It’s springtime in Cleveland, which means fans of the Cleveland Browns are engaged in one of their favorite yearly traditions: analyzing this year’s draft picks and hoping predicting how the team will perform in the coming season. This season, though, an unusual topic is taking a turn in many of those discussions: the issue of insurance recovery.

In the seventh and final round of the 2015 NFL Draft, the Browns selected Ifo Ekpre-Olomu, a cornerback who played for Oregon. During the 2014-15 college football season, Ekpre-Olomu was widely viewed as one of the best cornerbacks in the country and multiple experts predicted he would be drafted in the first round of the NFL Draft. Unfortunately, Ekpre-Olomu suffered a major knee injury at the end of the season. Due to the uncertainty surrounding his ongoing recovery and whether he would be able to return to his previous high level of play, Ekpre-Olomu almost went undrafted. 

A draft slide such as Ekpre-Olomu’s has major financial implications for the player. Whereas a player drafted in the first round can expect to receive a multi-million dollar contract, a portion of which may be fully guaranteed, a player drafted in the later rounds will receive much less money–in addition to the fact that they face a much tougher road to even making the team’s final roster after training camp. One of the many reasons college players decide to declare for the NFL Draft before they finish their college careers is because they fear exactly what happened to Ekpre-Olomu: an injury that will cause their draft position, and therefore their future earnings, to decline.

As with so many risks, however, an insurer may be happy to cover it. Many college players hold permanent total disability insurance policies which protect them if an injury permanently prevents them from playing their sport. In recent years, elite players such as Ekpre-Olomu have begun seeking coverage under an additional rider to their permanent total disability policies called “loss-of-value” insurance. Loss-of-value insurance protects players whose value (i.e. their draft position and resulting contract) declines due to a covered event, namely injury. 

Professional players have been purchasing loss-of-value insurance for years in order to protect themselves before they become eligible for free agency or arbitration, but the expansion of the coverage into the college ranks is a newer phenomenon. Much like any product expanding into a new market, it appears that there are a few kinks to work out with loss-of-value insurance at the college level.

One of the major issues is who exactly should purchase the insurance: the player, or the school? Players are free to purchase insurance on their own, but with many policies costing upwards of $100,000, coverage is prohibitively expensive for most players. Recent NCAA rule changes allow players to effectively borrow against their future earnings in order to pay for the coverage, but even that could present problems: what’s to stop an opportunistic insurer from offering an expensive loss-of-value rider to a player who was never likely to be a high draft pick in the first place?

Schools are also permitted to purchase policies on behalf of players, as Oregon did for Ekpre-Olomu and others. In theory, both parties win: the school can offer the coverage to induce players to play another year, while the player benefits from more education and opportunity to improve on the field. However, there are inherent conflicts of interest. As but one example, the school is likely to be interested in purchasing the policy with the lowest premium possible–and that is unlikely to be the policy that offers the player the best coverage or the greatest likelihood of paying a claim. In addition, the school officials responsible for purchasing the coverage may not be trained insurance brokers, or they may be incapable of appropriately educating players on the benefits and potential drawbacks of the coverage.

The likelihood of paying a claim, one of the most basic of all insurance issues, is perhaps the biggest concern in the collegiate marketplace for loss-of-value coverage. Multiple reports indicate that Ekpre-Olomu is likely to be the first player to make a successful claim under a loss-of-value rider. At least two other claims have gone to litigation due to the insurers arguing that the players failed to disclose preexisting injuries or other relevant health information. Other players don’t file claims simply because the prerequisites for coverage are so high. Cedric Ogbuehi, an offensive lineman from Texas A&M, was projected as a top-five pick in the 2015 NFL Draft prior to suffering a major knee injury; he was eventually drafted 21st overall. Ogbuehi’s drop in draft position resulted in the loss of millions of dollars, but Ogbuehi’s agent indicated that Ogbuehi would not make a claim under the policy because the decreased income was not sufficient to trigger coverage. In addition, the plethora of factors which teams consider when making draft decisions affords insurers a variety of arguments against coverage: perhaps a player dropped in the draft because his on-field play declined, or he performed poorly at one of the numerous pre-draft workouts and interviews players are subjected to, or teams were concerned about off-field issues. It is not difficult to conceive of loss-of-value litigation which would require expert testimony from team officials, coaches, or scouts as to the player-plaintiff’s talent or reasons for dropping in the draft.

Elite college athletes are well-advised to do their own research before purchasing loss-of-value coverage or allowing their school to purchase it on their behalf. The rewards may be financially meaningful, but the risks of relying on coverage which may be difficult to collect on can be equally dangerous. If current predictions are borne out and Ifo Ekpre-Olomu becomes the first college athlete to collect on a loss-of-value claim, that would be a positive indication for the marketplace. It would also be a happy topic of conversation for long-suffering Browns fans.