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Contact Sports Risk
Management
PO Box 91053 AMSC
Auckland 1030
New Zealand
P: +64 9 358 2725
F: +64 9 358 2715
M: +64 21 320 171
E: info@sportsriskmanagement.com
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Protecting the Consequences of Legal Liability
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Protecting the Consequences of Legal Liability
22/08/04 by John Dallimore |
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Our experience with a number of national sporting organisations and numerous clubs and event organisers has given us a unique focus into the many issues and the corporate governance issues facing sporting organisations today.
Our advice is “do it right” because if not, the next headline could be at the expense of your organisation.
We are frequently asked to comment on the liability insurance arrangements for sports organisations - each case has it own specific peculiarities and it is therefore crucial that as much information about the sport or the event is collated before we approach insurers for terms.
Protecting Legal Liability
The structure of indemnity arrangements whether for an event organiser or a sporting organisation is similar. All sporting organisations need liability insurance that encompasses - general public liability, statutory and association liability insurance and legal expense insurance. Without legal expense cover the liability protection arrangements are incomplete.
Our experience has been that many at club level have only public liability and statutory liability and are ignorant of the fact that legal expenses insurance is available for defence of criminal charges.
The need for Association liability (officers bearers insurance) is well recognised by the major sporting bodies but for smaller organisations few will have thiscover.
Legal expenses cover has only recently become available - during 2003 two insurers selectively began to offer this type of insurance to New Zealand clients. The availability of legal expense cover is the last piece in the jigsaw for a comprehensive approach to protection of legal liabilities.
The Role of National Sporting Organisations
In the SPARC Discussion Paper “Issues for Event Organisers in New Zealand” was a recommendation that “national sport and recreation bodies investigate the benefits of negotiating legal protection cover for their affiliates (if they have not already done so)”.
The most practical method for NSO’s to achieve wide cover at acceptable premium cost is for the NSO to negotiate on behalf of its affiliated clubs and related organisations and to set minimum levels of insurance protection for both the NSO and its affiliates. In this way, economies of scale can be generated that benefit not only the NSO, but enable the affiliated clubs to access cover at a premium they will find affordable.
By an NSO negotiating a mandatory or endorsed insurance scheme for their affiliates not only are they discharging their duty of care to the affiliates but importantly they have begun the process of ensuring that their affiliated associations and clubs are developing and adhering to approved insurance programmes to supplement their risk management plan and safety standards can be monitored. This benefits the code generally and also has social and community flow on as well. Clubs can of course arrange cover independently but the cost of insurance will be significantly higher.
Schemes can be set up as voluntary schemes or as mandatory schemes. The higher the percentage of participation in an endorsed scheme the more favourable will be the premium
Cover Level
Limits of indemnity and excess levels under each section of the comprehensive liability protection plan can be tailored to the specific requirements of the event or NSO and affiliates. Establishing limits of indemnity particularly for the public liability section requires a full appreciation of the scope of activities and an assessment of the liability exposures and may often be driven by contractual requirements.
Here are the types of cover available:
General Public Liability: Covers claims for liability from unexpected and unintended personal injury or property damage to a third party arising in the course of the conduct of a club’s or organisation’s activity.
Association Liability (including officer bearers liability):
Protection for an association or a club against liability from wrongful acts which it may arise through the conduct of its activities and individuals in their capacity as an office bearer of the association or club.
Statutory Liability / Employers Liability: Protects an organisation for legally insurable fines and associated legal costs arising from an unintentional breach of statutes. The employers liability section covers the liability for compensation to any employee for work related injury which is not covered by ACC.
Legal Expenses: Provides legal expenses for defence of criminal charges. Only by including the legal expense option will event organisers and sporting organisations be able to provide a funded resource for defence of criminal charges for their officials volunteers as the case maybe.
Cost of Insurance
The most economic way to achieve real premium saving is to “bulk” purchase the insurance on a group basis; purchased on a stand alone basis the premium is significantly higher hence our recommendation to arrange cover as part of an endorsed or mandatory liability protection plan; also insurers prefer to provide cover on this basis because it is then fully inclusive of the membership without distinction of category of office bearer, or volunteer etc and / or club.
Premium will vary between organisations dependent on factors such as the membership, number of affiliates (regional associations and clubs) and also the risk profile of the particular sporting code.
On a rule of thumb basis an NSO endorsed/mandatory scheme could reduce the cost of insurance by as much as 50% of premiums that would be otherwise payable - however this is conditional on the qualifying uptake levels being achieved.
Risk Management: this is our point of difference
New clients we are working with in many cases are initially seeking assistance on risk management and safety aspects.
Through our involvement with a number of national and regional sporting organisations and event organisers we recognised early on the importance of providing specific risk management and legal support services for our clients and potential clients. The creation of Sport Risk Management Group was a logical progress and this is the vehicle that we now use when promoting integrated legal and risk management services and risk protection services.
Risk management plans cannot be copies – one organisation's risks are not another organisation's risk but education coupled with guideline material and templates that are sport specific will assist event organisers and organisations to discharge their risk management and safety planning obligations.
Simplifying compliance within a culture of safety
Sports event organisers and volunteers are motivated by the personal satisfaction that arises from conducting successful events but they have a duty of care to their organisation and those participating in it to prudently protect themselves and the organisation from the consequences of legal liability.
Our aim is to present for the benefit of sporting organisations at all levels the risk protection solutions that remove obstacles and simplify the compliance obligations within a culture of safety and risk management planning that is efficient and cost effective to all involved.
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