University of Kansas

Mr. Chenowith goes to Washington ... to speak about insurance for college athletes

Former KU player Eric Chenowith (left) has good memories of the Great Alaska Shootout. This year’s event will be the last in the 40-year history of the tourney.
Former KU player Eric Chenowith (left) has good memories of the Great Alaska Shootout. This year’s event will be the last in the 40-year history of the tourney. File photo

Wearing a custom-made gray suit coat and slacks, checkered shirt and navy blue and brown striped tie, 7-foot-1, 270-pound former Kansas basketball center Eric Chenowith formally addressed the 22-person Knight Commission on Intercollegiate Athletics on Wednesday in Washington, D.C.

“This is truly an honor for me as a former student-athlete now an insurance professional working with over 50 universities nationwide. Thank you for having me,” the 40-year-old Chenowith said in beginning an eight-minute speech that preceded a question and answer session.

The Knight Commission, which was formed in 1989, “to promote reforms that support and strengthen the educational mission of college sports,” turned to 2001 KU graduate Chenowith, owner and founder of “Leverage” insurance company in Corona del Mar, California, to explain the process in which colleges are allowed to purchase permanent total disability and loss-of-value insurance for their athletes.

These disability policies are designed to protect student-athletes’ future professional earnings in case of injury or illness sustained while in college.

“My business model is simple,” Chenowith told those in attendance at the JW Marriott Hotel located on Pennsylvania Ave., just down the road from the White House. “I only call coaches and compliance directors. I do not call families directly. I do not call student-athletes directly. I find it intrusive and find some schools can be caught off guard.”

The Power Five Conference schools Chenowith works with are allowed to pay for elite athletes’ insurance policies through the school’s student-athlete assistance fund, which reportedly can be up to $350,000 provided each year by the NCAA.

He explained the different coverage plans as succinctly as he could.

“Permanent total disability insurance is the cornerstone of our market. If you have a career-ending injury or illness, if you cannot play basketball, football, baseball, hockey ever again — for instance if you had cancer or shattered a leg — you as a student-athlete would be covered,” Chenowith said.

“A lot of athletes have dismissed permanent total disability insurance saying, ‘My career is never going to end with all the advances in medicine.’ So Lloyds of London (a partner of Chenowith) developed a product called, ‘Loss of Value (insurance).’

“They take a projection of where you will go in the draft (NBA, baseball, hockey, football), set a monetary value on that, take off about 50 percent of that projected value and set what’s called a threshold. If you have an injury which is not career ending but has proven to make you fall past your threshold (in draft) they will indemnify you of the difference of where your threshold was and where you signed,” Chenowith explained.

Commission members — including former NFL commissioner Paul Tagliabue, basketball Hall of Famer David Robinson, former U.S. Secretary of Education Arne Duncan, CEO of American Airlines Derek Kerr, former CEO of major league baseball Jonathan Mariner and various college presidents and chancellors — heard Chenowith mention “a product new to the market called ‘Critical Injury’ which is a defined benefit plan where there’s a Category One and Category Two for injuries..”

Category One examples would include torn Achilles, torn ACL, rotator cuff injury. For Category Two, examples would be a torn quad or hamstring, torn pectoral muscle or triceps muscle.

“You get a defined benefit for a specific injury. It takes out the gray area. A lot of schools like it. It’s expensive, but you know exactly what’s going to happen when you have a certain defined injury,” Chenowith noted.

He stressed it’s great that colleges pay premiums for the policies. It’s different from when he played at KU from 1998 to 2001.

“When I was in school I took out a loan to pay for the premiums for my insurance. It’s something you had to do then,” Chenowith, who went on to play pro basketball for eight years before entering the insurance business, said. “If your family could afford it, you’d pay for insurance that way. My family was not in position to pay premiums. I took out a loan and eventually paid it off. It was good for me, taught me financial accountability, taught me how lending works.

“Five or six years ago is when the NCAA full autonomy rules changed. (Before that) as a producer I was having to get student athletes loans.”

Chenowith said even when he played it was common for college players to acquire disability insurance.

“When my dad knew (KU standouts) Paul Pierce and Raef LaFrentz each had a disability insurance policy,” Chenowith told the commission members, “he said, ‘Eric you probably should talk to coach (Roy) Williams about getting a policy as well.’ Coach said, ‘Eric go talk to Richard Konzem in compliance and he’ll take it from there.’

“As I was walking down the hallway (to speak with assistant AD Konzem) I was like every student or pro athlete whose fear is ‘What am I going to do when I’m done playing?’ There was that seed planted in my head walking down that hallway that, ‘OK if I don’t make enough money to retire after playing basketball I could always sell insurance and work with student athletes doing this.’ That seed was planted and came to fruition later in life.”

One of the commission members asked Chenowith how often an athlete receives payment on these policies and if they are “hard to collect on.”

Career-ending injuries and injuries that affect draft status are somewhat rare.

“In 2018, I wrote 110 sports cases (policies). I have one potential claim right now,” Chenowith told the Knight Commission. “That’s less than 1 percent of the time. I don’t like the term, ‘Hard to collect on,’ but a lot of things have to happen in order for it to trigger and click in.

“I pride on doing things the right way, underwriting policies correctly, explaining to the athlete what they are buying, how it works, where the triggers are, so that there’s expectations that are managed on the front end. As long as we don’t have buyer’s remorse on the back end, then I’ve done my job. They do pay out. I’ve had several claims paid out for PTD (permanent total disability) and loss of value if they are done correctly.”

Chenowith will not name the clients who have collected benefits from their policies.

“I don’t ever want to utilize someone’s misfortune for my own self promotion,” Chenowith told The Star. “It’s strictly confidential. Some other brokers will let people know. I’ve always been above that.

“Playing for coach Williams, I have a great understanding of the letter of the law and spirit of the law for NCAA guidelines. Coach Williams runs a tight ship,” added Chenowith, a native Californian who lives there now with wife Bethany and son Cooper (2). “I thrive on being fully transparent, being an educator and order-taker after that. It’s a simple business model: calling coaches, compliance directors and going from there. If they decide to use my services great. If not we can all go our separate ways.”

Chenowith said the only concerns about insurance for athletes that he presented to the Knight Commission involved “rogue brokers working back channels and behind the scenes without schools’ knowledge. Other concerns are denied claims due to poor underwriting and unstable market support. My underwriting is sound and my markets are strong.”

His only suggested change?

“For universities to be allowed to use their general athletic budget instead of having to use the student-athlete assistance fund to pay insurance premiums,” Chenowith said.

The student-athlete assistance fund has been used to pay for athletes’ flights home for funerals, to purchase formal clothing for athletes’ travel, to purchase iPads and computers.

He’d love to meet up in front of the Knight Commission again.

“It was a complete and total honor. I was very grateful to be part of a committee whose first goal is the betterment of student-athlete life,” Chenowith said. “I look at all athletes as comrades in a way. If I can do a small part to protect their financial gains, then I’m all for it.”

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