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Monday, April 05, 2004

Lloyds of London Sues Marlins: An often-overlooked part of sports economics is the business of insuring large player contracts. All teams insure their large (and sometimes all) guaranteed player contracts in case of injury. A summary of this case: Marlins sign pitcher Alex Fernandez (who helped them win the 1997 World Series) to a lengthy contract on the basis of one good season. Fernandez gets injured and cannot play, but the Marlins must pay this guaranteed contract. Because of the injury, the team makes a claim with Lloyds, who funded the insurance policy on the Fernandez contract.

But, Lloyds claims the team also had the contract insured with Hartford Life Insurance, and made claims with both companies without disclosing the double coverage. Now, Lloyds is suing the Marlins for fraud. The case is set for arbitration this fall. You can read more here.

Hat tip: Business of Baseball Blog (recommend his post).


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