You might have watched the NFL Draft and you might not have. One thing that most people don’t think about is how players prepare for the worst. This year, a lot of the top college football players will buy an insurance policy in case they get injured. These are highly customizable policies, and they cost some money. I am sure there are a lot of creative things insurance agents do to get payment.
Jake Butt was a tight end at the University of Michigan. He was good enough to become considered a high draft pick. In last year’s Orange Bowl, he tore an ACL. That killed his draft prospects. Fortunately for him, he had bought an insurance policy. For every pick he slid beginning in the middle of the third round, he made $10,000. He netted $534,000 tax-free.
Smart. The risk of injury in football is so high many star players sit out games they don’t have to play.
These kinds of policies have always been exotic. Remember the stories of supermodels that insured their legs? This is the same. I think they will get less exotic and commoditized.
One of the things that big data and all the new ways we can crunch numbers does is open up the tableau to risks that we might not have been able to quantify before. If there are risks, there can be insurance for those risks. I am wondering what new risks might be insurable that have high turnover. For example, prior to car rentals, there was no car rental insurance. Over time as we got data and measured risk more accurately, car rental insurance costs have come down. It’s become a profit center for rental agencies and insurance companies.
With automation, insurance companies should be able to automate everything including underwriting and find places to insure risks. That will drive up profits for companies. Imagine doing a transaction where you always knew there was some risk and a chat bot popped up on your screen and gave you a super competitive rate automatically to insure that transaction.
What are the different places that you think insurers could be assessing risk and creating an on the run insurance policy for it?