REPORT
ON NCAA INSURANCE ISSUES
PRESIDENTS
COUNCIL ACTION ITEM.
For the Executive Committee to appoint a special insurance task force, comprising risk management professionals, to review the Association’s insurance programs.
1. Recommendation. To support the recommendation from the Executive Committee Budget Committee.
2. Rationale. The Executive Committee Budget Committee recommends the appointment of a task force to review and to make recommendations regarding the NCAA risk management program to the Executive Committee. Because any modification in student-athlete insurance would impact member institutions, the budget committee also recommends that the chair of the Executive Committee appoint campus risk managers from each division and a representative from the Competitive Safeguards and Medical Aspects of Sports Committee to be members of the task force.
The task force will be charged to review the student-athlete insurance programs provided or made available by the membership, the NCAA catastrophic injury insurance program, and the survey results from the NCAA student-athlete feasibility study. The task force will also review existing NCAA bylaws governing student-athlete insurance; existing policy coverages, insurance limits and retentions; and self-insurance alternatives by the members and the NCAA. They will then recommend any modifications to the existing insurance coverages and programs. The task force will also examine other potential risk management exposures to the Association. These may include business interruption, event cancellation, and directors and officers coverage.
The task force will provide a full report at the October meeting.
· January 14, 2002- Board of Directors requests report on student-athlete insurance.
· February 1, 2002- Insurance survey sent to all risk managers at member institutions. Purpose is to gain a better understanding of the coverages members have in place and to assess the need for more comprehensive, student-athlete coverage.
· March 4, 2002- Executive Committee Budget Committee recommends an additional $3 million allocation to the Association’s insurance programs. The recommended increase is primarily for the NCAA catastrophic program and the Division I men’s basketball event cancellation policy. These two programs represent approximately 90% of the Association’s insurance budget. Due to the volatility of the insurance market since September 11, the budget committee is further recommending to the Executive Committee that a special insurance task force be formed.
· April 25, 2002- Insurance report presented to Division I Board of Directors and Divisions II and III Presidents Councils. NCAA staff requests these bodies recommend the Executive Committee appoint the special insurance task force.
· October, 2002- Full report to the Executive Committee.
Current Bylaws:
Currently, Bylaw 16.4 governs what coverage institutions may and may not provide for student-athletes. For Divisions I and II, the bylaw states that institutions may not finance the following types of medical expenses:
· Health insurance, if health insurance is only offered to the rest of the student body on an optional basis;
· Expenses to treat an injury or illness that was not a result of practice or participation in athletics at the institution, and did not occur during voluntary physical activities during the academic year to prepare the student-athlete for competition;
· Expenses incurred as the result of an injury while going to or from class, or while participating in classroom activities, unless similar services are provided to the entire student-body;
· Dental work (e.g., teeth cleaning, provisional fillings) unless the dental work is directly related to an injury to the teeth that occurred during practice or competition.
An interpretation of the bylaw was issued on June 23, 2000, advising that institutions are allowed to provide medical expenses for any student-athlete who sustains an injury while participating in voluntary conditioning activities during the summer that are conducted by an institution’s strength and conditioning coach.
In Division III, the bylaw is more permissive. The Division III bylaw states only, “An institution may finance medical-expense benefits incidental to a student-athlete’s participation in intercollegiate athletics.”
Also, for Division I the Special Assistance Fund, allocated by the NCAA to conference offices, may be used to pay health insurance premiums if student-athletes receive a Pell grant or can demonstrate financial need.
The issue of insurance for student-athletes is much more complicated than it is for the remainder of an institution’s student body. Currently, student-athletes may have to rely on four different forms of insurance protection to cover their health and accident needs. These include: 1) coverage under their parents’ or guardians’ health insurance policies; 2) voluntary health insurance programs provided by institutions; 3) accident medical coverage provided by institutions or their state programs; and 4) the NCAA Catastrophic Injury coverage. And while NCAA bylaws state what may be covered by the institution, they do not mandate that the institution have these coverages available. Therefore, what coverage a student-athlete has varies dramatically from one institution to another. Coverage can even vary from one student-athlete to another at the same institution.
Currently, the NCAA catastrophic program has a deductible of $50,000, which will increase to $65,000 on August 1, 2002. After that deductible is met, the policy begins to pay benefits on a secondary basis. This means that any other insurance a school or student-athlete has would pay benefits before the catastrophic program. After the deductible is met, and the student-athlete has met the policy criteria, the program offers a host of benefits which include: medical; home health care; skilled, private duty nursing care; disability benefits; and continuing education benefits, among others. The policy also provides a lifetime maximum benefit of $20 million. The policy covers student-athletes at all NCAA active member institutions while they are participating in covered events. Under the policy, a covered event means a qualifying intercollegiate sport competition scheduled by the student-athlete’s school and includes pre-competition activities and practice sessions which are authorized, organized, and directly supervised by the school. It also includes NCAA sanctioned competition in which the student-athlete’s participating school is an official competitor.
The events of September 11, and the exposure for companies to cover 365,000 student-athletes will present many challenges to the future of the catastrophic injury insurance program. An adverse year that results in an increase in claims and losses could result in sharp increases in premiums. Also, the insurance market has seen a reduction in capacity for this type of coverage. This affects both the insurer and the re-insurer. The resultant market instability jeopardizes the future benefits of the program. The current policy commitment will expire August 1, 2003.
Summary of Survey Results:
A summary of the survey results is included as Attachment A.
(3) Budget Impact. None at this time.