Finance & Governance Forum
Understanding and Managing Risk
24 April 2014
Richard Doubleday
Managing Director, Sport and Recreation
Perkins Slade Ltd
Sport specific Risk Management
and Legal Liability
•
Review of claims – what happens when a risk goes wrong?
•
Consequences
– From an insurers’ perspective
•
Practical Risk Management examples
– British Gymnastics
– Lawn Tennis Association
•
Protecting your sport
– Liability insurances
Review of sports related claims
•
There are representatives from approximately 30 National Governing Bodies here
today. Of these, at least:
– Two have had one or more claim(s) for damages, settled in excess of £5m
– Two more have claims, currently reserved at more than £1m
– Two more have claims, currently reserved at more than £250,000
•
Just because your sport is ‘low risk’, please do not think you are safe from a
potential “catastrophic” loss:
– In 2013, £5m damages was paid to an individual, as a consequence of an injury arising at
a barbeque!
Review of sports related claims cont’d
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On behalf of a number of National Governing Bodies, Perkins Slade has recently
settled or is handling claims in relation to:
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Corporate Manslaughter
Child Abuse (1 sport £870,000)
Repetitive strain injury (gradually occurring)
Disability Discrimination (membership of an NGB)
Breach of Human Rights (membership of an NGB)
Injury to a ‘volunteer’ at a National Championships
Libel and Slander (NGB Chairman to a Board member)
Contract Liability (three major clothing manufacturers)
Data Protection (inappropriate use of personal information)
Employment Practices Liability (senior member of NGB staff)
AND THAT IS JUST THE TIP OF THE ICEBERG!
Review of sports related claims cont’d
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At any one period of time, the Perkins Slade Claims Team is handling:
– More than 5,000 incident notifications
– More than 1,500 ‘live’ claims
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We know two things for certain:
– Every so often, there will be a catastrophic loss
– We have absolutely no idea, where it will come from
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WHAT EFFECT WOULD AN ADVERSE CLAIMS EXPERIENCE HAVE ON YOUR SPORT?
Underwater Tiddlywinks Association
• Renewal – October 2014
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40,000 members (premium £2.50 per person)
Been with the same insurer since 2005
3 year Long Term Agreement coming to an end
Large loss in 2011/12 (£955,000)
Significant increase in claims notifications in 2012/13 and 2013/14 (part year)
Sport is generally considered to be well run, well regulated, well controlled
Did not perform well in the 2012 Olympic Games and participation figures have not hit
targets. Exchequer funding reduced by £100,000 per annum
– Has significant financial challenges!
Underwriting Information
Year
Net Premium
£
Claims Paid
£
No
Claims
o/s
No
2009/10
105,000
2010/11
58,000
3
-
-
58,000
105,000
68,000
7
-
-
68,000
2011/12
100,000
985,000*
3
57,000
5
1,042,000
2012/13
100,000
22,000
2
80,000
11
102,000
2013/14
100,000
26,000
2
45,000
5
71,000
Total
510,000
1,159,000
17
182,000
21
1,341,000
*Includes one large loss at £955,000
Underwriting Strategy
What would be the premium for 2014/15?
– Previous 5 year claims ratio (2004-2009) 61%
– 2013/14 - 6 months only
Total Paid/ Reserved
£
Underwriting Strategy
•
Not including large loss
4 years @ £315,000
1 year @ (6 months x £71,000)
5 year average
=
=
=
£315,000
£142,000
£ 91,400
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Add claims inflation @ 10%
Add large loss provision £1m over 50 years
Sub Total
=
=
=
£ 9,140
£ 20,000
£120,540
•
Add insurers administrative costs @ 19%
2014/15 net premium
=
=
£ 22,902
£143,442
•
October 2014 premium per member £3.57
Question
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What can be done to improve the risk?
(Ideally, what could have been done by the Underwater Tiddlywinks Association prior to
2011/12)
– Proactive measures
• to minimise the risk of injury
– Robust procedures
• to defend Civil Court actions
Case Study 1
•
British Gymnastics
– Challenges
• Large losses
• High volume attritional losses
• Claims against coaches
•
Solutions
– Fewer ‘recognised’ environments
– Fewer ‘recognised’ activities
– Managing The Risks of Coaching
British Gymnastics –
Managing the Risks of Coaching
•
Online resource
– Health, Safety and Welfare Manual
•
Accredited Training Programme
– Evidence of competance
•
Records maintained by British Gymnastics
– Used by 25% of coaches
Case Study 2
•
Lawn Tennis Association
Challenge
– High volume attritional losses
– Claims against clubs (volunteers)
Solution
– Online Risk Assessment Tool
LTA Risk Assessment Tool
•
Compulsory for all clubs since October 2013 (unless they self declare)
•
Based on the HSE Model
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Creates a practical Risk Assessment
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Record maintained by the LTA
– No risk assessment – no insurance!
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
LTA ONLINE RISKS ASSESSMENT TOOL
Defence of Claims
Club members who tripped over pot holes in their clubs’ car parks
CLUB A: Broken toe
Claim made:
Paid:
CLUB B: Ligament damage to ankle
£17,160
£14,400
Claim made:
Paid:
£22,000
NIL
Club A – had no documentation
Club B – was able to produce a copy of its written risk assessment and detail its
maintenance programme to show the car park was regularly inspected and
maintained and it detailed the repairs that were carried out when required.
Mock Trial – February 2014
Croft v’s Kettle Dale Cricket Club
(Edgbaston County Court)
Berryman Lace Mawer
No 5 Chambers
Judge – Chris Bright QC
•
•
Injury to player not disputed
Risk assessment
– ‘was reasonable under the circumstances’
Systems and procedures
Document Management
Is your Association (and its constituents)
covered for these claims?
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Injury at Barbeque
Corporate Manslaughter
Child Abuse (1 sport £870,000)
Repetitive strain injury (gradually occurring)
Disability Discrimination (membership of an NGB)
Breach of Human Rights (membership of an NGB)
Injury to a ‘volunteer’ at a National Championships
Libel and Slander (NGB Chairman to a Board member)
Contract Liability (three major clothing manufacturers)
Data Protection (inappropriate use of personal information)
•
Employment Practices Liability (senior member of NGB staff)
What does your insurance cover?
Public Liability
• Accidental bodily injury or damage to property
Professional Indemnity
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Errors and omissions in advice, failure to perform
Director’s and Officers’
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Failure to perform Executive responsibilities
Employers Liability
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Injury to an employee
Cyber Liability and Data
Protection
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‘Damage’ to your data
‘Damage’ to third party data
What does your insurance cover? cont’d
Issues to look out for
Public Liability
• Limit of Indemnity
• May not cover coaching risk, or abuse or high risk activity
Professional Indemnity
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May cover financial loss only
Aggregate Limit of Indemnity
Directors’ and Officers’
Employers Liability
Provided for the National Body
- Not extended to Regions, Counties, Clubs
Summary and Conclusions
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Claims for compensation are now, sadly, integral to participation in Sport and
Recreation
A poor claims record will have a significant, adverse, effect on the overall cost of
insurance
Effective risk management is essential and it must prevail from the ‘top to the
bottom’ of the sport
– Measures must make the sport safer
– Procedures must be documented for future reference
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Claims are increasing in their type and complexity, so comprehensive protection
for a National Governing Bodies and all its constituents is essential
Real and tangible improvements have been made, in recent years, to make
participation in sport safer. Keep up the good work, but there is still lots to be
done and there will always remain a risk element!