Loss of value insurance is an area in which further NCAA reforms are needed

Loss of value insurance policies are mostly unregulated by the NCAA, and its member institutions have taken advantage of that laissez-faire approach.

The top professional prospects who play football and men’s basketball at NCAA member institutions stand to land big paydays, if everything goes as planned. Covering the possible loss of economic value that would result from an injury is why loss of value insurance policies exist, but the process of buying and then making a claim on those policies can be complicated. According to one insurance adviser who has worked with some recent top names in the collegiate ranks, one thing that complicates it is the unnecessary meddling of the schools in the process.

Ronnie Kaymore is a former college and Arena League football player who has worked in the insurance industry since 2008. After a stint at New York Life, Kaymore began to look at the insurance products for friends of his who were playing in the NFL. As a result of that inquiry, Kaymore began to learn about the disability insurance policies that were being offered to NCAA athletes. What resulted is more of an education than Kaymore initially believed that he would get.

“I understood that the NCAA offered a policy that they called ‘exceptional athlete insurance,'” Kaymore said. “I began to realize the only way that policy would pay out is if the kid had a career-ending injury. Going back to when Marcus Lattimore was playing at South Carolina, I had engaged with Marcus’ family, and their exact words were the university took care of the coverage and Marcus is okay. After watching that kid suffer two devastating injuries, I became very interested in reaching out to student-athletes and educating their families on the various coverages that are available.”

What Kaymore learned next was a surprise to him.

“In doing so, the unexpected event is that sometimes the universities want to control that whole policy,” Kaymore admitted. “There are some universities that tell kids that they cannot talk to any insurance advisers. There are some universities that desire to pick the person that the kids work with. From my experience, there have been schools in the Power 5 conferences which designate an insurance adviser. At one university, it’s an alumnus. At another, it’s a booster. So universities really dictate and determine who their student athletes work with.”

It was the story of former USC and Jacksonville Jaguars wide receiver Marqise Lee that really got Kaymore’s attention, however.

“Going back about five years ago, there was a high-profile athlete named Marqise Lee; his insurance claim was denied by Lloyd’s of London,” Kaymore explained. “The reason that the claim was denied is because the university inaccurately filled out the kid’s paperwork. As the kid was going through the application process, he was not allowed to talk to the insurance adviser, he was not allowed to get advice outside of the compliance office on how to fill out his paperwork. Once the kid got injured and filed a claim, the insurance carriers said that he withheld material information and they denied the claim not based on the fact that he wasn’t injured but based on the fact that he incorrectly filled out the information.”

Lee’s case wasn’t an isolated incident, even at USC.

“A more public case in that same scenario is Morgan Breslin over at Southern Cal,” Kaymore elaborated. “He’s another kid that sued the University of Southern Cal due to the fact of not understanding the insurance process as it was conveyed to him by his member institution.

“My approach from that point in time has been to directly reach out and educate the families, make sure that they understand the types of coverages that they got, and make sure that they understand the university does not have to assist them in the enrollment process. They are at liberty to work with any insurance advisers. They are at liberty as moms and dads to seek out insurance coverage. One thing that caught me off-guard in a sense is how aggressive these universities are in determining which person these elite athletes get their insurance with.”

In Kaymore’s opinion, the key for current and future top-level professional prospects avoiding the same situation that Breslin, Lattimore and Lee found themselves in is education.

“I was told by a former SEC coach that their student athletes have the ability to make sure they are covered before signing an NLI (national letter of intent) or scholarship agreement,” Kaymore said. “The top-tier kids should never sign NLIs or scholarship agreements until having a conversation with the schools about insurance.

“There was a kid who was a running back out of a Big Ten university, a projected top-five pick in the NFL a couple of years ago. His father did not even know that loss of value policies existed until it was brought to his attention by another one of my clients who is currently in the NFL from the same university. If that conversation is had, who are the universities having it with? If the universities are going to reach out to individuals, does that individual have experience in handling claims? The schools don’t have that foresight. The families can do a better job.”

While pointing students toward insurance agents/companies that have tangible ties to the schools’ athletic programs is morally questionable enough, the lack of education held by these athletes and their families has left the door open to situations that appear to result from the schools potentially misleading the athletes.

“Edmond Sumner was a projected first round pick in the NBA at Xavier. Edmond Sumner wanted a loss of value policy. The university said don’t worry about it, we got it under control,” Kaymore commented.

“Edmond Sumner tore his knee and found out that all he had was a permanent disability policy. Had he had a loss of value policy, like what Jake Butt collected on, what Silas Redd collected on, what Jaylon Smith collected on, and he would have been able to file a claim. The detriment on the basketball side is if a kid is injured and goes in the second round, there’s no guaranteed money. This kid suffered an economic loss that in my opinion is credited to the university because he did not have the correct type of coverage.”

While it’s unclear whether Xavier misled Sumner and his family, or the staff at Xavier simply didn’t understand the nuances of the different policies, it’s an area in which Kaymore thinks that athletic department staff should be staying out of altogether.

“A lot of these student athletes are of minority descent and most of them don’t have the means to pay a $5,000-$10,000 insurance premium,” Kaymore stated. “So when the university tells you that we got you covered, the family thinks that they are covered. With the university being controlling and overzealous, they put the kid in a policy that they don’t even understand.

“Keep in mind, it is illegal for any person to give insurance advice who isn’t licensed. That is against the law in every state in this country. You cannot give insurance advice without a license to do so. I think that these universities are overstepping their bounds by telling a kid at Michigan or Ohio State, ‘oh here’s the type of policy you should have,’ or, ‘this policy may not be good,’ and they are not even qualified or licensed on a legal level. If attorneys were to get involved and ask a kid why did you have one type of policy over another, most lawyers would sue the universities on behalf of that client.”

Sumner’s loss of value that occurred partially because he trusted the school to provide the coverage that he needed isn’t an isolated incident in Kaymore’s experience either.

“I would say on the few occasions that it [the insurance agent designated by the schools] was an alumnus or the individual had some kind of relationship with the university. They make sure that their alumnus works with the kids and say if you get this policy, we will pay for it.

“Ole Miss has a player by the name of Tony Conner. He was a highly-rated safety as a junior. He injured his knee and did not have the proper coverage. He came back as a senior, and played the whole year. He not only did not not get drafted, but he didn’t get signed as a rookie free agent either. He had his coverage through the person that the university recommended to him, which only covered a career-ending injury. Had he went outside of Ole Miss, he could have gotten a more comprehensive policy which would have enabled him to file a claim against that knee injury.”

Keeping schools’ influences out of areas where they could not only be considered an ethics violation but potentially illegal as well is exactly where the NCAA is supposed to be stepping in. The NCAA bills itself as a student-athlete advocacy organization. The reality is that it has taken action on this matter to an extent, but only to the extent that it benefits the schools.

“One thing I consider is that if these student-athletes were looking for auto coverage, the schools would not step in and make sure that the kid got the proper auto coverage,” said Kaymore. “When it comes to something that involves the kid’s future potential as a pro athlete, all of a sudden, insurance takes a different course of action. I work with high-rated student athletes who have children, and the universities don’t make sure that they have life insurance so that if the player dies the kids would have some kind of benefit. The only thing that the schools worry about is the injury protection policies and I think it’s to the players’ detriment. The benefit of these kids having their own outside insurance coverage outside of the universities is to make sure that if he/she is enrolled, that he/she is enrolled in the very best possible policy.

“The NCAA rules used to state that student athletes can only take out a loan for a policy to pay a premium for a policy that protected a kid from a career-ending injury. The reason that it wasn’t publicly discussed that kids like Jameis Winston were getting loss of value policies was because the NCAA created an internal rule that prevented the kids from getting that type of policy. If Jadeveon Clowney had wanted to get a loss of value policy when he was in college, he would not have been able to take out a loan to pay for that rider. In essence, they were forced to only have permanent disability coverage because that was the only type of coverage the NCAA would allow them to take out a loan for. When universities started paying for the loss of value rider like Florida State did with Jameis Winston, that opened up a can of worms and made the NCAA understand that there is a better kind of policy out. Universities started to pay for these coverages because the kids couldn’t, but the schools were also concerned about their budgets. The NCAA reversed its own by-laws to let the kids pay for the policies. It was never anything about providing the better coverage for the kids.”

Kaymore’s experiences have also included seeing success with these policies when the athletes and their families were properly advised and assisted in the process of securing the policies and filing claims by licensed, impartial professionals.

“Silas Redd, running back formerly of Southern Cal, when I enrolled him in his policy, he wasn’t projected as a first or second round pick, he was projected as a mid-round pick,” Kaymore explained. “The way I wrote the policy, if he was to get injured and fall below that to the sixth or seventh round or not get drafted, he would be eligible to file a claim. He did collect on his policy to an amount southward of about $900,000. In the beginning, the schools thought loss of value policies were scams. At least five kids have collected on these policies in the last two years. That’s more kids than on the NCAA program. Up until now, I highly doubt that they have paid out more than five coverages over the course of the entire exceptional student athlete program. Families should educate themselves outside of the universities counsel. In my experience, when the universities come in, that’s when they don’t have the type of coverage that they should.

“Lee and Redd are great friends. The question from Lee to Redd was how did Redd collect on his policy, and Lee wasn’t able to collect on his? The answer is that Redd’s father, who is a detective, helped him fill out his paperwork. He made sure every answer was appropriate and when his son got injured, he was able to make a claim and he got paid very famously, no attorneys involved. The other young men who left it up to the university, those are the ones we read about getting denied. Families have to be very engaged. They can’t let the universities take care of it. Families have to be very proactive in not only looking at the policy that the school is presenting but go out on their own and do their due diligence to make sure that they are getting the best kind of policy available.”

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The progress on this issue has been partially due to the NCAA realizing the need for change in its by-laws and adjusting them to fit the times. Those adjustments have been a half-measure, however. Further regulation of matters concerning these policies is needed to ensure that athletes are getting advice and assistance from impartial, licensed agents.

Until such a time, however, the athletes and their families must pursue what the NCAA says it prizes above everything else: education.