Disability and death insurance for individual athletes are placed at Lloyd's in varying amounts. Arnold Palmer has a $500,000 policy that costs him $7,500 per year. This is one of the bigger policies, with one of the fatter premiums—though the rate is not high considering the payment involved. A much higher rate is the one levied against pre-and postseason college football games, of which Lloyd's is very wary. One all-star game has developed such a reputation for injuries that the sponsors must now pay a premium of $100 per man to cover injuries, with a maximum payoff of a mere $1,200 on any single player.
Besides these more or less standard policies, Lloyd's brokers have placed insurance on every aspect of sports from Irish Sweepstakes tickets (a ticket holder insures against his horse not starting the race) to mountain climbing. Jim Whittaker, a member of the U.S. Mount Everest climbing team, wanted extended coverage on the expedition, and Lloyd's was the only place he could get it. "I had liability insurance when I was a guide on Mount Rainier," Whittaker says, "but on expeditions, no. However, for Everest, I wanted more. Lloyd's insured me, and several others, for six months. The premium was $100 for $10,000. I took out $500 worth." It was life insurance only and did not cover accidents unless a climber lost a whole foot or arm. "They were pretty smart," Whittaker adds. "Fingers and toes lost from frostbite didn't count. As it turned out, two members of the expedition were frostbitten and lost all of their toes."
Overall, says Lloyd's Peter Nottage, the insurance record with sports is fairly good and getting better all the time.
One reason the overall payment record has been good for the brokers is that they have improved their knowledge of the odds through painful experience. A risk that caused considerable woe to the underwriters was their much-publicized hole-in-one guarantee. The sponsors of the Palm Springs Golf Classic offered a bonus of $50,000 to any professional who scored an ace on any hole during the tournament. The sponsors then got Lloyd's to insure the tournament for the full amount against any hole in one. For three years running, an ace was scored, and Lloyd's underwriters had to pay up the full amount each time. Now the coverage is restricted to a specific hole named before the tournament begins, because the brokers insisted they deserved a "more sporting chance."
The hole-in-one payoffs, however, were a long way from being the largest that Lloyd's has faced in sports. That distinction still is held by the amount handed over to Edgehill Farms, Incorporated and the Turfland Corporation, the owners of Bally Ache, the 1960 winner of the Preakness. After his victory, Bally Ache was a doomed horse. First, he suffered a wind puff and was sent to pasture to rest. When he returned to racing, he fractured a bone. He was placed in a cast and given antibiotics. Eventually Bally Ache developed acute colitis, of which he finally died. The owners received $1 million.
This was not the only grief Lloyd's has suffered from racehorses. The underwriters once went into horse breeding. They had insured a California Thoroughbred named Your Host, owned by Film Producer William Goetz, for $250,000. Not long after, the horse broke its right foreleg, and Goetz feared that his animal would have to be destroyed. Lloyd's, however, paid off the full mortality to Goetz and then, after checking with American veterinary experts, the underwriters kept him as a stallion. But they did not keep him long enough. After Lloyd's sold Your Host to a syndicate for $140,000, he sired Kelso, racing's second biggest money winner.
In the U.S. the organization that has derived the most profit and pain from racehorses is the Animal Insurance Company of America. AICA has carried insurance on many of the best-known Thoroughbreds—Carry Back, Tom Fool and Turn-to—and even paid out $100,000 on Bally Ache. Originally, the company had written the policy on Bally Ache but had fortunately laid off the bulk of it with Lloyd's. AICA has also written insurance on cattle, dogs and cats. They started writing policies on animals six years ago because, as one executive put it, "Horses, dogs and cats have become members of the American family." The flat rate for dog insurance is $10 per $100, the maximum being $15,000. And no dog over 9 years old is insurable with AICA.
"This is not cut-and-dried insurance," the executive continued. "Only people who really love animals can be in this line of work. We have to be able to conjure up a picture of what the animal is like, so we have an identification that carried through with the clients. You take Bally Ache. He was the kind of horse you could really love." Despite this happy affair with animals, two months ago the company saw more profit in insuring people and has abandoned its four-legged friends.
In Chicago, meanwhile, a young executive named Paul Copello is plunging more deeply into sports insurance each day. Only 33, Copello is already the insurance expert for skiing. Copello now writes commercial liability insurance for 160 ski areas in the U.S., covering everything from a creaky chair lift to a biting dog. The annual premiums range from $300 to $16,000, varying according to location of the area, its size, types of ski lifts, experience and quality of management. Copello is now attempting to write a package plan that will cover everything an area owns and a few things it never wants—like a year with no snow. He has already written a one-year policy covering the U.S. Olympic team during the full training program and the actual Olympic Games. The plan will cost $14.25 per person to insure everyone on the team against any accident at any ski site. Copello also writes blanket medical policies ($2,000) on all members of the U.S. Ski Association. "But that's a losing proposition," he insists. "Over the last five years payments are averaging $1.35 for every $1 taken in." Copello's largest payment was $26,200; it was due to an off-season accident at a ski resort when a sightseer was knocked off a chair-lift platform onto the rocks below.