- Sep 8, 2014
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This is an interesting read on how Alabama handles player insurance policies. I'm curious how many of our guys have a policy:
How Alabama approaches player insurance policies
How Alabama approaches player insurance policies
It came up unprompted during two separate Nick Saban interview sessions in late December, something the Alabama coach had rarely — if ever — brought up previously in a press conference setting.
Player insurance policies.
He did it once while discussing the Crimson Tide players who opted against skipping the team’s bowl game.
Then again a few days later while talking about Dylan Moses’ decision to return to school for another season instead of leaving for the NFL.
“He can create value by coming back,” Saban said at the time of Moses, “and we certainly have to — as an institution and an organization — make him comfortable relative to how we insure him.”
Insurance policies have been a bigger talking point around Tuscaloosa these past few months, ever since a November article from Action Network that essentially questioned Alabama’s approach with player insurance policies.
The reality, though, is that there were some misleading elements within that Action Network story.
***
Under NCAA rules, schools are able to use their student assistance fund to purchase permanent disability policies for top pro prospects to protect those players in case of a career-ending injury.
Policies usually cost a little less than $10,000 for each $1 million of coverage and max out at $10 million worth of coverage.
Schools then have the option of adding loss-of-value coverage to those policies, which is supposed to pay out if an injury causes a player to slip past a certain point in the NFL draft.
Like the permanent disability plans, those loss-of-value add-ons typically cost about $10,000 for each $1 million of coverage and max out at $10 million worth of coverage.
As noted in the Action Network article, Alabama is among the schools that doesn’t purchase loss-of-value coverage.
The article, which came out after Tua Tagovailoa injured his hip against Mississippi State, said that Alabama not having a loss-of-value plan in place for Tagovailoa “may have cost him upwards of $10 million” and that the lack of a loss-of-value policy “means he will not be able to recoup millions of dollars in potential losses.”
It’s more complicated than that, though.
And there are several factors that go into why Alabama and other top schools opt against purchasing that type of insurance.
With loss-of-value plans, an insurance company projects a player’s draft positioning — whether it’s top-five, top-12, early second round, etc. — and then determines the rookie salary total that would come along with being drafted in that specific slot. A player would then have to fall beyond a certain point of the draft strictly due to an injury in order to be in position to collect money from the insurance company.
Generally, it would have to be at least 50 percent below the projected contract total for the player to be able to collect anything.
For example, if a player is projected to go No. 5 in the draft, the slot value for that pick last year was $29.3 million. Fifty-percent of that would be $14.65 million. So, theoretically, that player should be able to begin collecting on a loss-of-value policy if an injury causes him to slip in the draft to the point his rookie contract is worth anything less than $14.65 million, which would have been anything after the No. 14 overall selection last year.
Simple, right? It’s not.
Only a handful of players have actually collected on loss-of-value claims.
And the next player to collect more than $3 million from a loss-of-value claim will be the first.
Most don’t come anywhere close to that number.
There are almost as many players suing insurance companies over the policies as there are guys who have actually gotten money from them. Former USC star wide receiver Marqise Lee and ex-Arkansas defensive lineman Deatrich Wise are among the players who have sued because of issues collecting from those loss-of-value plans.
Players have to prove that the one specific injury is the sole reason they slipped in the draft.
That’s not easy.
“The loss-of-value is very challenging to collect on,” Alabama athletic director Greg Byrne told AL.com. “We have insurance specialists. We have an independent evaluation done by a professor that is an expert in the insurance field. And they have felt the best strategy for our student athletes is permanent disability protection and — because of the resources we have from a rehabilitation standpoint through our medical team — that we would do everything we could to help give a student-athlete the best medical support that they can have to give them the opportunity to get back out playing their respective sport.”
***
There’s no clear-cut consensus on the best approach regarding insurance policies.
It’s an important yet complicated issue, enough so that the NCAA has a section on its website devoted to talking about insurance policies, including those loss-of-value plans.
“The NCAA does not offer LOV (loss-of-value) insurance at this time because the coverage has not been shown to consistently benefit student-athletes who file a claim,” it reads on the NCAA website. “Because of the complexity of LOV policy wording and the subjective nature of underwriting and accurately projecting draft positions, LOV claims are often times litigated and the market is consistently changing.”
While some schools provide the loss-of-value insurance for top prospects, like Ohio State reportedly did with star defensive end Chase Young, many other schools don’t.
Top players like Clemson quarterback Trevor Lawrence and LSU quarterback Joe Burrow reportedly paid for their own loss-of-value policies.
The main difference with Alabama and some of those other schools is the amount of players it pays to insure. Alabama had permanent disability policies in place for 16 players prior to Tagovailoa’s injury. It then added four more policies leading up to the Citrus Bowl.
“(Twenty players) is double, if not triple, what any other school in the country does because of Alabama being uniquely situated with the number of qualifiers on the roster,” said former Kansas basketball player and current insurance specialist Eric Chenowith, who handles insurance policies for Alabama. “I work with over 60 schools. And on average, each school only has 2-10 each year.”
While the Tagovailoa injury led to additional conversations regarding insurance policies among Alabama administrators, it had already been a regular topic of conversation within the Mal Moore Athletic Facility.
Byrne and his staff are always evaluating to make sure they have the best plans in place for their student-athletes.
According to football budgets filed with the NCAA, Alabama spent $1.47 million on medical expenses and medical insurance premiums in 2019 and $1.56 million in 2018.
In comparison, Auburn spent $325,864 in 2019. LSU spent $231,901.
“The University of Alabama athletic department continuously evaluates our longstanding insurance coverage program in an effort to maintain a system that best benefits our student-athletes within the confines of the NCAA rules,” Byrne said. “We work with qualified brokers to identify the most advantageous products for our student-athletes and strive to incorporate those benefits into the program. … The process of identifying new coverage options for the 2020-21 academic year will be initiated soon.”
***
As for Tagovailoa, the lack of a loss-of-value policy probably won’t even end up mattering.
He is still projected to go early in the draft even after the hip injury, so he likely won’t be losing “upwards of $10 million” and probably won’t have to worry about “millions of dollars in potential losses.”
Ultimately, he may not lose out on much of anything money-wise.
Even without that loss-of-value policy.
How Alabama approaches player insurance policies
How Alabama approaches player insurance policies
It came up unprompted during two separate Nick Saban interview sessions in late December, something the Alabama coach had rarely — if ever — brought up previously in a press conference setting.
Player insurance policies.
He did it once while discussing the Crimson Tide players who opted against skipping the team’s bowl game.
Then again a few days later while talking about Dylan Moses’ decision to return to school for another season instead of leaving for the NFL.
“He can create value by coming back,” Saban said at the time of Moses, “and we certainly have to — as an institution and an organization — make him comfortable relative to how we insure him.”
Insurance policies have been a bigger talking point around Tuscaloosa these past few months, ever since a November article from Action Network that essentially questioned Alabama’s approach with player insurance policies.
The reality, though, is that there were some misleading elements within that Action Network story.
***
Under NCAA rules, schools are able to use their student assistance fund to purchase permanent disability policies for top pro prospects to protect those players in case of a career-ending injury.
Policies usually cost a little less than $10,000 for each $1 million of coverage and max out at $10 million worth of coverage.
Schools then have the option of adding loss-of-value coverage to those policies, which is supposed to pay out if an injury causes a player to slip past a certain point in the NFL draft.
Like the permanent disability plans, those loss-of-value add-ons typically cost about $10,000 for each $1 million of coverage and max out at $10 million worth of coverage.
As noted in the Action Network article, Alabama is among the schools that doesn’t purchase loss-of-value coverage.
The article, which came out after Tua Tagovailoa injured his hip against Mississippi State, said that Alabama not having a loss-of-value plan in place for Tagovailoa “may have cost him upwards of $10 million” and that the lack of a loss-of-value policy “means he will not be able to recoup millions of dollars in potential losses.”
It’s more complicated than that, though.
And there are several factors that go into why Alabama and other top schools opt against purchasing that type of insurance.
With loss-of-value plans, an insurance company projects a player’s draft positioning — whether it’s top-five, top-12, early second round, etc. — and then determines the rookie salary total that would come along with being drafted in that specific slot. A player would then have to fall beyond a certain point of the draft strictly due to an injury in order to be in position to collect money from the insurance company.
Generally, it would have to be at least 50 percent below the projected contract total for the player to be able to collect anything.
For example, if a player is projected to go No. 5 in the draft, the slot value for that pick last year was $29.3 million. Fifty-percent of that would be $14.65 million. So, theoretically, that player should be able to begin collecting on a loss-of-value policy if an injury causes him to slip in the draft to the point his rookie contract is worth anything less than $14.65 million, which would have been anything after the No. 14 overall selection last year.
Simple, right? It’s not.
Only a handful of players have actually collected on loss-of-value claims.
And the next player to collect more than $3 million from a loss-of-value claim will be the first.
Most don’t come anywhere close to that number.
There are almost as many players suing insurance companies over the policies as there are guys who have actually gotten money from them. Former USC star wide receiver Marqise Lee and ex-Arkansas defensive lineman Deatrich Wise are among the players who have sued because of issues collecting from those loss-of-value plans.
Players have to prove that the one specific injury is the sole reason they slipped in the draft.
That’s not easy.
“The loss-of-value is very challenging to collect on,” Alabama athletic director Greg Byrne told AL.com. “We have insurance specialists. We have an independent evaluation done by a professor that is an expert in the insurance field. And they have felt the best strategy for our student athletes is permanent disability protection and — because of the resources we have from a rehabilitation standpoint through our medical team — that we would do everything we could to help give a student-athlete the best medical support that they can have to give them the opportunity to get back out playing their respective sport.”
***
There’s no clear-cut consensus on the best approach regarding insurance policies.
It’s an important yet complicated issue, enough so that the NCAA has a section on its website devoted to talking about insurance policies, including those loss-of-value plans.
“The NCAA does not offer LOV (loss-of-value) insurance at this time because the coverage has not been shown to consistently benefit student-athletes who file a claim,” it reads on the NCAA website. “Because of the complexity of LOV policy wording and the subjective nature of underwriting and accurately projecting draft positions, LOV claims are often times litigated and the market is consistently changing.”
While some schools provide the loss-of-value insurance for top prospects, like Ohio State reportedly did with star defensive end Chase Young, many other schools don’t.
Top players like Clemson quarterback Trevor Lawrence and LSU quarterback Joe Burrow reportedly paid for their own loss-of-value policies.
The main difference with Alabama and some of those other schools is the amount of players it pays to insure. Alabama had permanent disability policies in place for 16 players prior to Tagovailoa’s injury. It then added four more policies leading up to the Citrus Bowl.
“(Twenty players) is double, if not triple, what any other school in the country does because of Alabama being uniquely situated with the number of qualifiers on the roster,” said former Kansas basketball player and current insurance specialist Eric Chenowith, who handles insurance policies for Alabama. “I work with over 60 schools. And on average, each school only has 2-10 each year.”
While the Tagovailoa injury led to additional conversations regarding insurance policies among Alabama administrators, it had already been a regular topic of conversation within the Mal Moore Athletic Facility.
Byrne and his staff are always evaluating to make sure they have the best plans in place for their student-athletes.
According to football budgets filed with the NCAA, Alabama spent $1.47 million on medical expenses and medical insurance premiums in 2019 and $1.56 million in 2018.
In comparison, Auburn spent $325,864 in 2019. LSU spent $231,901.
“The University of Alabama athletic department continuously evaluates our longstanding insurance coverage program in an effort to maintain a system that best benefits our student-athletes within the confines of the NCAA rules,” Byrne said. “We work with qualified brokers to identify the most advantageous products for our student-athletes and strive to incorporate those benefits into the program. … The process of identifying new coverage options for the 2020-21 academic year will be initiated soon.”
***
As for Tagovailoa, the lack of a loss-of-value policy probably won’t even end up mattering.
He is still projected to go early in the draft even after the hip injury, so he likely won’t be losing “upwards of $10 million” and probably won’t have to worry about “millions of dollars in potential losses.”
Ultimately, he may not lose out on much of anything money-wise.
Even without that loss-of-value policy.
