A series of racehorse deaths that led Churchill Downs Inc. to suspend racing earlier this month at its track in Louisville, Kentucky, pending safety reviews, has not yet affected horse insurance rates, but that could change, some experts say.
Twelve thoroughbreds died at the track, which is home to the Kentucky Derby, during a five-week period starting on April 27. Two horses were also euthanized at Belmont Park racetrack in Elmont, New York, earlier this month during the weekend of the Belmont Stakes, the finale of the Triple Crown, renewed scrutiny of the industry’s safety protocols.
It is not clear whether mortality coverage was in place to cover the recent racehorse deaths, sources said. Some racehorse owners and investors buy coverage, while others choose to retain the risk themselves.
Mortality coverage is based on the market value of a racehorse, which can range from thousands to tens of millions of dollars for marquee event winners who have the potential to go on to successful breeding careers.
The cluster of 12 horse deaths was not one “the hurricane, or a named storm for the insurance market,“ said Michael Levy, president of Muirfield Insurance, an equine insurance agency based in Lexington, Kentucky.
“It would have no monetary impact … on any annual fiscal results,” Levy said.
All-risk mortality policies typically pay out in the event of a horse’s death, if it is injured or ill and if euthanasia is required, he said.
“Euthanasia is determined by the attending veterinarians in conjunction with an adjuster approved by the carrier,” Levy said, adding that instituting a policy requires a veterinary certificate that a horse has no ailments or diseases.
Some owners self-insure either because of a lack of familiarity with equine coverage or because they’re trying to keep costs down, said Spokane, Wash.-based Josh Smart, North American practice leader for agribusiness and food and sales manager at Hub International Ltd. .
“You have feed costs, stable costs, vet costs, training costs, so insurance may just be the only thing they can live without,” Mr. Smart.
Premiums vary based on the age, pedigree, health, use and value of a horse, but typical annual rates range from 3% to 4.5% of a horse’s value, sources say.
The deaths at Churchill Downs were tragic but “they have not translated into any immediate impact on the equine insurance market,” said Meghan Mackenzie Bell, Toronto-based senior operations manager at Henry Equestrian, part of NFP Corp.
From a risk management and safety perspective, horse racing has been moving in the “right direction,” Mackenzie Bell said. “The fatality numbers are dropping every year, and racetrack owners and regulators are putting in place new protocols that have clearly worked,” she said.
The rate of fatal injuries to thoroughbreds during racing on all surfaces in the United States fell 10.1% to 1.25 horses per 1,000 starts in 2022 from 1.39 the previous year, according to data compiled for the Equine Injury Database released in March by The Jockey Club New York. It was the lowest number recorded since 2009 when tracking started and the figure was 2.00 horses per 1,000 starts.
However, these numbers do not include incidents that occur during training or off the racetrack, and several groups have compiled different death tolls that are higher, based on different news reports.
Niall McKibbin, London-based director of equine and livestock at Convex Group Ltd., said data and analytics are contributing to improvements in safety and risk management in horse racing, which inform underwriters.
Statistics suggest that racing on synthetic surfaces can result in fewer injuries, for example, he said. When information like this is presented, things will pick up and insurance companies will react, he said.
When underwriters review data as part of a renewal and if they find a problem affecting their portfolio, they’re likely to look to use rates to differentiate, Mr. McKibbin.
Much of the business in the U.S. is written on a recognized basis, which can slow insurers’ ability to quickly move the dial on rates, he said.
There were 12 deaths in racing on synthetic surfaces in the United States in 2022, compared to 45 on grass and 271 on dirt, according to the Equine Injury Database.
Investigations by the Kentucky Horse Racing Commission and the Horseracing Integrity and Safety Authority, a federal regulatory agency, had identified no apparent or specific pattern linking the deaths at Churchill Downs on June 2.