Picture any town in America on a warm Saturday afternoon. Whether you imagine a rural area or a cityscape, one thing is for certain: Kids are at play.

Sports and play are an integral part of American life. On any Saturday afternoon, children of different backgrounds come together to play sports in gymnasiums and on fields, while their families cheer from the sidelines.

Even with the residual effects of the economic downturn, "Families are still spending money on their children to go to sports camps, leagues, traveling for games. That is a constant," said Brian Himmer, underwriting supervisor at Philadelphia Insurance Cos., Bala Cynwyd, Pa.

Amateur athletics and family amusements are holding steady, and with that comes a solid niche for insurance agents.

But be warned: Agents active in the market note that it's subject to new carriers and MGAs who don't understand the business. They underprice the coverage to buy up market share, then leave the market when unanticipated claim activity builds.

A big challenge is the "ever-vacillating appetite of insurance companies," said Drew Tewksbury, vice president and director of programs at Amusement Insurance Resources (AIR), a program administrator for Allegiant Programs Group in Cleveland. "That artificially reduces the rate structure, which hurts companies who price accordingly based on a longer, better-understood loss picture."

Youth sports and leagues

Amateur sports tend to be a localized, regional niche, Himmer said. Philadelphia finds business through its network of 45 regional offices nationwide. It's a successful approach, as the carrier has underwritten this product since 2006 and has seen it grow each year by 12 percent.

Writing coverage relies on being a part of the local sports community. "It's knowing that your neighbor has an 8-year-old daughter who plays softball in the spring, and going to the [the league's] board of directors" for coverage placement, Himmer said.

Sports leagues also are localized by geographic area and seasons. Lacrosse, which is extremely popular in the mid-Atlantic and Northeast, is now taking off in Florida, Texas and the Rocky Mountain/California regions. Ice hockey is big in the northern states and swimming in the warmer regions. Paintball is popular in Texas and the Southeast. The Midwest is traditional: football, baseball, soccer and basketball leagues.

Another challenge in this market is keeping abreast of safety and implementing sound risk management. Parents are often the coaches and directors of youth leagues, and aren't aware of risks.

The largest risk is player safety. By nature, sport exposes players to bodily injury, and it's just not football players suffering concussions or broken bones. Take gymnastics or competitive cheerleading: Participants perform tumbling, cradle catches and throw each other into the air.

In traditional sports and leagues, general liability and participant accident insurance is a must, said Tony Pulgine, president and CEO of MIC Insurance Group, a program manager based in Naperville, Ill., that writes sports policies in 30 states. "The exposures are obvious. The best mitigating factor is the quality of coaching and adult supervision. Are the leagues, these coaches, affiliated with any of the national associations that provide guidance?"

Monitoring league rules is essential, especially with youth sports. For example, do the league rules allow a young child to play up in competition? An 8-year-old phenom may have the skill level of a 13-year-old in youth football, but the 8-year-old is half the size, Himmer points out.

As far as loss control, participants (or their parents) should sign an exclusion waiver that includes language regarding the acknowledgement of the risks of participation, releasing parties from liability and an agreement not to sue in the event of injury. Philadelphia offers a loss control service called Waiver Saver, which assists clients in writing waiver language.

Family Fun

Fun and games don't end on the field. "Families have to be smarter about their use of discretionary income," Tewksbury said. "Historically, they may have been able to afford $1,000 to go to a large theme park, but now they go to a family entertainment center for a quarter of the cost."

Family fun centers include multiple amusements in one location: go-karts, bumper boats, batting cages, arcades, roller skating, bowling, laser tag, inflatables and zip lines, to name a few. 

AIR also insures the mobile amusement industry and amusement rentals, which include inflatables, bounce houses, mechanical rides and rock climbing walls. The program manager writes in excess of $5 million premium with relationships with CNA, Berkley and Cincinnati Specialty.

In this niche, Tewksbury often writes general liability, auto liability, property liability and workers' compensation. Common claims are scrapes, bumps, bruises, sprains and broken bones. He deems mechanical bull rides as a high-end risk. "The potential for injury increases with the elimination of control of the human body," he said.

Safety training and sound risk management training helps avoid claims. Tewksbury holds licenses and accreditation as an Amusement Ride Safety Official and Inspector. 

Kids at Heart

Sport participation doesn't end at age 18. Himmer said that college towns where the post-grads stick around show a high concentration of adult leagues for baseball, basketball, softball, dodgeball, paintball, kickball and Ultimate Frisbee.

After 20 years in this industry and writing just shy of $5 million in premium volume in 2012, Pulgine sees an increased popularity in the physical fitness area: personal trainers, small gyms, yoga studios and mixed martial arts (MMA).

The MMA market is still findings its way and it's a difficult risk to underwrite, Pulgine said. "You could have a bad, bad injury in MMA. That's a catastrophic exposure," he said. Agents should consider the length of time the owner has been in this industry, if he or she has worked in the traditional martial arts and previous loss records. Also ensure that owners require a participant waiver.

Pulgine encourages agents to stay aware of ever-changing rules, regulations and equipment changes, and ensure that any non-sports exposures are identified. "We had a paintball facility where a gentleman filled propane tanks, which we were not aware of," he said. "He had a gas leak, and kaboom! Our underwriters paid a significant loss."

 

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