Fantasy Insurance

I was listening to a podcast the other day, and one of the guests was the owner of a website built on maybe the most interesting premise I have ever heard of: fantasy sports insurance. The site works with a legit insurance company, everything is underwritten and everything from getting a quote to filing a claim is run like any other type of insurance, i.e. car or homeowners. You can then choose one of three packages: a one player package, a two player package, or a three player package. There is a pre-picked list of players that you can choose from, not every player in the Major Leagues is an option. The list is relatively short with roughly fifty names on it.

So here is how it works. First you choose which package you want. If you want the one player package, then that player needs to spend at least sixty days on the disabled list for your policy to kick in and collect on your claim. If you do the two player package, then the two players must combine for at least ninety days on the disabled list. If you choose the three player package, then the three players must combine for at least one hundred and fifteen days on the disabled list. If you choose one of the multi-player packages, the time on the disabled list does not have to be split proportionately amongst the players, one of your three players can spend the full amount of time on the DL while the other two remain healthy all year and you will still be covered by your policy.

The next step is to choose which players you want covered. As I mentioned above, not all players are eligible. There is a predetermined list chosen by the operators of the website. These players are generally the top fifty coveted players heading into the fantasy baseball season. The idea is that most fantasy teams are so dependent on their top two or three draft picks that if one or two of them were to go down, their season would be lost (this logic is inherently flawed in its own right). By getting insurance for these fantasy studs, in theory, you can sleep easy at night knowing that you have mitigated risk if these guys were to get injured.

Step three: tell the site how much your league's entry fee is. There is also a separate line item for additional expenses, such as online fantasy related subscriptions, books, magazines, etc. Any expense you deem related to your fantasy season can be included.

Finally, you get your quote. I went through the process just to see how it worked, and I (fake) insured a three pack of Nelson Cruz, Aramis Ramirez, and Shane Victorino. My league fee is $500, and I spent an additional $120 on prep materials. My quote? $66, which is 10% of my expenses plus a $4 processing fee. This seems extremely reasonable to me. If I am spending 500 bucks on a baseball league, what's another $66 to insure against the worst case scenario. If your players meet the disabled list threshold, then you are paid your league entry fee plus expenses in full. For once it would be nice to not feel so helpless when one of my guys gets injured.

All in all, this is a super interesting idea, but not without some flaws.

First off, I have no idea if/how/when they validate the customer's fantasy information. For instance, if I went through with the above mentioned policy, and my players combined for the requisite 115 days on the DL, does a claims adjuster ask for my Sportsline login info and make sure these guys are actually on my team? Who is to stop me from looking at the list of players available to be insured, doing thorough research on their injury histories, and putting together any number of packages of guys I deem injury risks and just playing the injury market like its the Dow Jones? This can essentially be viewed as legalized gambling, no? Further, it is not like the players have different values. If you are on the list you are on the list and that is it. So, for instance, Aramis Ramirez has spent 73 days on the disabled list in the last three years. Jose Reyes? 173 DL days in the last three years. On the other hand, Hanley Ramirez has spent zero in that same time frame. All three of these players are on the list and are weighted equally. What is to stop me from taking out a policy on Reyes and A-Ram, saying I play in a $1500 entry fee league, and playing the odds that these two guys who spend more time on the DL than I do on Xbox Live will accumulate just ninety DL days?

What about verifying league fees? I don't get a receipt from the commissioner of my league, do you? It just seems to me like this can be used for other reasons besides insuring your fantasy team. Is that a bad thing? Not necessarily. Was this their intention? I'm very curious about that answer.

One more thing - for the most part, as with all insurance, I think this is a suckers bet and I will tell you why. The baseball season is roughly six months long. 180 days. A minimum DL stint is fifteen days. For a player or group of players to reach the minimum DL requirements in order to cash in on your policy they would most likely need to be out for the season as this is just as likely, if not more, than a forty or fifty day DL stint. But here is where the sucker bet comes in - on September 1st of every year MLB rosters expand their rosters from 25 players to 40. This is so clubs can call up minor leaguers and give them a taste of the Majors. However, when a player gets injured after 9/1, 99% of the time (unofficial stat) the player DOES NOT go on the disabled list due to all of the new found roster room and flexibility. No team needs forty roster spots, so there is no need to place an injured player on the DL and clear space for a fill-in. Can you imagine if you are not going to win your league, you're a few DL days short of hitting your insurance lottery, and on September 8th one of your insured players gets injured? Guess what - you're screwed. Really.

One more tangent - I think there should be insurance not only for injuries but for players sucking. Like, if you took Carlos Lee in the 3rd round of your draft, projected him to go .300/30/100 like he does every year, you should be able to get some money back when he is currently hitting .198/1/5 five weeks into the season. This seems more logical to me. Maybe the insurance company can create a projections system and you can insure your top players against coming within 30% of their projection or something like that.

Anyway, very cool idea and I wish I came up with it first. I just think there are latent agendas within the business model as well as some serious sucker bet potential.


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