The cutting edge of business decisions

If you’re unhappy about seeing fewer star players take the field for their college team’s final bowl game, you may have a new villain to blame, the insurance industry.

Former Notre Dame linebacker Jaylon Smith has become at least the fourth highly-rated player in the last 18 months to collect on his loss of draft value insurance policy, two sources told CBS Sports.

But that is less of a story than the implications of Smith’s payout — believed to be $700,000. Will the increasing availability of such insurance and seeming frequency of payouts make it more likely that more players will be skipping bowl games?

“What you saw is the tip of the iceberg,” said Bryan Fisher, a Baton Rouge, Louisiana-based attorney who works with college players vetting insurance. “You’re going to see a lot of kids skipping.”

Much was made of Stanford’s Christian McCaffrey and LSU’s Leonard Fournette skipping their teams’ bowl games because of injury concerns.

Their loyalty was questioned by some even though McCaffrey touched the ball more than 800 times at Stanford. Fournette had been nicked up at LSU but was considered a workhorse himself.

Meanwhile, a cottage insurance industry has grown up around top-rated college football players in recent years. CBS Sports reported last year Fournette had separate $10 million policies for total disability and loss of value.

Even if Fournette collected on those policies, he’d get a fraction of what he would earn as long-time healthy NFL player. So does this mean the less football played, the better?

“I would probably say more young men will be cognizant that that is a reality,” said Ronnie Kaymore, CEO of Kaymore Sports Risk Management, who advises players on such matters.

It’s not like anybody can do much of anything to stop it, either, unless, I guess, the NCAA revokes its current policy of allowing players to borrow against their future earnings to buy such coverage.  That would send one helluva negative message, though.

In the meantime, though, notice this bit at the end of Solomon’s story:

In the last four years, schools have begun exploiting in a loophole in NCAA rules that allows them to pay those premiums. The Student Assistance Fund at each school is stocked by NCAA money. Typically, there is $300,000-$350,000 in that fund.

The practice of paying for premiums has become so common, that it has become a recruiting tool.

“You would have a difficult time managing recruiting without paying the premium for insurance for players,” Oklahoma State coach Mike Gundy said. “If I had a son that I thought could be that good, if you’re a school that can’t pay the premiums, he’s not going there.”

Before you ask, even Georgia’s gone there.  As long as those funds can’t be clawed back into the reserve fund, their existence will be useful for Smart in that regard.