National Collegiate Athletic Association |
The NCAA News - News and FeaturesMay 4, 1998 New catastrophic insurance policy approved
Executive Committee OKs three-year deal with Mutual of OmahaThe NCAA Executive Committee has approved a new catastrophic-injury insurance policy that will provide continued protection for student-athletes and other individuals at member institutions. The program will continue to provide benefits for catastrophic injuries, as well as for serious noncatastrophic injuries. The new three-year policy with Mutual of Omaha Insurance Company will feature a deductible of $50,000, an increase of $25,000 from the current policy. To provide institutions with an option on addressing the increase in the deductible, Mutual of Omaha is making available "gap coverage" ranging in price from $1,975 to $4,975, depending on the institution's division affiliation and whether it sponsors football. The Association's annual premium for the catastrophic-injury insurance policy will increase from approximately $3.6 million to $7.4 million. The changes were based on the recommendation of an Association-wide Catastrophic Insurance Review Committee, chaired by Irvin A. Cross, director of athletics at Idaho State University. That committee was formed in October after the current carrier -- North American Specialty Insurance Company -- notified the Association that it would not renew the current policy. Cross said that from the outset, the committee focused on what the primary purpose of the program should be. In that regard, it was guided by former NCAA President Judith M. Sweet, who was on the committee that negotiated the NCAA's first comprehensive catastrophic policy. "Judy felt very strongly that it was important to maintain the original intent of the program," Cross said, "that the program should provide protection for student-athletes who suffer catastrophic injuries in competition." In fact, the relatively low $25,000 deductible had turned the program into something of a supplement for major medical policies. Many knee surgeries, for instance, were surpassing $25,000 in cost. Cross said a high number of $30,000-$40,000 claims were putting pressure on the program. In addition to the increase in the number of noncatastrophic claims, the number of actual catastrophic claims also increased over the last policy period. Since 1995, there has been an average of four catastrophic claims a year, compared to an average of one claim in the previous three-year period. American Specialty Insurance Services, the program administrator, invited 38 carriers to submit proposals for a new catastrophic-injury insurance policy. Five finalists submitted proposals to the committee, which eventually selected the proposal made by Mutual of Omaha. The Executive Committee accepted the committee's recommendation at its April 22 meeting. "We had several quality proposals from which to choose," said Pete Eshelman, president and chief executive officer of American Specialty. "Mutual of Omaha's financial strength and its extensive experience and resources in case management for catastrophically injured individuals -- and its competitive pricing -- carried the day." As in the past, the coverage will not be limited to student-athletes. Insured persons will include student-athletes, student coaches, student trainers and cheerleaders (including dance team and mascots) while they are participating in intercollegiate athletics (competition, supervised practices, and travel to and from competition or practice). Although the NCAA's annual premium is almost twice the previous cost, the increase would have been much higher had the adjustment not been made in the deductible, Cross said. "Increasing the deductible helped in the cost of the premium," Cross said. "We saw some quotes that were very high." The committee was sensitive to the fact that the change in deductible would leave institutions at greater risk than is currently the case. With that in mind, it negotiated a group rate for gap coverage (describing the gap between the current deductible and the deductible in the new policy) that features varying rates. First-year premiums for institutions purchasing gap coverage would be as follows: Div. I -- Divs. II and III All sports, excluding football -- $2,975 -- $1,975 All sports, including football -- $4,975 -- $2,975 Member institutions will be able to purchase this coverage directly from Mutual of Omaha. "As a Division I school with football, our premium for the gap coverage would be about $5,000 a year," Idaho State's Cross said. "I think that's reasonable." On May 15, Mutual of Omaha plans to send athletics directors at member institutions a complete description of the gap coverage. Enrollment forms will be included. Cross, whose institution has first-hand experience with a catastrophic injury, was enthusiastic about the program renewal. "This was an exciting experience," Cross said. "I'm not familiar with all of the programs that the NCAA offers, but I can't imagine one being more effective for the member institutions. This one is a life-saver."
Questions regarding this program may Comparative Benefits Summary (Summary only. Not intended as complete description of terms, provisions and benefits of program.) Current Policy -- Proposed Renewal Policy Policy Period -- August 1, 1995 - July 31, 1998 -- August 1, 1998 - July 31, 2001 Annual Premium -- $3.6 million -- $7.383 million Deductible Insured -- $25,000 -- $50,000
PersonsStudent-athletes, student coaches, -- Same
Excess Coverage -- Intended as policy of last resort. -- Same BenefitsMedical -- Unlimited lifetime -- $20 million lifetime aggregate Death -- $10,000 -- Same Home Health Care -- $100,000 year max. -- Same Adjustment Expense -- $50,000 lifetime aggregate -- Same Special Expense -- $125,000 for first 10 years, $50,000 decade thereafter -- Same Lost Earnings -- Up to 2,000/month, inflating at 4% per year for lifetime, offset by other income -- Same Ancillary Illness -- $2,000 deductible/calendar yr., $100,000 lifetime aggregate -- Same -- College Tuition -- $60,000 aggregate -- Same
Catastrophic-injury insurance facts
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