors and officers of sports and recreation organizations are entrusted with making important decisions about the selection of insurance brokers, insurance carriers, policies to be carried, the quality of coverages within each policy, and risk management services that are needed. In larger sports organizations, these decisions are not just made on behalf of the sports organization as an entity and its respective directors, officers, employees, and volunteers, but also on behalf of the individual members, teams, or clubs.
Organization decision makers should take into consideration each of the following concerns when researching a Property & Casualty insurance program:
- Managerial Negligence: What could be more embarrassing than to learn a large lawsuit or property loss is not covered by the insurance program due to a lack of due diligence. The resulting financial hardship or bankruptcy will result in finger pointing. Failure to carry adequate insurance can result in litigation against directors and officers for managerial negligence.
- Personal Liability: Whenever the sports organization as an entity is sued, directors and officers are often shotgunned into the lawsuit as individual defendants. To avoid personal liability, it’s important that the various liability policies adequately cover the individual directors and officers.
- Membership Benefits: A strong member insurance program can aid in the recruitment and retention of members. This can be achieved by providing organization members an excellent insurance program that offers more competitive prices and broader coverages compared to what they could purchase individually.
- Overpaying: To ensure the organization isn’t overpaying for its insurance policies, test the waters every few years by approaching different carriers about their programs and rates. Alternatively, ask your current insurance carrier to reduce rates when warranted by overall industry pricing trends and based on the organization’s history of loss.
- Offset Expenses of the Organization: Many larger sports and recreation organizations want reimbursed for expenses incurred to promote the insurance program to their members. It is permissible in many states for sports organizations to receive a marketing fee in exchange for the performance of non-insurance services. However, organizations can’t cross the line by engaging in services that require an insurance license, such as approving applications or explaining coverages.
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