College sports’ “pro”-era risks reshape insurance strategies
The business of US college sports is entering a new phase. As college athletics becomes more commercialized, the sector’s risk profile is starting to look a lot more like professional sports.
This is pushing schools to rethink how they buy insurance, according to Shiraz Rehman (pictured), VP, sports & entertainment, financial services at Higginbotham.
“The introduction of formalized/regulated student-athlete compensation has significantly increased the risks that universities face when allocating resources,” Rehman told Insurance Business.
In June 2025, a federal judge approved the landmark $2.8 billion House settlement, clearing the way for schools to compensate athletes directly through revenue sharing, alongside name, image and likeness (NIL) deals. The settlement’s implementation marked a structural shift in how college programs operate, even as appeals continued over parts of the deal.
At the same time, the NCAA (National Collegiate Athletic Association) said participation in championship sports reached a record 554,298 student-athletes in the 2024-25 academic year, up 15,368 from the prior year.
Opendorse estimated in July 2025 that $2.75 billion would be spent on NIL products and services that year, with about $1.95 billion going directly to college athletes.
The combination of rising participation and rising financial commitment is changing the conversation for insurers.
“College programs are becoming more sophisticated quickly and are more aware of, and making better use of, the types of tools and strategies that have long been available to professional sports organizations,” Rehman said.
“Already we’ve seen some of the larger sports programs start to shift to incentive-based compensation structures – and as that financial exposure grows, they’re actively shopping for ways to manage it.”
Rehman said the core issue is not that entirely new risks have emerged, but that existing risks now carry much larger financial consequences.
Athlete “availability,” for example, has always mattered. But where schools are tying more money, brand value and program performance to individual athletes, the downstream effects of injury, conduct issues, or underperformance can be much more costly.
“The fundamental risk of ‘availability’ for any athlete creates risks that have always existed for these programs,” he said. “But the scale of the commitment being made to these athletes, and the revenue at risk based on their ability to perform, is increasing significantly.”
The market is also adjusting to formal revenue-sharing rules. The new compensation framework took effect on July 1, 2025, allowing schools that opted in to start paying athletes. Under the settlement structure overseen by the College Sports Commission, the cap for the 2025-26 academic year is $20.5 million per school, scheduled to rise by 4% in each of the next two years. T
Underwriting college programs with a more complex blend of accident, disability, reputational, contractual and compensation-related risks. Rehman pointed to NIL as one area where underwriting is broadening beyond pure injury concerns.
“Insurers have experience underwriting these types of risks, but we’re also dealing with a younger type of athlete, which has both pros and cons,” Rehman said. “For example, schools are starting to look for ways to manage the risk that a student athlete’s conduct off-the-field could impact his or her ability to generate the positive NIL exposure the schools desire.”
Despite the new scrutiny on college sports, Rehman does not see colleges as facing wholly different challenges from pro organizations. Instead, he said the speed of change is the real differentiator.
“In many cases, the college challenges are no more unique than the decisions faced by pro teams,” Rehman said. “Resources are a question for any sports program, but colleges do face a landscape today that is changing quickly, and sure to continue to do so at a rate likely quicker than a more established professional league.”
Established football and basketball schools have been in catastrophic injury markets for years, but pricing will keep adjusting as claims experience develops, he added.
In the near future, Rehman expects regulation to be the biggest force shaping innovation in the college sports insurance market.
“I think the largest catalyst to innovation or disruption in these markets will be the continued evolution of the College Sports Commission (CSC), regulations and rules changes,” he said.
“Transfer rules, revenue-share caps, and NIL policing will certainly have an impact; as will the schools that look for more creative ways to structure athlete compensation, not just for financial efficiency or risk management, but to support athlete retention and satisfaction.”
