Shane Sellers didn't want to play Russian roulette anymore.
A top jockey who rode in the Kentucky Derby 14 times and won more than 4,000 races during the course of his career, Sellers decided in October to stop riding until he could get better insurance coverage.
For years, he had purchased disability insurance for $10,000 a year. But after he seriously injured his knee in 2000, insurers would no longer cover him. He decided to fight his way back anyway and ride without disability insurance because he was just 200 wins away from the 4,000-win milestone.
"I rode in pain to get to that milestone," Sellers says. At the Kentucky Derby last year, he was on the favorite, The Cliff's Edge, who finished fifth.
But Sellers, 38, knew he ran the risk of serious injury every time he got on a horse; and he knew he was riding with virtually no safety net. The Jockeys' Guild had allowed its catastrophic injury policy to lapse after 2002, following a rapid increase in insurance premiums in the hard market. That left jockeys covered through policies obtained by the racetracks, but they only provided accident coverage of $100,000, a pittance for a seriously injured jockey. "I knew for a while that we were only covered for $100,000. I knew that," Sellers says. But he took the risk anyway.
The wakeup call came last July when jockey Gary Birzer was paralyzed from the waist down after spill at a racetrack in West Virginia. Birzer had only $100,000 in accident insurance from the racetrack, but has so far reportedly racked up bills of more than $600,000.
Sellers recalls returning to Kentucky after a summer of riding in New York, where jockeys are covered by workers' compensation, and thinking about Birzer's accident.
"It was just a very scary feeling to know that I could possibly lose everything I worked for for 26 years," he says. "When I came back to Kentucky after Saratoga, riding under those conditions, I felt very unsafe. I talked it over with my wife, and it wasn't something I wanted to risk. I didn't retire; I just stopped riding until we could get some better insurance. I just felt I didn't want to play Russian roulette with my future anymore."
Sellers wasn't the only one alarmed by the situation. Riders had been growing increasingly concerned about the insurance issue after a series of accidents that resulted in the death of jockey Michael Rowland and left jockeys Birzer, Remi Gunn and Tony D'Amico seriously injured.
In early November, tensions came to a head at Churchill Downs, Louisville, Ky. Sellers was led away from the track in handcuffs, a day after he had spoken to jockeys about the risks they faced by riding with inadequate insurance.
Though no charges were filed in the Sellers incident, later that week 14 jockeys declined to accept mounts at Churchill Downs. A walkout a few days later at Hoosier Park, Anderson, Ind., led to the cancellation of one night's races there.
MOST RIDERS CAN'T AFFORD COVERAGE
The jockey boycott, however, attracted a lot of attention. Kentucky Gov. Ernie Fletcher has made the issue of insurance for jockeys a top legislative priority for 2006 and appointed a blue ribbon panel to study the problem. The governor expects a report from the panel by September 1.
The Lexington Herald-Leader, one of Kentucky's major daily newspapers, also kept the issue on the front burner when it ran a series of articles in January and February on the issue of adequate insurance coverage.
In addition to the developments in Kentucky, the National Thoroughbred Racing Association formed the Jockey Accident Insurance Working Group in November. The working group announced its conclusions in April.
A U.S. House subcommittee is investigating the Jockeys' Guild because of serious questions about why the Guild allowed its policy, which covered claims up to $1 million, to lapse in 2002, according to an Associated Press report.
For the jockeys, though, a solution might have to be developed on a state-by-state basis since workers' comp is regulated at a state level and thoroughbred horse racing does not have a national governing body. "That's one of the difficulties jockeys have faced," says Eric Banks, a spokesman for the Jockeys' Guild. "It is a nationwide problem, but it's state-by-state and then racetrack by racetrack. We don't have a national governing body that would take care of this."
Of the more than 30 states that have pari-mutuel racing, only a few provide workers' comp for jockeys. New York, New Jersey, California and Maryland are the key states that have major thoroughbred racing operations and also provide workers' comp for jockeys.
As employers, trainers are required by law to have workers' comp for their employees. Jockeys, however, are considered independent contractors because they ride for multiple trainers on any given day. According to the regulations in most states, that makes them ineligible for workers' comp.
Jockeys riding in states without workers' compensation now have just two options. They can buy their own disability insurance, or they can rely on the coverage provided by the racetracks.
Most jockeys, however, cannot afford to buy their own disability insurance. "There are 1,500 licensed riders and the top 10 percent make a good living," Sellers says. "The rest make an average of $35,000 a year." At $10,000 a year, disability insurance is simply out of reach for the average jockey, he says.
Some tracks have since increased their on-track accident insurance coverage. Churchill Downs Inc. has said it was raising its coverage from $100,000 to $1 million. Gulfstream Park, Hallandale Beach, Fla.,which is owned by Magna Entertainment, increased coverage to $500,000.
In Kentucky, the goal is to find a solution that will protect both the jockeys and the exercise riders, says Tom Ludt, who is a member of the Kentucky Horse Racing Authority and a broker at BB&T-Cromwell.
While jockeys have been the focus of the insurance crisis, there is also concern that other workers, such as exercise riders, hotwalkers and grooms, may be falling through the cracks as well.
The Lexington Herald-Leader found that only one-third of trainers in Kentucky had workers' comp insurance based on a survey of trainer licenses. Those numbers, however, are in dispute, according to Ludt. Ludt says most trainers have workers' comp insurance. But licenses are issued to trainers and owners, and owners are not required to have workers' comp insurance, he says. In addition, trainers often simply do not check off the box asking whether they have the insurance or not.
Kentucky's governor has promised a crackdown to make sure workers are covered. An investigation has been taking place at Turfway Park, Florence, Ky., to make sure that everyone who should have a certificate of insurance actually has one, according to William P. Emrick, executive director of the Kentucky Office of Workers' Comp.
"The tracks are working very closely with us on this," Emrick says. "We intend to be at all the tracks this year."
GUIDANCE FROM NEW YORK
The Kentucky governor's blue ribbon panel is expected to continue the work of the Kentucky Horse Racing Association which had been asked by the governor in November to study the jockey coverage issue after the riders had refused mounts.
The KHRA had recommended to the governor in February that Kentucky create a workers' comp fund for jockeys and exercise riders similar to the successful one that has been used in New York for more than a decade. But it was decided that there was not enough time to get the KHRA proposal done this year.
Kentucky is considering a program similar to the New York Jockey Injury Compensation Fund, which provides full medical coverage for licensed jockeys, assistant jockeys and exercise riders if injured in the course of their employment.
For insurance purposes, the riders are treated as employees of the fund. The fund is financed through three sources; a flat fee paid by owners and trainers; a stall fee, which is used to determine the appropriate premiums, and a percentage of the purse.
The Kentucky Jockey Injury Compensation Fund proposed by the KHRA in February would cover
jockeys, apprentice jockeys and exercise riders, like the New York fund, and it would be paid for by a flat fee paid by the owners and trainers, Ludt says.
Although Kentucky favors the New York model, it is one that makes it difficult to mandate loss-control measures, Ludt says.
A new fund also would have to be set up in such a way that it would be attractive to prospective insurers, seeking quotes from Kentucky Employers Mutual Insurance, for example, as well as any other insurer that might be interested.
Ludt says he had gathered information about accidents from Kentucky tracks and met with Kentucky Employers Mutual officials a few months ago to discuss the potential cost of such a program.
One of the sticking points facing the horse-racing industry, though, has been that it does not have accurate loss histories, according to a report published on the National Horsemen's Benevolent and Protective Association Web site.
The industry also does not have a consistent, standard loss-prevention program, nor does it have a mechanism for recording and reporting accidents on a national level. Such information, however, is vital for developing insurance premiums.
Insurance premiums could be reduced by forming a captive and by developing systems for reporting accidents and payrolls so insurers and the industry alike can determine risk and better control losses, according to the HBPA report. In Kentucky, there is still a lot of concern about how much a new jockey compensation fund will cost and who will have to pay for it, Ludt says.
"The hardest part about looking at how to do this is how do you get this fund funded without constantly charging the same people to the point where you chase people out of the industry," Ludt says. "The horse owner pays a lot of money to be in this game. It's just complicated."
Sellers says the tracks can find a way to pay for the insurance.
"There are many ways it can be paid for," he says, noting that jockeys have suggested that tracks, for example, give the Jockeys' Guild their uncashed winning tickets to help defray the costs.
For their part, jockeys have not staged any new protests since November now that major tracks such as Churchill Downs have started providing on-track coverage of as much as $1 million.
At Churchill Downs, the racetrack and the Jockeys' Guild announced a deal less than three weeks before the Kentucky Derby to keep riders from boycotting mounts in protest of medical insurance and safety issues.
For Sellers, though, there will be no more Kentucky Derbies. He says his career as a jockey is over and he's not coming back, even if the insurance problem is resolved. But he hopes that he has helped to draw attention to a serious problem and bring about change that will help young riders. "You're never going to get anything unless you fight for it. There's been a lot of people saying, 'Why do you all have to do it this way?' Well, we've been asking and begging for 40 years," Sellers says.
The tracks have made a lot of money off horse racing, he says, but the industry has shown little concern for the welfare of the jockeys.
"Don't treat me like a slave. I'm one of the main two reasons you have that money. Without me and the horses, you don't have anything."
While the horse-racing industry is in the spotlight now, insurers and regulators may start cracking down on cattle ranchers and other farmers suspected of underreporting payrolls or failing to provide coverage to workers who should be covered, says Laura Koester, practice leader for the agribusiness unit of broker Willis.
PATRICIA VOWINKEL is a frequent contributor to Risk & Insurance®.
June 1, 2005
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