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Insurers Could End Football. It Won't Be the First Industry They've Transformed.

With CTE lawsuits mounting, the NFL can’t find a general-liability insurer to cover head injuries. Fraternities and police departments have faced similar problems.
Insurance underwriters working at Lloyd's of London, in April of 1958. Today, insurers won't offer general-liability insurance to the NFL to cover head injuries.

Insurance underwriters working at Lloyd's of London, in April of 1958. Today, insurers won't offer general-liability insurance to the NFL to cover head injuries.

This is the way the world ends. Not with a bang, but an insurance policy.

American football has been ailing in recent years. Amid increasingly widespread and conclusive knowledge about its relationship to neurodegenerative disorders like chronic traumatic encephalopathy, the once dominant sport's popularity has been dropping: Both high school football participation and NFL viewership declined sharply in recent years. A slow, decades-long death once seemed likely.

But according to a new ESPN report, football faces an even more immediate peril: the insurance industry. With the cost of concussion and CTE lawsuits mounting, the NFL has been unable to find a company to provide general-liability insurance to cover head injuries, and struggled mightily to find workers' compensation coverage—only securing it at tremendous cost. Football helmet manufacturers and youth leagues such as Pop Warner report that only one remaining carrier will agree to cover them. "Insurance coverage is arguably the biggest threat to the sport," Pop Warner's medical director Julian Bailes told ESPN.

Football's still with us for now, but if the sport is felled—or significantly altered—by decisions around coverage, it won't be the first time insurance companies have sought to significantly reshape Americans' behavior in the interest of their bottom line. "When insurance companies do act like regulators, they do it because of the liability," say Tom Baker, an insurance law expert at the University of Pennsylvania Law School. "And the bigger the liability, the more they have a potential to earn a return for acting like regulators."

The history of the insurance industry is a history of experiments in profit-driven social engineering, with attempts to discourage the insured from engaging in behaviors costly to insurers, and to encourage those that save them money. "The life-insurance industry more or less invented public health," says Caley Horan, a historian of the insurance industry at the Massachusetts Institute of Technology. Metropolitan Life Insurance built tuberculosis sanatoriums and funded pivotal studies on scarlet fever and typhoid. The car insurance industry, she says, was the main force behind the creation of driver's education programs and requirements.

The insurance industry has had a particularly heavy hand as a regulator in policing. Insurers have covered municipal police departments since the 1960s. Since then—particularly after the nationwide broadcast of the Los Angeles Police Department's brutal beating of Rodney King directed the country's attention to the illegal and unethical practices of many police departments across the country—they have been making not-all-that-optional policy recommendations to police departments in order to avoid lawsuit risks.

In his 2017 study, How Private Insurers Regulate Public Police, the University of Chicago Law School's John Rappaport found that insurers routinely raised premiums and threatened denial of coverage to police departments that did not adopt their policy recommendations. Insurers have forced departments to fire problem officers, controlled the hiring of police chiefs, required various education programs, and provided expensive virtual-reality training simulators for high-stress situations. At least one insurer sends employees to "cop bars" to check in on departments, both to make sure risk-management policies are being followed, and to look out for potential problems down the road.

"There are a numerous examples where municipalities either refused or were unable to make the changes that the insurer wanted," and as a result "lost coverage, and then had to close its police department," Rappaport says.

The insurance industry has also notoriously withheld coverage for less publicly interested ends. Insurance redlining—refusing to insure homes in neighborhoods based on their racial and ethnic composition—was used for decades to deny black and low-income applicants homeowners' insurance. Later, in the 1980s, during the AIDS crisis, some companies refused to insure any men who held jobs stereotypically assumed to be occupied by gay men—hairdressers, florists, interior decorators. One company even denied coverage to all San Francisco applicants, regardless of occupation. More recently, 92 percent of all car insurance providers use credit scores to calculate car-insurance premiums, according to Nationwide, a practice that often results in the poorest applicants paying the most. "Actuarial classifications can be discriminatory in ways that people don't always recognize are discriminatory," Horan says, warning that such discrimination-by-data is especially worrisome when "insurance companies are responding in the way that a nation state might respond."

Still, as concerns football, the insurance industry is rarely able to completely end a popular or widely practiced behavior, even an expensive one. "When the insurance industry gets in a position to say who can and can't do something, and it's something that people feel like they should be able to do, then the industry finds out that it doesn't actually have that power," Baker says. He's especially interested in the football-insurance situation, "because if it turns out that it does drive behavior, it'll be one of the relatively few examples you can really point your finger to."

Baker says insurance companies can often serve as a convenient boogeyman when a widespread disappearance occurs. For example, last decade he was hired to do a study on the closing of city playgrounds—a phenomenon widely believed to have been driven by risk management policies pushed by insurance companies. After investigating, Baker determined the insurance industry was not to blame. "In fact, it was incredibly difficult to sue a playground when a kid got injured, and it was just because cities couldn't be bothered to keep them open, and they were worried about vandalism."

But where they might not change behavior, or the landscape of cities, insurance companies do work to rid themselves of their clients' liability. Notably, liability-insurance coverage of fraternities in recent decades has changed markedly. After a few high-profile lawsuits in the 1980s involving horribly injured frat brothers, insurance companies ranked frats as the sixth worst insurance risk in the country, after toxic waste companies, according to the Atlantic. "You guys are nuts," an insurer, in 1989, reportedly told a fraternity whose coverage he subsequently canceled; "you can't operate like this much longer."

Fraternity members, by and large, have strayed little from their risky, debauched manner of operation during the 1980s. But, as Caitlin Flanagan detailed in the Atlantic, their labyrinthine insurance policies are now constructed so that many common fraternity activities result in exclusion of coverage. For example, the policies have remarkably strict policies regarding the handling of alcohol that in practice are rarely followed by members. If an accident occurs in the midst of an evening of breaking the panglossian alcohol rules, the insurers are off the hook. As a result, the liability often falls to the individual members alone. "It's a neat piece of logic," Flanagan writes. "The very fact that a young man finds himself in need of insurance coverage is often grounds for denying it to him."

If insurance companies soon decide that covering football is an unsustainably expensive risk, much like they did with fraternities, the companies could just end up transferring their risk to the players. Liability-insurance companies care about liability, Baker says; "They don't care about the underlying injury."

Baker believes a possible outcome of the evaporation of youth football league insurance coverage would be states passing legislation that allows parents to waive the league's liability risk. "People have been itching to make liability waivers enforceable against kids for a long time, and not just for football," Baker says.

Irrespective of who the liability rests with, Horan finds the occasional positive reforms that come from insurer guidelines to largely distract from a pernicious shift taking place when corporations take over functions of regulation and governance. "It takes a moral and political question and transforms it into an amoral question—ultimately settled by what the insurance industry is willing to do. It takes something that's moral and makes it sound purely objective and scientific by using the rhetoric of risk," she says. "Who is protected by these decisions? It's the insurance companies."