Event insurance update: global challenges
In this feature, Arc International Event Insurance Specialists, discusses the affect Covid-19 has had on the event insurance industry.
The insurance market, as a whole, has been experiencing challenging times over the past few years. With global warming affecting the climate and the increase in the number of natural disasters, coronavirus and the risk of terrorist attack; Lloyd’s of London Contingency market has been heavily hit by claims.
In May 2020 Lloyd’s advised that it expected coronavirus-related claims to cost between £2.5-3.5bn. To illustrate the enormity of the loss, the combined claims relating to hurricanes Harvey, Irma and Maria in 2017 are thought to equal or exceed the claims paid due to the Coronavirus pandemic. Nearly a third of the losses are thought to come from the cancellation or postponement of major events around the world, including Wimbledon, Music Festivals, The Ryder Cup, and numerous conferences and exhibitions. Arc International clients have received claims payments relating to adverse weather totalling €169,727.62 and £40,756.61 and coronavirus of €7,908,991.20, $20,238,733 and £9,628.80.
With the increased number of claims it was inevitable that premiums needed to increase in order for there to continue to be an insurance market to protect event organisers against financial loss.
When particular events arise, or are prevalent, they may become uninsurable for a time in the Lloyd’s Market. This currently is the situation with regard to Covid-19.
Another incident where Lloyd’s postponed cover in respect of a specific cause was with regard to the grounding of planes as a result of the eruption of Eyjafjallajökull in 2010 which produced ash clouds, resulting in the risk of causing potential damage to aircraft. It was reported that 107,000 flights were cancelled during an eight day period. Cover was reintroduced once the risk of reoccurrence reduced.
In the current situation our clients have needed to be resourceful in their offering in order to supply events providing value for money for attendees, securing interaction and high-end content; technology has been embraced to achieve this using video links, virtual events etc…. In these difficult times we increasingly rely on technology. Insurance is available should an event suffer due to transmission failure and this is something that event organisers should consider purchasing in order to protect their outlay.
On a final note, although rates have increased the cost of event insurance is not extortionate if you consider the effect a total loss could have. Rates of around 0.5-1% of your total expense/gross revenue figure are achievable and cover can be tailored to suit your individual requirements. If the cost of insurance is factored into your budgets at the outset it need not have a huge effect on your bottom line.
Arc International Event Insurance Specialist can be found by clicking here.