Can Penguins insure Crosby's deal?

Penguins spend big on Crosby, but insuring the deal is another story.

Sidney Crosby’s 12-year, $104.4 million contract extension that was announced Thursday may seem like a gamble given that the Pittsburgh Penguins captain missed most of the last two seasons due to head and neck injuries.

“Once he came back and it was clear everything in terms of his health was sorted out, he played great the last part of the season,” former Calgary Flames general manager Craig Button told FOXSports.com. “Plus another thing you have to keep in mind is that there is insurance just in case.”

The NHL has a league-wide insurance plan that covers the clubs in case a player suffers a long-term injury or is disabled. After a player misses 30 consecutive games for the same injury, a team can apply for insurance and be reimbursed 80 percent of that player’s salary — a program the Pens could have tapped each of the last two seasons to get back much of Crosby’s salary.

Underwriters, however, may move to exclude payment to the Pens for any future head or neck injuries Crosby might suffer. Such exclusions are allowed under the NHL’s multi-year policy that is overseen by New York-based BWD Group and underwritten by MetLife.

While no player can be totally excluded, the insurer can specify a pre-existing condition that won’t result in a payout — or at least a full payout — if the same body part is re-injured, Marc Blumencranz, executive vice president and CEO of BWD Group, told FOXSports.com. (Blumencranz noted that he’s speaking on injuries in general, not specifically about Crosby.) There is a limit to the number of exclusions underwriters can claim league-wide.

It’s unclear what this means to Crosby’s situation specifically, partially because the contract can’t officially be signed until July 1.

“The insurability of the contract is something I have never talked about in the past,” Pens GM Ray Shero said on a conference call on Thursday. “I’m not going to talk about it on this contract. That’s a team issue. We will deal with that internally.”

Crosby, however, would be virtually uninsurable if the NHL didn’t have a league-wide program in place. The NBA has the same setup, which is also run by BWD Group and underwritten by MetLife. The NFL, which doesn’t generally have guaranteed contracts, and Major League Baseball do not have league-wide insurance that pays a team if a player is injured, although teams are allowed to enter the free market to insure a player.

“To a great extent, we are guaranteeing the marketplace and guaranteeing consistency,” Blumencranz told FOXSports.com. “Rates within our programs can go up and down, but they do so only within pre-negotiated narrow parameters. By taking advantage of the leagues' group purchasing power and locking in terms and conditions on a long-term basis, the leagues can control costs, guarantee availability of coverage and remove the vagaries of the marketplace."

Blumencranz said the contracts for players are only guaranteed for a maximum of seven years.

If the Pens were forced to do that, they would certainly assume the financial risk on the guaranteed deal when it comes to any sort of head trauma.

“He might be insurable, but not when it comes to concussions,” one insurance executive told FOXSports.com. “There would be exclusions. That’s the only way it would work. The team would still be responsible if he suffered a head injury and missed games.

Two collisions in January 2011 forced Crosby out for the duration of the 2010-11 season. He returned last November, but the comeback spanned just eight games. It was after that second stint away from the ice when doctors in Southern California finally diagnosed a neck injury, which compounded the effect of the concussion.

Crosby played the final 14 games of the regular season and the Pens’ six postseason games before they were ousted by the Philadelphia Flyers.

Another insurance executive said to expect these league-wide policies to get pricier as more concussion-related lawsuits are filed and researchers continue to uncover the long-term impact of head trauma.

“It’s really going impact the smaller and minor leagues than the pros,” said Chris Fox, director of operations at Virginia-based Monument Sports Group. “The bigger leagues will be able to self-insure. It’s the teams in the smaller leagues who already paying a large percentage to worker’s compensation benefits that will be hurt the most.”

Beyond compensation to the teams, the NHL is also obligated to fulfill the full financial terms of a player’s contract. Under the collective bargaining agreement, players would also receive as much as $370,000 for a career-ended disability and as much as $750,000 for a serious disability such as blindness, paralysis or brain damage.

Those one-time payouts would come from the NHL and the NHL Players’ Association.

Also under the current CBA set to expire in September, teams would get cap relief for a player who suffers a long-term injury.

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