Insuring the soccer business

Do you remember when a great Brasilian player joined the Paris’ soccer team last summer, for a total amount of €500 million for the next five years? Considering the sums at stake, soccer clubs are looking for an insurance that can cover them in case of financial losses, caused, for instance, by the disability of their favorite player.

This insurance is called the “key man” policy. It aims at covering an “important” person for the benefit of his/her employer. This “key” person could be an executive, a researcher working in a laboratory, a ‘Nose’ working for a perfumer… or a soccer player. Without him/her, the economic and financial balance of the company is compromised, this is why this “key” player is covered for the benefit of the soccer club. Considering the important amounts at stake, insurers must often share the risks via reinsurance or co-insurance policies.

Thus, the legs of the greatest player of Argentina are covered by two Italian insurance companies for €500 million. Most of the time, Lloyds – a London-based insurer – is involved, as specialty risks are part of its core business.

Currently, AXA France has signed six “key man” insurance policies with one of the biggest soccer clubs. The company is also insuring 900 out of 1200 players enrolled in the National Union of Professional Soccer Players, who need a coverage for loss of income, in case of bodily injuries which lead to a temporary or permanent disability. In this latest scenario, when the injuries cause the end of their career, they can receive a termination pension that will help them find another job. Moreover, AXA’s policies have the particularity to follow and keep insuring players, even if they move to another team abroad. That is the reason why, some famous players can spend each year up to  €100,000 to get a cover against accident. This amount seems huge but it is only 1.5% of their annual salary when it comes to soccer’s biggest stars.