Insurance limits influence contracts

Deals more than seven years may be prohibitive to team finances

RALEIGH -- When negotiations conclude on a long-term contract extension for Carolina Hurricanes superstar center Eric Staal, a process that could end soon, there are two certainties about what that contract will look like.

One, it's going to be for a ton of money, the most the Hurricanes have ever paid a single player. Two, it's not going to be for any longer than seven years.

Not because the Canes don't want Staal around any longer than that -- clearly, they do -- but because the NHL's leaguewide insurance plan will only insure player contracts for seven years.

Beyond that, if the player gets hurt, the team is on the hook for the full amount of his contract. Seeking private insurance to cover a longer deal is prohibitively expensive, Hurricanes general manager Jim Rutherford said.

Other teams have signed players to longer contracts -- the New York Islanders signed goalie Rick DiPietro for 15 years and the Tampa Bay Lightning this summer extended Vincent Lecavalier's contract for 11 years -- but most NHL teams, the Canes included, want to remain under the insurance umbrella, costly and complicated as it may be.

Teams are required to insure a handful of players through a "temporary total disability" program administered by the league. That program has been in place for about 15 years, NHL deputy commissioner Bill Daly said, and is designed to make coverage more easily available to teams.

"It provides the underwriters with 'scale,' spreads the risk and allows them to provide more favorable rates," Daly said in an e-mail.

The league purchases its disability insurance through the BWD Group, a Long Island, N.Y., insurance broker that also obtains coverage for the NBA, WNBA and Major League Baseball. (One underwriter, the Chubb Corporation, touted its relationship with the NHL in its 2001 annual report.)

Each team pays a premium based on the salaries of its five highest-paid players, but is free to allocate that coverage how it wishes. Typically, a team will extend coverage to as many as seven players, Daly said. Coverage kicks in when a player misses at least 30 games.

Beyond that, individual teams are free to pursue additional coverage, but the heavy premiums make it a losing proposition. To insure a player under the league program, it costs about 5 percent of his salary. To insure additional players, it would cost substantially more.

"Usually it works out that we have five players under the league program," Rutherford said. "When you get to a certain dollar amount, the premiums keep skyrocketing. I wish it was easier to get each [player] insured, but we can't do that. ...

"If you wanted, you could insure all the contracts, but it would be very expensive."

So when David Tanabe suffered a concussion that appears to be career-threatening, the Hurricanes moved in June to buy out the final year of his contract, even though injured players cannot be bought out. Within 10 days, the NHLPA filed a grievance against the team. (No hearing has been scheduled.)

Because Tanabe's contract was not insured and the team disputed his injury status, it was cheaper for the team to pursue a lump sum settlement through the grievance process than pay him his full salary.

This season, the Hurricanes will pay almost $1 million for $19 million of coverage through the league program, but even that process isn't simple. Insurers may balk at something as specific as an individual body part.

The Hurricanes were able to insure Justin Williams last season despite a previous injury to his right knee, Rutherford said. They received insurance payments when he missed more than three months with a serious injury to the same knee, but they wouldn't be able to insure that knee again this season.