Sportscover Insurance Interview

Interview with Chris Nash – CEO Sports Cover
Conducted By Walt Missingham, President MAIA
21st May 2003.

WM: First of all, Chris if you could give us an outline of who you are, what your position with Sports Cover is as a company and what it does.

CN: I am the acting CEO of Sports Cover, usually Peter Nash would be the Chief Executive Officer but he is, at the moment spending a fair bit of his time in the United Kingdom, researching and enhancing our business over there. Sports Cover is an underwriting agency, which may be an unfamiliar term to several people, but is sort of a specialist underwriter for Sports Insurance. We are currently the largest insurer of sports people or underwriter of sports people in Australia, and we are doing that right around the world we insure people in New Zealand, The United Kingdom, Europe and Asia, and our business is only to specialise in sports.

WM: And further to that then Chris, would it be fair to say that you are the No 1 insurer of Martial Art’s people in Australia.

CN: Definitely.

WM: In terms of my position with The Industry Association insurance is one of the key enquiries that we have on a regular basis, we can go back 4 or 5 years and I can remember that people were getting packages of insurance with public liability and what have you for about $60 a year, and of course that changed drastically, could you outline for our readership the reasons that these drastic changes have occurred.

CN: Yes, we had three major events, take place in a very short period of time. The first event was something that has been occurring for a number of years and that has been the increase in public liability claims. Since about 1996 public liability in claims within the sports area have been on a very step-incline and they have now got to a point where in some areas, some sports have almost become un-insurable and individual clubs have effectively become un-insurable. That coupled together with the events of September 11, and just to quickly explain what occurred in September 11, when the planes crashed into the building a number of people within the insurance industry massive capital investors’ who were effectively supporting a lot of insurance companies decided well, it look’s like insurance is going to be a bad risk, so I am going to take my investments out of insurance and put them into other areas such as gold, the money market, shares you know what ever it may be. In doing so, that meant there was a hell of a lot less insurance to go around because the insurance companies can only take on as much insurance as they have actually got capital for. So that meant that insurers then re-aligned the kind of risk that they wanted to look at and because of such low premiums in the sports area, insurers said well we are not interested in taking on say a $5 million risk, and receiving a $100 premium for it, when we could take on a similar $5 million risk for a small business, and receive you know $2,000 for it. So a lot of insurers moved out of the sports area, the last thing that happened then was the collapse of HIH. They were writing a number of sporting costs at a greatly reduced rate in some cases up to 30% of what the market rate was and when they disappeared those people who were insured previously with HIH, then had to come back to the reality of the market costs and obviously their 30% you know tripled to get them back to the market reality now. Those sort of events would usually occur over a 5 or 10 year period, and it would be a slow increase and that sort of turn in the market place, unfortunately they occurred you know the release of the results for the public liability, September 11 and then the HIH collapse, and so they occurred over about an 8 months period, which then really brought into sharp focus exactly what was going on in the industry and consequently people pulled out of the xxx and premiums went through the roof in a lot of areas.

WM: The impact now more specifically on Martial Arts’ I know that we have enquiries from people saying, oh I can insure this aspect of my club does but they won’t insure this other aspect. Sometimes they say that it is certain Kick Boxing related activities or certain grappling related activities, can you explain the rationale behind that please Chris.

CN: Yes. Basically because there is a hell of a lot less insurance to go around, insurers now look for exactly those good risks that they think will produce them profits, bearing in mind that insurance is about making a profit, and are certainly no queries over the fact that insurer’s are definitely trying to make a profit for their shareholders and their investors, that’s exactly what it is about. So, in doing so they then look for areas that either have excellent risk management, or in terms of the activities pose little risk or less risk than other things, so consequently certain Martial Arts’ as you mentioned Kick Boxing, were then determined to have less risk management or to have posed greater risks and consequently, we started to then identify some of those areas, and exclude those from the policies we were writing.

WM: Okay. In terms of your experience in dealing with Martial Arts’ as an industry, what would you see are some of the key problem areas in our industry, that are leaning towards people running foul of the courts as far as being sued for negligence or breach of duty of care, that type of thing.

CN: Yes there are a few issues; one is the united approach to the whole issue of the codes of practice or risk management. Basically there is a number of bodies who go off and do their own thing and unfortunately they don’t match up so from an insurance perspective you are not really giving an insurer the opportunity to say, well I can see that all Martial Arts’ Schools follow these sorts of procedures, have qualified first aid people have a first aid kit, have you know padding on poles, have all these areas covered, so therefore insurers’ are much better off to say, well hang on, I may as well just not do it at all and not take the risk and I do see that as a major issues, sort of a unified approach from the Martial Arts’ Industry itself, not just from individual Martial Arts’.

WM: I guess that’s the area where there is an increasing role for the MAIA.

CN: Oh, definitely I mean there is no doubt that that is the role for the MAIA to try and adopt and bring into focus this group of sports that are considered by insurers and probably the public at large, as almost you know one ara of sport, even though the sports themselves are very different they are considered by the general public to be almost one and the same thing.

WM: You have had the opportunity to go over the MAIA Risk Management Policy, your view on that.

CN: I think the Risk Management Policy is excellent. I think it is definitely a step in the right direction to help a number of these, smaller clubs where people are expected to try and be effectively Risk Management experts it will give them the knowledge without having to go and become a risk management experts or to effectively create them into that then that will allow them to liaise with their municipal authority if they are hiring facilities or even just provide a much safer environment for their students.

WM: And, well covering those related areas, I guess you have obviously gone over the interview we did with Slater & Gordon, they had some fairly precise legal views on the application of The Industry body endorsed Code of Practice, there was a view out there from some people that the Coder of Practise doesn’t apply to me because I am not a signatory, would you like to expand upon what was said by the people at Slater & Gordon on that regard.

CN: Yeah, look basically, and this happens across a number of industries and this is a fairly standard legal principle, there does not actually have to be something that everybody has signed to, to establish a best practice situation. The solicitors can easily say that it is widely done by all or a number of schools then that becomes best practice and that people who aren’t living up to best practice whether it be officially or unofficially, are then negligent in their duty.

WM: Yeah well, that is as you say a standard legal position for which there is ample precedent.

CN: Oh, right across a whole range of industries and it is not just sport related. In fact it probably a newer idea to sport because we have had such a violent change, if you like in our community behaviour that we are now asking sports whether they be volunteers or not, to be virtually acting as professionals.

WM: There are a range of legislative initiatives being introduced across Australia both federally and in states and territories, there are new laws in Victoria for example, regarding the us of waivers but I think, become effective as of the 1st May, this relates to the restriction or modification of certain rights to sue under Section 97A of the Goods Act of 1958, Goods & Recreational Services Act Regulations also 2003, have you had a chance to look at those?

CN: Yeah look I have been advised on them briefly, basically what it is doing is say taking away the old and I might use the old cliché of ‘a waiver is not worth the paper it is written on’…

WM: Yes, well apparently it is now.

CN: Yeah well exactly, it is probably worth more than the paper it is written on, basically what it really is doing is two things, it is obviously bringing into play a level of personal responsibility, and that is that and we will use the obvious one and look parachuting gets used all the time here, if I am going to jump out of a plane and the parachute doesn’t open properly, I know that I am going to hit the ground at a very hard rate of knots and I shouldn’t be checking to tell someone you know that you didn’t warn me that if I hit the ground at a great rate of knots that my head might come off. Or, I could be severely disabled you know those sorts of things, not that your head coming off is not severely disabled but, yeah I think that the way that they are really now looking to do, is to make people aware that they now have a level of responsibility that they have to live up to themselves and we are not going to be gifting in the community belief if you like, that if something happens to me well hang on… I can go and see someone else.

WM: Right I think the comparable legislation in New South Wales is actually called the Personal Responsibility Act I think, as it says it is aptly named, and fair enough too. The use of the expanded legal effect being given to waiver is… would I be right in putting same that should impact favourable on how people can access insurance.

CN: Oh look we would hope so, we are now asking with a number of insurers that we are dealing with about the waivers that they are using, for example people running events, now get asked to supply us a copy of their waiver and if they don’t have a waiver then we are often turning down the insurance for them again… so, we would hope that the courts, would obviously follow the lead of the Government and originally the waiver situation was linked to The Trade Practices Act Federally, so we would hope that the courts would follow that lead and uphold what has been put forward.

WM: On a similar vein just recently in fact yesterday there was an announcement made by the Bracks Government in Victoria, a range of legislative initiatives regarding or relating to insurance reform, your just your quick view on that if you have had a chance to look at it.

CN: Yeah look, we have had a quick look at what has come through, obviously it was only just released yesterday and we think it is excellent in terms of a step forward for bringing back a balance, and assurity to what we are doing as a community. It is an unfortunate situation that we found ourselves in where we have got a number of what we would consider you know just basic community groups, struggling to get insurance and you know the government in Victoria had to jump in and actually bail out a number of these groups, through an Association that they set up. That those groups now with this new legislation, should be able to turn the balance back to, okay I have done something grossly negligent well, then obviously I am going to pay for it but, if I have done the Risk Management if I have lived up to my code of practise, if I have done all of the right things and then someone has fallen over in a hole that they knew was there, that actually maybe, and all they have done is hurt their knee a little bit but maybe that is not my fault. Or that maybe that is not really worth making a claim on the insurance and I think that that will be a very positive turn for you know, non-profit organisations and small sporting groups.

WM: Would you agree that this initiative by the Bracks Government would, in all likelihood, influence other states and territories to bring in similar laws?

CN: Yes definitely. I think Premier Carr in New South Wales was leading the debate early on and the things that came through in New South Wales and this was the leader for the models that have popped up in Victoria and Queensland and I think that probably both of those states New South Wales and Queensland will now follow the direction from Victoria and potentially some of the other states, Western Australia and Tasmania might follow as well.

WM: To narrow this focus of this new initiative how does it impact of the Martial Arts’ Industry… what benefits are to be had from this package with our industry?

CN: Look hopefully it will take away a number of these silly little claims that we receive, one of the issues that has been killing small clubs is the premiums are so small that any incident that occurs that results in someone you know issuing a writ, those incidents will cost several thousand dollars because of the investigation that needs to take place prior to the appointment of the solicitors to deal with it, even if it is found that the insured might be, you know not guilty or not negligent, in what is taking place that money is still sitting there. Now with what we have seen here, hopefully it will now bring about a change in community attitude, for people to say actually it is not worth it, I am not going to worry about the claim for you know $2,000 or $5,000 or whatever the case may be because I have got a bruised knee.

WM: That’s does not surprise me. Some final points, firstly on the government accreditation, that is an expanding thing you would be aware that as a result of MAIA and State and Federal Government initiatives many venues now won’t allow Martial Arts’ to be taught unless the instructor holds a government accreditation and that is a plan that will expand over the coming years, your view on that please.

CN: Yeah, look I think basically what we are going through is what we are going through in a whole range of activities and look it is not just Martial Arts’ I think it is across the board generally…

WM: Of course it is.

CN: The accreditation of instructors and right the way through, I think we are going through a fairly big social change in this country, where we are saying that it is not acceptable for someone to not be educated in the field that they are instructing in, and we would like that to be some sort of formal education, we would also like them to live up to certain standards, that we are finding acceptable in terms of what they do within their sporting organisation and I think that is definitely a step forward in the right direction I mean, as a nation we pride ourselves on our professional sporting performance and I think what has happened here is we have asked a sporting administrators to do the same. To now go through and become professional in what they do, even though the major, or the majority of those people are genuine volunteers.

WM: And the role of the MAIA as the peak industry body within the Martial Arts’, from an insurance perspective as the peak insurer for Martial Arts’ are you supportive of the industry body and its various efforts in terms of risk management, accreditation etc; etc.;

CN: Yes absolutely, we are supportive of anything that is educating people, in terms of what has to take place in a Risk Management front, we are supportive of anybody that is taking people forward in terms of understanding that we don’t live in the 1970’s anymore or the 1960’s, that we now live in an actually a different century, and that we need to understand that there are different ramifications and different social attitudes as to what is expected when you know, people turn up to a venue or when they are participating in a particular sport that they haven’t participated in before, that social attitude has changed and changed substantially, probably in the last 10 years more than it has maybe even over the whole of last century, to what is acceptable and what is not acceptable and I think we are sort of you know in the back half of that change now where the Government is now starting to sort of wrestle it back down to say well okay we went the wrong way in that particular direction we need to come back and get a balance, or else we are going to loose a lot of the things that we do, but yeah anybody that is educating people in those areas I think is definitely a positive and we wholeheartedly support that.

WM: Do you see accreditation as being an insurance pre requisite in the future and if so when

CN: Definitely, I would say that if an instructor does not have accreditation and appropriate Risk management in place then I can’t see that instructor being able to access insurance in no more than 18 months time.

WM: One of the points that I have had pushed for some time is that if as an industry we don’t embrace these changes and move towards these sorts of standards is that we may not have an industry in the future because we will be un-insurable. When you look at some of these community groups that have had to close up because of insurance problems that is a possibility is it not?

CN: Definitely the case, I think if the wider Insurance community were aware of what was going on in a number of Martial Arts’ Schools in terms of the use of you know live weapons, in terms of the use of contact and sparring and various other things and you know, if the insurers were to be involved in some of these groups, I think you would find that the ramifications would be horrific for the industry, because certain insurers would pull out of the market all together, leaving not too many other people doing it and premiums would either go through the roof or the people that did do it, or there would be no-one left to do it, and I think the equestrian and the pony clubs and the like are a perfect example of that.

WM: What happened there?

CN: Well basically as most people would be aware, Pony Clubs have gone through a major battle just to get insurance, over the last 18 months to 2 years, I heard a gentleman on the radio last night saying that his premiums were about $400 a week, and you know it was only sort of 5 or 6 years ago that he was paying $400 a year.

WM: It is a massive increase.

CN: Oh enormous and he sort of charted his increase to go 3 years ago, I think $2,000 written and then and 2 years ago it jumped $6,000 and last year it jumped to $12,000 and I think this year it has gone up more again, so.

WM: As you are aware part of the MAIA Risk Management Policy allows for Risk Management Audits to be conducted by MAIA or Sportscover representatives without notice, on any insured club. Will this be a more likely occurrence.

CN: Yes, lets say a Martial Arts’ Group that actually insures with us they would most likely be getting a risk management audit or surveyed and if we can get people just turning up on a training night, I think that is perfect.

WM: As you are aware the MAIA has commenced a program of Risk Management Certification for all of its instructors. Do you think there is a case for a minimum Risk Management Certification for Martial Arts’ people to access insurance?

CN: Yes I think that this is something that needs to occur, instructors need these minium standards because as we have discussed before if there is no Sportcover then what we just spoke about in terms of clubs not getting insurance is absolutely 100% correct.

WM; Definitely not a good thing.

CN: No that is exactly right but hopefully with these changes other insurance players will come back into the market and your industry will get some balance back.

WM: Well we are battling ahead to keep our industry on the straight and narrow and we certainly appreciate the continued support of Sports Cover. Chris thank you for your time.