Rethinking Horse Insurance

A loyal reader sent me a clipping from the Wall Street Journal about re-evaluating the criteria used to issue insurance for thoroughbreds. According to Ron Kirk, a horse-insurance agent and underwriter in Lexington, KY, whose company manages the horse program for North American Specialty Insurance Co., "horse insurance policies don't take into account the injury history of a horse's family, and owners don't pay more to insure horses whose ancestors have produced injury-prone offspring."

Kirk's point, of course, is that they should, even though the industry has not reached a consensus on the subject. In other words, if you purchase a horse descended from say, Big Brown, you should pay more to insure it because of the likelihood of the horse to have tender feet. Kirk points out that "on occasion" his firm will already charge owners an additional premium to insure a horse whose parents and grandparents have experienced breeding problems.

It's actually a really interesting concept and one that might actually have an impact because it hits horsemen where they feel it most--in the pocketbook. Let's say that it would cost more to insure a horse descended from one with weak knees, or hooves or shins, and that the seller had to disclose that information BEFORE you purchased the horse. Would you be willing to buy it? Or maybe the better question is, would you be willing to buy it as a potential sire or broodmare, considering the financial obligations that you would be passing on to the next generation of owners? Or better yet, would you be willing to breed horses that cost more to insure?

I think not. And I think it might be great incentive to limit certain bloodlines but the challenge, of course, would be to determine which bloodlines these are.

And that is something that is not likely to happen in my lifetime since all those bloodlines are currently very much in circulation and no one wants to take his stallions out of circulation and put himself out of business.

As a sidelight, Kirk said that Big Brown's owners had insured him for nearly $50 million, "one of the largest policies ever for an active racehorse." The coverage is underwritten by nearly a dozen different carriers. Here's another thought for you. What would happen to the value of horses if there was a limit to the amount of insurance you could purchase for mortality and fertility insurance?

Here's one sure thing. If something were to happen to Big Brown and the owners did file a claim, premiums throughout the industry would hit new highs and a lot of owners might begin thinking twice about insuring horses for such hefty amounts.