The Insurance Issue

By Thomas Hauser
When Vernon Forrest and Shane Mosley fought their rematch on July 20th, the focus was on the fight. But the bout also showcased a troubling side issue. Boxing, more than any other professional sport, is rife with conflicts of interest. Sometimes these conflicts are benign. Other times,they result in horrible exploitation. Thus, it is worth noting that the man who initially agented the insurance policy covering both fighters in Forrest-Mosley II also refereed the fight.

Ultimately, the Black Expo (which was promoting Forrest-Mosley II) got a new insurance agent. In part, that's because the Indiana State Athletic Commission was already under fire for the craven manner in which it had bowed to the WBC in the selection of judges. With Jerry Roth and Tony Castellano having replaced Duane Ford and Fred Jones in the jury box as a consequence of backroom maneuvering, the last thing the Black Expo needed was a referee controversy. But the issue will arise on a regular basis in the future, so let's take a look at what's involved.

As a general rule, boxing promoters purchase several types of insurance. There's signal insurance on big fights in case satellite transmission fails. A promoter who pays a large signing bonus to a fighter might purchase insurance to cover its losses should the fighter be unable to perform. But the most common forms of insurance purchased by promoters are:

(1) General liability insurance: This covers personal injury to individuals other than fighters (for example, fans and media representatives) for all events during a given year. The per-event coverage limitation on these policies for major promoters is generally between $2,000,000 and $5,000,000. However, for Lewis-Tyson, where fears of a public disturbance ran high, Main Events purchased additional insurance, bringing the coverage ceiling to $15,000,000.

(2) Non-appearance insurance: This coverage is usually in place for major fights. It reimburses the promoter for expenses should an event be cancelled for reasons other than a breach of contract (for example, an injury to one of the boxers or a hurricane that renders holding the fight impossible).

(3) Boxer insurance: This coverage is designed to pay a fighter's medical expenses for injuries sustained during a bout, or the fighter's estate if a fighter is killed during a bout. It is purchased on a card-by-card basis with policy limits that are subject to varying state regulation. Most major promoters have policies with a payment ceiling of $50,000 per fighter.

Virtually all of the boxer insurance in the United States is sold through two agents -- Joe Gagliardi of San Francisco and Laurence Cole of Texas.

Cole makes his living primarily as an independent insurance agent. Initially, he worked for his father. Then Dickie Cole was named boxing director for the Texas Department of Licensing and Regulation and turned the insurance business over to his son. The company is now called Laurence Cole Insurance Agency.

The bulk of the insurance that Cole sells are typical life, home, and automobile insurance policies. But by his own count, he writes boxer insurance policies for thirty to forty professional fight cards per month. He also agents policies for wrestling, kick-boxing, tough-man contests, and other martial arts competitions.

Cole has refereed professional fights since 1988. Ironically, on the first card he worked, a novice pro named Jesse James Leija emerged victorious in a preliminary bout. That bit of information bears repeating because, earlier this year, Cole raised eyebrows when he ruled that a cut suffered by Leija in a bout against Mickey Ward was caused by a head butt. Thus, when the fight was stopped after five rounds and the decision went to the judges'scorecards, Leija was awarded the victory rather than Ward winning by TKO.Some observers considered Cole's call "blatant hometown officiating."

Cole has refereed twenty-one world championship bouts; most of them for the WBC and most of them in Texas. Forrest-Mosley II was far-and-away his most significant assignment. He did a credible job of officiating although, near the end of round 11, he halted the action in the midst of a Forrest flurry because he mistakenly thought the bell had rung. Also, given the amount of holding by both fighters, Cole should have told them to fight their way out of clinches a few times to see what happened and perhaps change the pace of what Jim Lampley of HBO acknowledged was, "an unsatisfying, inartistic, grappling, holding, struggling, one-punch-at-a-time affair." Still, the end result was a fair one – a unanimous 12-round decision for Forrest.

So what, if anything, is wrong with Laurence Cole selling insurance to promoters for specific bouts and then refereeing those fights?

Arlen "Spider" Bynum (the Texas attorney who acts as counsel for the WBC and has served as on-site supervisor for a number of WBC title bouts) says, "Over the years, we've had horrible problems getting medical and life insurance for the fighters. It's a very difficult type of insurance coverage to find, and Laurence gets promoters what they need for the fighters. He's a fine young man and I have the highest regard for him."

Cole furthers the explanation, noting, "An agent is a mediator between the client and the insurance underwriter; that's all. Obviously, I try to do right by everyone involved, but there's no fiduciary duty to either side. I work with a larger agency in Illinois. We offer thirty-six different plans for professional boxers with coverage ceilings ranging from $2,500 to $250,000 per injury. That's it. There's nothing wrong."

It's unlikely that a referee who agented an insurance policy would stop a fight too soon out of concern that medical bills might mount. Cole himself makes that point, declaring, "I don't see it. I'm an agent; not the insurance company. If there's a loss, it's not coming out of my pocket."

However, the conflict becomes more real in theory when one considers the fact that promoters often have a rooting interest in the fights they promote; particularly if it's a major fight. For example, it's no secret that Bob Arum will be rooting for Oscar De La Hoya when he steps into the ring against Fernando Vargas. Don King was more than disappointed when Felix Trinidad was knocked out by Bernard Hopkins. Picture then a situation where a promoter says to a referee, "I'll give you my insurance business, but I want you to keep in mind who I'm rooting for."

The money involved in any one fight is so small as to be insignificant. The premium for $50,000 worth of insurance for a given fighter on a given night is about $120. That means, on a seven bout card, the total premium payment for 14 fighters is roughly $1,680. Cole says that, depending on the policy, his commission ranges from five to ten percent. If he received a ten percent commission, he'd be getting $168. That amount is miniscule. Still, over the course of a year, the commissons add up.

Moreover, it's not the amount; it's the principle that's in question. In some ways, a boxing match is like a courtroom proceeding. The ring judges are the equivalent of jurors; and the referee plays the role of a trial judge, directing the flow of the action. Laurence Cole doesn't appear to have done anything illegal or unethical. But most parties to litigation would not want the judge in their case to be the other side's insurance broker.

In short, common sense dictates that referees and judges should not have a financial interest, direct or indirect, in any fight they cover. Obviously, the Indiana State Athletic Commission feels differently about the matter because it had no problem with Cole's dual role. And the Texas Department of Licensing and Regulation, headed by Cole's father, seems equally comfortable with the arrangement because Cole referees in Texas on a regular basis.

Situations like this are one more reason why boxing needs uniform national standards and guidelines and a federal commission to enforce them.