Risks Revealed

Fantasy football makes its way into insurance biz

August 18, 2014
Is this a new business opportunity for insurers?
Did you know that Fantasy Football participants can buy real insurance that provides coverage when players on their teams have season-ending injuries? … Let that sink in for a second.

Fans across the nation rejoice!

As with real football, injuries to top players can have a devastating impact on the season. And with the September 4 draft deadline quickly approaching, this could become a game changer.

The 33 million people engaged every year know what I’m talking about. According to an article by Leighton Hunley from Risk & Insurance, they already spend between $100 and $10,000 (for some league owners) in the $2 billion industry. So, if 10 percent of the 33 million players are willing to pay a $20 annual premium to insure a single player, that’s a $66 million insurance product each season.

“While this figure currently would still be a fraction of premium levels for other niche property and casualty products, if priced right, and if growth in fantasy sports continues, the size of the market would be difficult to ignore,” Hunley writes. “This market potential should likely entice more insurers to enter into the business.”

What Does It Cover?

Fantasy sports insurance is an online product. One product offering for the upcoming 2014 season appears to be available: FantasyPlayerProtect (FPP).

FPP is designed to recover costs for owners whose players experience season-ruining injuries. FPP’s policies define this condition in terms of the number of games missed, according to a Wall Street Journal article by Nando Di Fino. According to the article, the coverage is triggered when a player misses eight or more games of a 14- or 15-week season, and nine or more games of a 16- or 17-week schedule.

The coverage is intended to replace the league entry fee, plus research expenses such as magazine or online subscriptions, according to Di Fino. FPP’s coverage maximum is $1,000, including up to $250 for ancillary research expenses.

Owners can insure as many as five players per fantasy team and 10 players per season with FPP. The premium per player insured ranges from 9 percent — for a historically healthy player — to 13 percent for an injury-prone player — of the coverage amount, plus taxes and fees.

With this product expected to gain traction if interest in Fantasy Football continues to increase, could you see this becoming a major product in the insurance industry?

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