It's fair to say that a surprise announcement coming out of Cincinnati was the mane event in the insurance world yesterday. Head & Shoulders, a leading brand of anti-dandruff shampoo, announced that it has purchased an insurance policy from Lloyd's of London covering Pittsburgh Steelers' safety Troy Polamalu's hair for $1 million. A Lloyd's spokesman described the 29 year-old player's tresses as "truly legendary." Polamalu, who is of Samoan descent, has reportedly not cut his hair in seven years, making it something of a trademark for him, though Steelers fans are also quick to point out his 20 tackles and three interceptions during the 2009 season. I suppose his on-field accomplishments should be noted, but come on -- we're talking about hair that has its own Web site.
I admit it: I'm envious of the underwriters who put this deal together. When I was a commercial lines underwriter, I worked on boring stuff like contractors and factories and shopping malls. No one ever sent me an application for coverage on anyone's hair, let alone hair for which the NFL should invent a new category of holding penalties. This is the height of insurance geekery, the likes of which other insurance challenges cannot compete. Retros? Yawn. Multi-layer property coverage on a downtown Los Angeles skyscraper, including earthquake coverage? Ho-hum. Liability insurance for the entire World Cup tournament? That is so last June. Specialty insurance on an athlete's locks? Now we're talkin'.
As a card-carrying insurance geek, I can't help but contemplate the following questions regarding this stunning development:
- What causes of loss does the policy cover? Dryness? Discoloration? Sudden pattern baldness? Entanglement occuring as Polamalu lays a devastating hit on an unfortunate wide receiver? How did the underwriter negotiate this? "Okay, we'll cover scalp injuries arising out participation in football games, including warm-ups, pre-game excercises, practices, and showers and grooming after the game, but no way am I covering split ends."
- What are the exclusions? Is the policy null and void if he wakes up some morning and decides it's time for a mohawk? What about bad hair days?
- Is there a deductible? If so, is it a flat dollar amount or some percentage of the value of the loss? Does the percentage grow as the amount of the loss grows? "No deductible if it can be fixed in an afternoon at a salon. Anything worse than that, the first five percent is out of pocket."
- How will Lloyd's figure out what a loss is worth? Does it depend on the percentage of hair that's damaged? The true exposure here is the ends. He doesn't appear to have much in the way of bangs, and anyway he's wearing a helmet during those times of maximum threat to his coiffure. Does Head & Shoulders have coverage for potential lost income from sales of Polamalu's specialty shampoo, Hair Endurance for Men?
- Finally, how the heck do you figure out a price for something like this? No matter how the underwriter determined the premium, the price probably makes as little sense as the average airfare. Pump a few drinks into him and I'm sure the underwriter will admit he pulled the price out of his...hat.
Mark August 30, 2010 as a day to remember in insurance history. A new opportunity for insurance professionals everywhere has appeared. A new subject of coverage, a new source of revenue. However, if you're in a position to capitalize on this development, I suggest you do so in a hurry. If it turns out to be merely a fad, you will once again learn that sad lesson of life:
Hair today, gone tomorrow.