Europe's leading football clubs can now get comprehensive financial protection for what is often their biggest asset – their players – through a new product created by Avoca Elite Sports (AES) and specialist insurer Hiscox.

The product, called MAXI, covers teams against a fall in a player’s agreed transfer value resulting from serious injury or illness, and compensates for their potential lost revenues caused by that player’s prolonged absence.

Football clubs invest heavily in stars to succeed in their domestic leagues and the showpiece European competitions, with Premier League clubs spending a record £630 million in this year’s summer transfer window, according to Deloitte. Across all of the five major divisions in Europe, clubs’ gross transfer spending is up compared to the previous year, it found*.

Despite spending such large sums, clubs have little financial protection if something goes wrong. The combined value of the squads of the top 20 European football clubs is estimated to be over £5 billion, but, analysis by AES and Hiscox reveals that very little of this amount is protected.

This is because, until now, there was simply no product that covered clubs adequately against adverse events occurring to their stars either on or off the pitch that could wipe millions off the value of their squad and ruin their season – as well as their finances. Existing insurance protection compensates clubs only for the wage costs of a long-term injured player or for an insured value if a player is forced to retire through injury – a rare occurrence at the top level.

"Football clubs are among the very few businesses whose key assets, on which they rely for their success, are exposed to harm on a weekly basis," says Guillaume Bonnissent, Head of Alternative Distribution Division at Hiscox. "Each Saturday, they send teams onto the pitch that are worth tens, if not hundreds, of millions of pounds, without knowing whether they will return in one piece. Until now clubs haven’t had the ability to comprehensively protect these expensive assets in the same way that other businesses can protect their balance sheets."

AES and Hiscox have worked closely with leading Premier League clubs during the past two years to design MAXI. They have also been in discussion with several of the game’s administrators about how MAXI can be used to help clubs manage their finances and objectives under Financial Fair Play rules.

David Lampitt, former Head of Financial Regulation at the Football Association and former Chief Executive of Portsmouth FC, is a consultant to AES. He added: "With the advent of Financial Fair Play, clubs are going to be far more restricted in their ability to inject cash into their squads to mitigate the loss of key players. Dealing with those changing circumstances is a must for all clubs. What’s good about this product is that it provides a new way of protecting clubs from potentially significant financial shocks. It also reflects an increasingly professional approach to financial risk management being taken in football."

Hiscox leads the risk protection provided by MAXI, with additional backing from several of the world’s biggest insurers, including AXA, Munich Re and Swiss Re.