Insuring Feathers, Fur and Football Tradition
Lions, tigers and bears. Oh my!
Not to mention the buffalo, a ram, horses, a falcon, an owl and various dogs. The animals that pump up sports fans at universities across the United States range from a gamecock and an eagle to a bulldog and a bluetick coonhound.
“There are quite a few of them out there,” said Vincent Morris, executive director of the higher education practice at Arthur J. Gallagher & Co.
“It’s the tradition and pageantry of it all. The pounding hooves before a football game, the raptor soaring around the stadium, the tiger growling … .
“Mascots are so different,” he said.
“What one does with a University of Georgia bulldog is different from what one does with a University of Colorado buffalo.”
But they all need to be insured for mortality as well as potential property damage or bodily injury. Plus, the animals need to be cared for, whether it’s ensuring they have proper nutrition and living quarters to making sure they are humanely and adequately restrained from harming fans.
Universities with mascots also must accept that there will be objections by animal rights groups.
“Nothing says ‘Go, team!’ less than an unhappy animal, and with athletes and coaches so prone to raising a ruckus on and off the field, there’s no reason to subject a real animal to the stress of being a mascot,” writes People for the Ethical Treatment of Animals (PETA) on its website.
“There’s a lot of pressure from people who say we shouldn’t have animals living like that,” Morris said. “There’s a kind of movement in the country that is concerned about caged animals … not in their natural habitat.”
He noted that most universities do not have live mascots. Of about 3,500 schools, fewer than 50 use live animals for mascots.
“When you are talking about risk management,” Morris said, “you are talking about loss control, keeping bad things from happening — and knowing how to pay for them when they do. You don’t want to have a buffalo rampaging through the marching band.
“You have to worry about the animal being stolen or escaping,” he said.
“There have been pranks. LSU’s tiger has been released or kidnapped on more than one occasion. Arkansas’ razorbacks have gotten out on more than one occasion and killed other animals.”
“Normally,” said Mitchel Kalmanson of the Lester Kalmanson Agency, which specializes in rare and unusual risks, especially animals, “commercial animal liability is broken down into either domestic or exotic.”
Domestic animal liability would cover, for example, dogs (mascots for Eastern New Mexico University, Texas A&M, University of Georgia, University of Tennessee and Yale), horses (Southern Methodist University, University of Oklahoma and University of Southern California), or goats (Naval Academy).
Exotic coverage would be necessary for a bear (Baylor University), razorback (University of Arkansas), African lion (University of North Alabama), buffalo (University of Colorado, Boulder) or tiger (Louisiana State University).
“I insure [mascot owners] all the time,” Kalmanson said, noting that he also owns 18 “big cats” — tigers, lions and leopards — that are hired to appear at fairs, schools and special events.
“Sometimes mascot animals live with handlers,” Morris said.
“Some live on a farm nearby. Some live with a designated family or sometimes, athletic staff.”
Some like Mike, a Siberian Bengal tiger, lives in a specially built 15,000-square foot habitat with a waterfall, stream and foliage on the campus of Louisiana State University, according to “Hear Me Roar: Should Universities Use Live Animals as Mascots,” a 2011 article by Jessica Baranko for the “Marquette University Sports Law Review.”
Baylor University’s bear mascots, all named “Judge” followed by a surname, also live in a campus facility with a waterfall, pond, cave, rocks and foliage. Students call it “The Pit,” Baranko writes.
Usually, Kalmanson said, the university is not the owner of the mascot animals, but is added “as an additional insured on the owner’s liability policy or commercial animal owners’ liability policy.”
“You want to make sure the owner’s liability policy is exhausted before it goes into the university’s,” Kalmanson said.
Nonetheless, it’s important for universities to have written guidelines and procedures related to the mascots. They should ensure the owner has the proper state, federal and local permits and licenses to own and exhibit the animal, and ensure proper nutrition and medical care is provided.
When animals are transported, the trailer or truck must be properly ventilated, he said. Inside, the animal’s enclosure, for a big cat, for example, should be made of Lexan, a bulletproof polycarbonate, and steel instead of a less secure wire cage. Plexiglas, he noted, will crack and break if used for big cats.
When the animals are taken onto the field, handlers — and back-up handlers for cases of emergency — must be properly trained and make sure the buffalo, for example, is tethered to a safety cable to keep it from jumping into the crowd, Kalmanson said.
Animals should be brought to the fields before actual games so they can become used to the area, lights and noise. There should be an “exit strategy,” in case something goes wrong and the handlers need to move the animal to a secure area, he said. Sedation equipment should also be available.
Policy deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.
Too often, he said, universities do not have set guidelines, and handlers or families “take too many shortcuts” about safety procedures. “There’s nobody looking over their shoulder saying they should follow the guidelines. There should be standard operating procedures available.”
That’s good for the animal as well as the reputational brand of the university, he said.
Kalmanson said liability coverage should be for a minimum of $1 million per occurrence aggregate. Deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.
If properly written, it will include coverage for bodily injuries or property damage caused by the animals. The policy would not, however, be triggered if PETA or some other animal rights group filed a lawsuit alleging mistreatment.
“There’s not much recourse but to defend that on its own merits,” Kalmanson said. “That would not be a covered hazard.”
Cleveland Insures Against Protesters
The City of Cleveland will pay $9.5 million to purchase $50 million of protest insurance coverage ahead of the four-day Republican National Convention that begins July 18.
The city quintupled its original proposed coverage amount, which would have had the city pay $1.5 million for a $10 million policy.
“The $1.5 million for $10 million coverage was always just a placeholder,” City spokesman Dan Williams told Risk & Insurance®. “We felt it was the best level of coverage for what we needed.”
Protest insurance coverage is required for any event that has been deemed by the U.S. Secret Service as a “National Special Security Event.”
The protest policy is liability insurance that includes incident insurance to cover potential lawsuits, private property insurance to cover any damage to property, and vehicles and equipment insurance to cover others coming to the convention with their own vehicles and equipment, Williams wrote.
The policy is required for any event that has been deemed by the U.S. Secret Service as a “National Special Security Event,” which also includes the Democratic National Convention, visits by the Catholic pope and G8 summits, among other events.
The city’s Board of Control increased the insurance coverage on the recommendation of its broker, Aon Risk Services Northeast, which polled 40 insurance providers, according to Sharon Dumas, the city’s finance director.
“They analyzed the national trend of conflicts and the risks associated with the convention, and we concurred,” Dumas said to Cleveland.com.
The Secret Service, FBI, Cleveland and Ohio State Police, the National Guard, and thousands of police officers from around the country will work together over the course of the week to ensure peaceful demonstrations — both for and against Trump, according to reports.
The groups scheduled to travel to Cleveland for the convention include anti-Trump demonstrators, a white nationalist group and the anti-gay Westboro Baptist Church.
Preparing for potentially violent demonstrations, the city’s police department has partnered with law enforcement agencies throughout the country “to ensure that we have an adequate number of law enforcement officers to staff the needs of the convention,” Cleveland Police Chief Calvin Williams wrote on the department’s website as well as its Facebook page. \
However, after shootings in Dallas and Baton Rouge led to the deaths of eight officers, some law enforcement agencies have rescinded offers to send officers to help at the convention.
But Williams remains confident. “Our officers have trained with many partnering agencies at the local, state and federal level to ensure that the highest safety standards are maintained,” he wrote.
“Throughout the course of planning for the RNC, our officers have undergone hours of training relative to many subjects. Although not all training can be discussed or demonstrated as law enforcement tactics are sensitive, the training has been both comprehensive and valuable.”
However, he did say the department purchased 300 bicycles outfitted specifically for “law enforcement purposes,” to be used by police officers who became certified riders after training through the Law Enforcement Bicycle Association.
Williams ended his letter on an optimistic note: “This is an exciting time for our great city. This is an historic event and we are not likely to see anything like this within the footprint of Cleveland again soon. I am looking forward to a safe event and I thank you for your support.”
Buyers Beware: General Liability Outlook May be Shifting
The soothing drumbeat of “excess capital” and “soft market” to describe the general liability (GL) market is a familiar sound for brokers and buyers. Emerging GL trends, however, suggest the calm may not last.
Increasing severity of GL claims may hit some sectors like a light rain at first, if they have not already, but they could quickly feel like a pelting thunderstorm in others. A number of factors could contribute to the potential jump in GL prices for certain industry segments or exposures, possibly creating “micro” or niche hard markets in the short-term, and maybe even turning the broader market over the longer-term.
“There are trends we’re seeing that will play out slowly. Industries that carry more general liability exposure will and have been hit first and hardest, but it won’t apply across the board initially,” said David Perez, Senior Vice President and Chief Underwriting Officer, for Liberty Mutual Insurance’s National Insurance Specialty operation. “There is ample capital in the market today, which allows a poor performing account to move its policy frequently from carrier to carrier. Poorer performing classes, however, will likely face increased pricing for GL policies and a reduction in capacity.”
The good news for buyers is that they can take action today to lessen the impact these trends and the evolving market may have on their GL programs.
David Perez on the state of the GL market.
Medical and Litigation Trends Drive Severity
One factor increasing claim severity is the rising cost of health care, driven both by greater demand and by medical inflation that is growing faster than the Consumer Price index.
The impact of rising medical costs on commercial auto is well-known. Businesses with heavy transportation exposures are finding it more difficult to obtain coverage, or are paying more for it.
That same trend will impact general liability, just on a slower and more fragmented basis.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk.”
— David Perez, Senior Vice President & Chief Underwriting Officer, National Insurance Specialty, Liberty Mutual Insurance
“It takes longer for medical inflation to register through the tort system in general liability than it does in auto liability (AL) because auto claims are generally resolved more quickly,” Perez said. “But the same factors affecting severity in AL also exist in GL and as a result, it’s foreseeable that we will not only see similar severity trends in GL, but they may in fact be worse than we’ve seen in commercial auto.”
Industries with greater exposure to severity in general liability claims should be the first wave of companies to notice the impact of medical inflation.
“Medical inflation will drive up costs across the board, but sectors like construction and product manufacturing have a higher relative exposure for personal injury lawsuits.”
The impact of medical inflation on the GL market.
Beyond medical inflation, two litigation trends are increasing GL damages. First, plaintiffs’ lawyers are seeking to migrate the use of life care plans—traditionally employed only for truly catastrophic injuries—to more routine claims. Perez recalled one claimant with a broken thumb and torn ligaments who sought as much as $1 million in care for the injury for the rest of his life.
Second, the number of allegations of traumatic brain injuries (TBI) in GL claims is growing. It can be difficult to predict TBI outcomes initially and poor outcomes can be expensive and long tailed.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk,” notes Perez.
Changing Legal Landscape
Medical inflation and litigation trends are not the only issues impacting general liability.
Unanticipated changes in court interpretations of policy language can throw unexpected pressure on GL pricing and capacity.
Courts sometimes issue rulings interpreting policy language in a manner that expands coverage well beyond the underwriter’s original intent. Such opinions may sometimes have a retroactive effect, resulting in an immediate impact on not only open, but also closed cases in some circumstances.
Shifts in the Marketplace
In addition to facing price increases, GL brokers and buyers will be challenged by slightly shrinking capacity due to consolidation and repositioning among carriers in the marketplace. “Some major carriers have scaled back their GL writing, resulting in a migration of experienced senior management. As these executives leave, they take their GL expertise and relationships with them, resulting in fewer market leaders and less innovation,” Perez said.
“Additionally, there are new carriers coming into the business that may not have the historical GL loss data to proactively identify trends or the financial strength and experience to effectively service their GL customers and brokers. Both trends make it important for brokers and buyers to work with an insurer that is committed to the GL market and has the understanding and resources to help better manage risks impacting customers.”
Last year saw a high level of mergers and acquisitions in the insurance industry. Buyers should take advantage of that disruption to re-evaluate their needs and whether their insurers are meeting them. Or better yet, anticipating them.
What’s a Buyer to Do?
Buyers—and their brokers— should look to partner with insurers that can spot emerging trends and offer creative solutions to address them proactively.
What should buyers and brokers do, given the trends facing the GL market?
“Brokers and buyers should value insurers that have not only durability and a long history in the general liability business, but also a strong risk management infrastructure,” Perez said. “Your insurer should be able to help you mitigate your specific risks, and complement that with coverage that works for you.”
Beyond robust GL claims and legal management, Liberty Mutual also provides access to one of the insurance industry’s largest risk control departments to help improve safety and mitigate both claim frequency and severity.
In addition, notes Perez, “Even if a company has a less than optimal loss history in general liability, there can be options to provide adequate coverage for that company. The key is to partner with an insurer that has the best-in-class expertise, creativity, and flexibility to make it happen.”
By working closely with their insurers to understand trends and their potential impacts, brokers and buyers can better prepare for the possible GL storm on the horizon.
To learn more about Liberty Mutual’s general liability offering, visit https://business.libertymutualgroup.com/business-insurance/coverages/general-liability-insurance-policy.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.