No-Assurance Insurance : Many Sports Organizations Now Must Scramble to Meet an Insurance Crunch In the Face of Spiraling Liability Costs

If things had gone as they had for the past 32 years, the Pierce College rodeo would have opened at the Woodland Hills campus last week. But the two-day event was roped and tied by a problem plaguing a growing number of sports--from Little League baseball to the U.S. Olympic Committee.

Rodeo officials, like organizers in a wide range of other sports, were unable to obtain liability insurance.

Rodeo director Ron Wechsler said he was forced to cancel the event after being informed by the rodeo’s insurance company earlier this year that coverage would be reduced.

“We could get spectator liability,” Wechsler said. “But participant liability wasn’t available. I checked with insurance companies all over the country. We couldn’t get it--at any price.”

Wechsler said companies are reluctant to insure events such as the Pierce rodeo--which includes bull riding, bronc riding and calf roping--because “people are suit-crazy.”

Jerry Ford, vice president of Specialty Programs Insurors of Kansas City, Mo., told The Times that the Insurance Co. of North America, which had issued the rodeo’s coverage, stopped providing liability insurance for sports events because of the high cost of recent lawsuits.

Specialty Insurors is the insurance agency for the National Intercollegiate Rodeo Assn., a sponsor of the Pierce College rodeo.

“We haven’t had any suits in 32 years,” Wechsler said. “It seems like attorneys are getting rich quick. The whole thing is out of control.

“Insurors are concerned with anything dealing with animals--particularly horses.”

Not to mention bulls and cattle.

Last December, the Hansen Dam Equestrian Center in Lake View Terrace stopped renting horses to the public for leisure riding because it couldn’t get liability coverage.

Said owner Chuck Walls: “We shopped everywhere, but no one would insure us. Even if we could get it, there’s no sense having insurance if it’s so high that you’re just working to pay the insurance companies.

“There are too many suits out there. Everyone is suit-happy.”

The liability problem in sports goes beyond renting and riding horses.

Last month, the U.S. Olympic Committee set up its own insurance fund after a number of Olympic-sport national governing bodies struggled in attempts to get coverage.

Under the USOC plan, each of the participating national governing bodies will pay into a pool that will in turn be used as an insurance reserve. That fund will insure a governing body up to $250,000. John Hancock Insurance will then provide a “second layer” of coverage for an additional $750,000 with a limit of $5 million for all the federations combined.

According to George Miller, secretary-general of the USOC, 17 governing bodies have expressed an interest in joining “Panol”--the name of the committee’s new insurance company.

“And there are 13 more that have insurance policies that expire during the next six months,” Miller said.

Some of the Olympic sports involved include boxing, cycling, track and field, figure skating, wrestling and soccer.

While Miller admitted that there are financial risks involved, he said the market left the USOC little choice but to self-insure.

“In some cases, we had no alternative. Insurance just wasn’t available. I’d prefer not to have to be in the insurance business, but I’m satisfied because we’ve done the best we can,” he said.

Said David Prouty of the U.S. Cycling Federation, a governing body that has faced numerous suits in the past: “At least we know we have coverage. We won’t have to sit and bite our nails worrying.”

Which is what cycling federation members were doing earlier this year when their policy was scheduled to expire.

The Encino Velodrome, a bike racing track that had been covered by the USCF, was shut down in January. The federation’s insurance ran out Jan. 15. But after a series of meetings with National Union, an insurance company in the American International Group that had been providing coverage for the USCF and other governing bodies, the USOC negotiated a three-month extension.

In the meantime, the Olympic committee set up its own fund.

While Prouty is relieved that the cycling federation will be covered by the fund, he added that the plan is expensive.

“People think self-insurance will save us money,” he said. “That isn’t necessarily the case. I’ve been told our premium from April to April next year will be $193,000. It was $21,500 last year. The good old days are over. That number is just general liability. The combined insurance costs will be around $300,000.”

Similar effects are being seen in other sports. The Las Vegas Stars, a Triple-A minor league baseball team in the Pacific Coast League, are faced with a 1,000% increase in rates this year--from $3,800 last year to nearly $38,000 in 1986.

“We haven’t budgeted for that,” said Dave Logan, the organization’s assistant general manager. “We don’t have the facility to make that kind of money.” The Stars are considering self-insurance.

School districts have already gone that route. Districts with sports programs such as the L.A. Unified District and Burbank Unified District have been forced to self-insure or join other districts in insurance co-ops to manage the high costs of coverage.

“Insurance companies will stop covering certain risks,” said Dave Koch, deputy business manager of the L.A. Unified District. “Trampolines have been eliminated. Football is high risk, but we haven’t received information on any specific sports.

“The market tends to be cyclical. The last time rates went up in 1978, we went to self-insurance. We thought we’d be better off.”

“We’ll see more and more self-insurance,” said Joe Gagliardi, who is president of Gagliardi Brothers Insurance and also president of the California League, a Class-A baseball league. “And I don’t blame them.”

Gagliardi does blame aggressive attorneys and short-sighted insurance companies for escalating costs.

“Insurance companies don’t want to write sports. The lawsuits are the root of it. If a person has a legitimate claim, I’ve got no quarrel with that. I don’t think anybody does. But there’s a lot of unjustified lawsuits going on.

“But the companies are wrong, too. The big rate increases still aren’t totally justified. They should have spread them out over a three- or four-year period.

“The insurance business will get worse, not better. I’m not optimistic. And if the insurance companies don’t resolve it, then state legislators will step in.”

In New Jersey, state legislators approved a bill last week that will protect volunteer coaches in Little Leagues from lawsuits. The threat of suits had crippled some youth baseball leagues in the state because of a lack of coaches. As a result of lawsuits, some Little League organizations had difficulty getting liability coverage.

In California, legislators have tried to pass bills that would ease the number of lawsuits.

One such bill, introduced by state Sen. H.L. Richardson (R-Glendora) would have had a direct impact on recreational sports in the state. The legislation provided protection for property owners in cases where persons such as spectators, athletic participants and outdoorsmen suffered unmalicious injury while on that property.

But Richardson’s bill was defeated in the state senate judiciary committee Wednesday.

“The power of the California Trial Lawyers Assn. killed it,” Richardson said. “They own the judiciary committees. They own them and they rent them out. The lawyers get their will.”

Opponents of Richardson’s bill insist that such legislation would take away the right of individuals to sue.

In some sports such as ice skating and bicycle racing, participants are often asked to sign an agreement that states they will not sue in the event of injury. But such agreements have not held up in California courts.

“It’s getting ludicrous,” Richardson said. “It’s crazy. We’re losing our marbles. It’s to the point where everybody needs liability coverage. If you can’t get it, you won’t do anything.

“Most legislators aren’t outdoors much. They don’t ride horses or backpack or sail. I’ll have to get more legislators elected who are outdoorsmen. That’s the only answer.”