2015 World Cups highlight inadequacy of sportsperson’s insurance in SA

With major sporting events such as the IRB Rugby World Cup and the ICC Cricket World Cup set to take place in 2015, it can be expected that some players may become injured while performing their chosen sport. This risk was recently highlighted when Springbok captain, Jean De Villiers, suffered a horror knee injury in the final Test of the season against Wales, putting his participation at this year’s IRB Rugby World Cup in doubt.

Unfortunately, should any South African professional sportspersons become seriously injured, resulting in them being unable to play their professional sport, they could suffer severe financial strain in the future due to insufficient sportspersons’ insurance.

This is according to Dave Honeyman, Executive Head at SHA Specialist Underwriters – the largest liability underwriting management agency (UMA) in Southern Africa – who says it is common knowledge that most professional sports players in South Africa do not have adequate insurance cover. “Some might have an income protection plan which covers them for loss of earnings for a year if they are injured or if they fall ill. However, this only covers them for short term income protection.”

Professional sportspersons really need income protection insurance paired with career ending insurance, says Honeyman. “Should a professional sportsman who is 24 years old and in his peak period fall victim to a serious injury it could end his career or seriously jeopardise attaining potentially large contracts going forward, leaving him trying to find a job in corporate South Africa. Some may succeed, but some may struggle to find a job that pays the same as they are used to in their respective sport.”

Take a T20 cricket player for example, says Honeyman. “He could be on a contract of R350 000 a year. If he has a great season, this could double and then he could get purchased in an auction for the Indian Premier League (IPL). These contracts can be worth anything up to $250 000 and in some cases $600 000 for the IPL tournament (6 weeks of cricket). If he gets injured and is unable to play for the IPL, he loses that full amount. If you multiply this by five, as he may play for five years, you can imagine the amount of money he could be losing if he does not have adequate cover in place.”

Honeyman says most sports stars become accustomed to a certain standard of living as large contracts and sponsorship deals provided multiple sources of revenue. “However, if these monies stop coming in, they will have to adjust their lifestyle quite substantially. A career ending policy will provide them with up to five times their contractual annual salary going forward, to help them through this period and give them a foundation upon which to build for the future.”

He says it is also a good idea for professional sportspersons to have catastrophic disability cover, which provides cover should the sportsperson suffer a disabling injury resulting in the person being unable to perform any type of occupation following an injury. “An example of this would be a major head injury or a spinal cord injury that leaves someone a quadriplegic. If this happens, they will become financially drained and it will be very difficult for them to survive going forward. They will need a large lump sum payment to invest and help them pay expenses for the rest of their lives.”

Honeyman says it would appear that most teams do not have any insurance if a plane crashes and their entire team is killed on the plane. “The cost to the team is huge, considering they may have to pay out the remainder of the players contracts and then also contract a whole new team of players that they will have to buy, or source via agents and other teams. The type of cover needed here would be Catastrophic Event Policy to cover these expenses.

The competitive lifespan of most sportspersons – such as rugby, football, cricket, hockey and swimming - is often limited to around 10 years and they often do not have a general provident fund and benefits attached to their occupations, he says. “In most cases, the current cover that is offered is a voluntary plan and the player pays for it themselves. This means they are left on their own to protect their finances and insurances.

“As a result of the inadequacy of the current insurance provision for sportspersons, it is imperative that sportspersons take out their own cover to ensure they are financially covered in the unfortunate event that they become unable to perform their respective sports profession,” concludes Honeyman.