Sport: how dangerous can it be?
Many popular recreational holiday pastimes, such as jet-skiing, are no longer covered on basic holiday insurance policies. Stewart Farr asks whether the public is commonly aware of this fact, and whether travel insurers are thus playing fair
First published in ITIJ 90, July 2008
Many popular recreational holiday pastimes, such as jet-skiing, are no longer covered on basic holiday insurance policies. Stewart Farr asks whether the public is commonly aware of this fact, and whether travel insurers are thus playing fair
Insurance is all about perceived risk – a fact highlighted perfectly amongst travel insurance providers when dangerous sports cover comes into play. Another known fact is that consumers rarely, if at all, read the small print of policies. In combination, these two facts inevitably result in rejected claims. Travel insurance is, admittedly, one of the more complex types of insurance on the market, and most people buy it without being clear about what it does and does not cover. They are also prone to behavioural changes whilst on holiday, making snap decisions to pursue exercise or sporting activities, blissfully unaware that these are not covered by their insurance. Arguably, it's their own fault if accident or disaster ensues, but this confusion over – or indifference to – what the policy provides in the way of cover is not helped by the divergence of underwriting opinion among insurance companies as to what constitutes a dangerous sport or pastime.
What of statistics?
In some respects, this variance of risk opinion is to be expected given that insurers, as well as compiling and accessing data banks for all the relevant accident and mortality statistics, also draw upon past claims experience and reassurance capabilities when fixing premium levels and determining exclusions. The consumer doesn't know this and feels aggrieved to find that horse-riding, for example, is not covered in his standard travel insurance package.
Can there be agreement on what is and what isn't a dangerous sport; what should be covered as 'standard', and what falls into the 'hazardous' category, thus meriting non-inclusion? Is it really possible to isolate those sports (the 'extreme' variety such as base jumping being automatically excluded) with a dangerous element and then rank them according to risk acceptability? What criteria do you use?
If death is the yardstick, then angling apparently leads the field in the UK (drownings, fishing lines getting caught in overhead power cables), closely followed by horseriding (including eventing and show jumping), climbing and car racing. But is angling a sport or a pastime? If injury is the determining factor, rugby gets the vote as the most dangerous sport; it has been reported that rugby players are three times more likely to get injured playing their sport than someone taking part in martial arts.
this confusion over – or indifference to – what the policy provides in the way of cover is not helped by the divergence of underwriting opinion among insurance companies as to what constitutes a dangerous sport or pastime.
However, a doctor writing to The Times two years ago noted that, if measured by the number of fatalities occuring during play, then bowls is the most dangerous sport of all, as participants are generally elderly and subsequently prone to heart attacks and strokes. He also maintained that the sport which leads to most insurance claims is surfing, mainly due to injuries incurred while removing boards from the roof of the car!
In the US, it could be argued that cheerleading is the most dangerous sport. Statistics from the National Collegiate Athletic Association (NCAA) suggest it may be even riskier than American football, the sport it was created to support. The NCAA's Catastrophic Injury Insurance Program found that 25 per cent of its claims for college student athletes since 1998 have resulted from cheerleading, placing it a close second to football in the danger stakes. This claims statistic is remarkable given that the ratio of cheerleaders to football players in US colleges is around 12 to 100.
Categorising risk
A potential customer who surfs the Internet to get a fix on whether his or her intended sporting activity could be prone to insurance exclusion is not guaranteed an edifying experience. Lists of unacceptable activities vary and have resulted in a lot of controversy over insurance company policy on sport. There is a tendency to categorise along the following lines, but it is by no means uniform and to many self-styled sporting experts the risk ranking would seem to be unfair if not deliberately obtuse.
The most risky category includes bungee jumping, mountaineering (over 4,500 metres), powerboat racing and any professional sport. Next down the ladder comes hang gliding, parachuting and paragliding, pot holing and rock climbing, off-piste skiing, ski racing/jumping, heli-skiing and ice hockey. Middle range risk takes in scuba diving, wintersports including snowboarding, and piloting aircraft, all considered more dangerous than hot air ballooning, microlighting, skateboarding and whitewater rafting/canoeing.
Sports categorised with the least risk include amateur contact sport, for example fencing, boxing, polo, soccer, mountain biking, high diving and jet skiing. Finally, there's a relatively 'safe as houses' category that covers non-contact sports such as abseiling, motorcycle touring, yachting (inside territorial waters!), tour operators' safaris (not using guns) and trekking, so long as it is not in remote or mountainous areas.
This form of ranking is at odds with many people's view of what is or isn't a hazardous sport. The fact that insurance companies themselves don't trek a uniform path to risk just adds further confusion. In North America, for instance, skiing is not considered a dangerous sport and parachuting and paragliding only perceived by some insurers as very high risk. The levying of additional premiums for, say, scuba diving might not apply if the customer can demonstrate proficiency or a certificate of expertise.
It is the customer or client's reasonable expectations of the level of cover and the fairness or otherwise of exclusions that should dictate whether a risk is assessed as standard.
Most European insurers, in contrast, exclude skiing and winter sports from standard travel insurance, instead offering a specialised package of cover. Direct Line is typical of several companies that offer a ‘policy for people taking part in winter sports, which does have a higher premium but offers extensive coverage for customers who want to enjoy the ski slopes with the peace of mind offered by travel insurance’. The company's head of travel insurance, Chris Price, added: “We recognise that sporting activities are a major part of many people's holidays and we want to provide them with the best cover we can. For activities with a history of high frequency and high value claims, we will often pay the customer's medical and personal accident costs but will not cover personal liability for damage to third parties or their property.”
As with other travel insurance providers, the mantra from Direct Line is that customers wishing to ensure they have the cover they need should contact their insurer prior to the trip to discuss what sporting activities they plan to undertake. Winter sports are noted for their high accident quotient, expensive medical treatment and/or repatriation; there is also the spectre of legal costs involved in determining who was at fault. “If a customer is on holiday and is injured as the result of an accident caused by someone else, we provide legal assistance cover to help the customer obtain costs from the responsible party,” said Price.
Meeting expectations?
Although, sensibly, most insurance companies won't add dangerous sports cover to the policy once the customer is in situ (and on a whim has decided, for instance, to execute a high dive from the top of Iguassu Falls), there is a much greater awareness of intention to participate in hazardous pastimes. Back packing and adventure holidays have grown in popularity and some insurance policies now make an effort to provide standard cover for hitherto exotic activities that are now more commonplace.
“Travellers want much more out of their trip than just a typical beach holiday nowadays,” said Paul Dittmer, marketing manager with UK company Columbus Travel Insurance. “Armed with guidebooks, they are clued up with what's on offer for the adrenaline junkie in them – and travel insurance companies are responding and including the more popular sports for free with the policy.” His company covers activities such as scuba diving, elephant rides and walking up Sydney Harbour Bridge, “for free because we found so many people were asking for them.”
A genuine attempt to provide customer service or just glib marketing speak? Probably neither; just that Columbus has found from its claims experience that such pursuits can be categorised as low risk. The company, after all, does load its premiums for certain sports it views as higher risk, such as kayaking (5 per cent extra) or heli-skiing (50 per cent).
While statistics show that most accidents and injuries whilst travelling actually occur in hotels rather than on the ski slope or in a remote, isolated location (in fact many of the accidents occur in the hotel room), the trend for adventure holidays can pose problems for risk assessment. When does an adventure holiday become an extreme one and how can underwriters calculate the risk incurred by dangerous sporting in such circumstances? As reported earlier in ITIJ, the British Insurance Brokers Association has worked hard to ensure that pursuits one sees as extreme, for example paragliding, hot air ballooning, even horse riding, are now covered as standard in insurance policies.
Nonetheless, the ultimate extreme trips with their high hazardous sports component are likely to remain non-standard. They are the remit of the specialist broker who can access the financial underwriting expertise required, is cognisant of the varying levels of reassurance used by different insurance companies, and can locate impaired life insurance for individuals involved in dangerous activities and pastimes. Lloyd's of London is well known for such specialist underwriting but here it is argued that although the market is increasing it is still too diverse to collate meaningful figures on the number of policies or claims. In essence, there is not enough of the risk to enable an accurate estimate of all possible costs and thus arrive at a 'standard' policy with a competitive price.
This form of ranking is at odds with many people's view of what is or isn't a hazardous sport. The fact that insurance companies themselves don't trek a uniform path to risk just adds further confusion.
Time is needed, perhaps another decade, before sufficient claims experience has built up to determine what sports are dangerous to the extent of always meriting non-standard cover and what activities deserve to have the rules relaxed. In the meantime, no doubt, ombudsmen, such as the UK's Financial Ombudsman's Service (FOS), will continue to see a high level of travel insurance complaints, partly due to the fact that such insurance has not kept abreast of changing holiday fashions. The FOS gets a lot of disputes over terminology: many of its complainants don't view scooter riding, surfing, jet skiing or bungee jumping as dangerous, while their insurers do.
It can be maintained that the customer is at fault here, should pay more attention to the conditions and exclusions of a travel insurance policy and should understand the difference between standard and non-standard. However, an off-the-record view expressed to me by a leading North American insurer is that the situation is really market driven and down to what customers expect from their travel insurance.
It is the customer or client's reasonable expectations of the level of cover and the fairness or otherwise of exclusions that should dictate whether a risk is assessed as standard. Customers need to understand that some sports attract a higher risk rating, but it is reasonable and eminently possible to achieve this understanding upfront in the marketing literature; there's no excuse in pointing out that the small print should have been read.