Navigating NIL Collective Risks as Insurance Needs Evolve

The rapid rise of NIL (Name, Image, and Likeness) collectives in amateur athletics has introduced a host of underwriting and claims challenges. These collectives, often structured as 501(c)(3) nonprofits, pool funds to compensate student athletes but operate without a standardized regulatory framework. As a result, management liability concerns—ranging from fund mismanagement to compliance with evolving state laws—have become a critical focus for insurers.

The landscape was shaped by the 2021 U.S. Supreme Court decision in NCAA v. Alston, which dismantled restrictions on education-related compensation for athletes. Since then, multiple lawsuits, including In re College Athlete NIL Litigation, have further challenged the NCAA’s control over NIL benefits. Meanwhile, states have adopted a patchwork of NIL laws, adding complexity to compliance risks for collectives and insurers alike.

Regulatory uncertainty raises potential exposures, such as violations of nonprofit status, improper fund distribution, and misrepresentation in NIL agreements. High-profile disputes—like former UNLV quarterback Matthew Sluka’s claim of an unfulfilled NIL promise—illustrate the legal gray areas surrounding collective obligations. Insurers must carefully evaluate whether NIL collectives present acceptable risks, particularly as litigation and regulatory oversight continue to evolve.