The 2012-2013 NHL Lockout Discussion Thread
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12-07-2012, 01:41 PM
Business of Hockey
Join Date: Jul 2006
Location: South Mountain
The NHL has a league-wide insurance policy where teams are charged a premium and receive contract insurance coverage based on their 5 largest contracts. This insurance pays the owner [team] in the event a player is injured for an extended period of time. The players contracts are already guaranteed to be paid by the team in the event they are injured.
In the past this insurance policy has covered up to 7 years of a contract. That policy expired following which there are recent reports that the league had problems finding an affordable insurance option to cover 7 years, and that the new league-wide insurance policy will only cover 5 years. Escalating contract values, increases in lengths of the largest contracts and actuary risk are all likely factors.
If it's true the league can only get 5 years worth of contract insurance now, then there's an extra financial incentive to keep new contracts to 5 years or less.
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